Opportunities in ASEAN to drive Standard Chartered’s wholesale banking business

Growing investor interest in the South-east Asia region will likely drive Standard Chartered’s wholesale banking business in the next few years.

Given its network and presence in the region, the bank sees opportunities to leverage such interest and become a “connector” for investors outside and within ASEAN, said Simon Cooper, Chief Executive Officer of the bank’s Corporate, Commercial and Institutional Banking (CCIB) division.

“I see ASEAN as a really attractive base for our clients … you should think about it as an opportunity in its own right,” Cooper said.

Standard Chartered has a presence in all 10 ASEAN markets, as well as an ASEAN hub in Singapore that consolidates its subsidiaries in Malaysia, Vietnam and Thailand.

This allows the bank to be at multiple ends of clients’ supply chains, especially for manufacturing, said Cooper. “The fact that we are present in each of the ASEAN markets, on the ground, gives us a real advantage in terms of supporting our clients in those markets.”

Singapore, in particular, has the additional advantage of being a hub for the region as well as global businesses.

Cooper, noting that Singapore is the global head office for his division, said this gives the bank a chance to be at the heart of growth opportunities: “We have the benefit of a global business out here, a regional business out here, and a country business out here.”

For its financial year ended 2022, Standard Chartered’s underlying operating income rose 10 per cent year on year to USD16.3 billion, driven in part by the rising interest rate environment.

Net interest income increased 12 per cent year on year, and the bank also posted record income for its financial markets segment. Its underlying profit before tax rose 13 per cent to USD4.8 billion.

Its CCIB division – which supports local and large corporations, governments, banks and investors with their transaction banking, financial markets and borrowing needs – posted underlying operating income of USD10 billion, up 19 per cent year on year.

This was supported by gains in transaction banking due to rising interest rates, as well as strong macro trading activity in financial markets.

Accordingly, CCIB’s underlying profit before tax rose 31 per cent to USD4.1 billion. The division also posted an underlying return on tangible equity of 13.7 per cent.

Financial institutions a ‘real area of growth’

Cooper said 2022 was a strong year for its CCIB business, and the bank has continued to see growth in terms of clients looking to expand.

As its network continues to grow, an area of focus for the CCIB division would be its financial institutions (FI) segment.

Cooper noted a “real appetite” from financial institutions for growth opportunities, especially for assets in markets within the bank’s footprint.

This provides it an opportunity to service investors, while at the same time helping clients raise money.

While the bank has had a “reasonable” FI business, the segment has been relatively under-penetrated, Cooper said.

He expects the FI business to be a key driving force ahead.

For Standard Chartered’s financial year ended 2022, its FI segment accounted for 45 per cent of its total CCIB client income. The bank plans for its FI segment to account for half of the revenue of its CCIB segment by 2024.

Its clients include big multinationals who are looking for support in this part of the world, as well as investors, sovereign wealth funds and large banks.

There is also interest from FI clients in Europe and the Americas to invest into the bank’s network in the South-east Asia region, said Cooper – who is also Standard Chartered’s chief executive for Europe and the Americas.

During an interview with the media earlier in April, Standard Chartered’s Group Chief Executive Bill Winters noted that clients from Europe and the Americas accounted for a third of the bank’s corporate business, with the bulk of their investments returning to Asia.

Within the FI space, Cooper noted that a big US asset manager was interested in finding an investment opportunity to support a power company in the Middle East as it transitions from carbon to sustainable fuel.

In Singapore, earlier in January, the bank also supported agrifood company Wilmar International with a USD200 million sustainability-linked trade finance facility.

Growth in sustainable finance

Cooper said Singapore has positioned itself to be a world leader in sustainable finance, so the bank can leverage on that to also grow its focus in sustainability and sustainable finance.

“When we talk to our clients, it’s an imperative for the world, and a real business imperative for people to start thinking how they plan a particular transition within our footprint,” Cooper said.

Singapore can support the region by developing technology, talent and financial tool kits in the space, as well as support Just Energy Transition Partnerships with the region, he said.

Looking ahead, Cooper remains “pretty excited” about the growth opportunities to come, which he expects will be significant.

“We’ve got all the fundamentals in place to see continued growth in the majority of our footprint,” he said.

“We’ve got continued appetite for people to invest into this footprint. And we’ve got continued appetite for people from the footprint to explore opportunities outside.”

Source: The Business Times © Singapore Press Holdings Limited. Permission required for reproduction.

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