Good day, and welcome to the Standard Chartered third quarter 2023 results presentation call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question by phone, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero, and alternatively, if you wish to ask a question via the webcast, please use the question box available on your webcast page to submit your questions. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Bill Winters, Chief Executive, to begin the conference. Bill, over to you. Good morning, and good afternoon, and welcome to our third quarter of 2023 results call. I'll make some opening comments, and Andy will dive in deeper before the usual Q&A. We have continued to make strong progress against the five strategic actions outlined last year, delivering a solid set of results. We remain highly liquid, well-capitalized, and we are confident in the delivery of our 2023 financial targets, including an ROTE of 10%. We're pleased with the progress we are making in our strategy. Our cross-border network business remains strong. Our affluent business has returned to excellent growth, both in customer numbers and income. Our digital banking strategy is working well, and our sustainable finance strategy is on track. The macro picture is more mixed. Markets remain volatile as the global economy remains resilient, leading to shifting inflation and interest rate expectations. This is particularly the case in the U.S., where we have seen significant rises in long-term rates and an increasing conviction that we will be higher for longer. While we believe we are near the top of the current rate cycle, the higher for longer expectation has led to extended dollar strength, pressuring borrowers reliant on dollar funding. Now, we're encouraged by the recent economic data coming from China. Manufacturing and consumption are returning to normal levels, and confidence is slowly rebuilding. We continue to expect GDP growth of around 5%, reassuring, given some of the narrative. That said, the commercial real estate sector has only barely stabilized, and companies are succumbing to the extended period of weak property sales. This continues to impact our results. The Chinese authorities seem keen to deflate the property bubble without materially impairing the local financial system, something that they have managed well so far, but this policy is not without risk. That, together with lower NIMs across the banking sector in China, have led to weaker results for local banks and the resultant impairment of the carrying value of our stake in Bohai Bank. On the flip side, our business in China is thriving. The offshore business, largely cross-border transactions, driven by China's actions to further open its economy and capital markets, is growing very strongly, up nearly 50% this year. The onshore business is resilient, up 2% so far in what's been a challenging year for China's domestic economy. So despite some material setbacks, we remain very confident that we will grow profits for years to come in and around our China franchise. Our strategy is to capture the trade, investment, and wealth flows, as well as financial markets activity in and out of China that derive from this ongoing opening of China's economy. I recently returned from China, and it's clear to me that in our focus areas, activity levels are booming, such as in cross-border flows and the new economy industries, especially those concentrated in the Greater Bay Area, such as electric vehicles, clean tech, and high tech. Looking more broadly, we expect Asia GDP to be above 5% this year and next, making it the highest growth region globally. In our recent global trade reports, increasing south-south or intra-emerging markets trade and growing services trade are expected to help offset the drag to trade from higher geopolitical tensions. Our unique regional footprint, with presence in China, India, the Middle East, Africa, and across ASEAN, allows us to capture the opportunities from shifting supply chains and growing trade and investment flows within and between our regions. Beyond the stress in China's CRE and some sovereigns, corporate and consumer balance sheets, particularly in our markets, are in good shape, often better than those of some governments, and have so far been resilient to higher rates. Now, on a more somber note, we've watched the events unfold in Israel and Gaza for the past weeks with shock and sorrow. We're hoping for a speedy resolution to the situation and that the tragic loss of life is brought to an end quickly. We have very limited presence in the currently impacted part of the Middle East. The principal transmission mechanism to our business would be a broader escalation of the conflict across the region, which results in higher oil prices, which in turn would put further pressure on the global economy, and particularly on oil-importing sovereigns. We made encouraging progress on our five strategic actions, and you can increasingly see that come through in the numbers. Our franchise offers superior growth prospects, and our investments are creating the platforms to ensure we capture that growth. We're convinced that we're in the right markets with the right strategy and are firmly on track to achieve our full year 2023 financial targets. With that, I'll hand over to Andy to take you through the numbers and then rejoin for the usual Q&A. Thanks, Bill. Good morning, and good afternoon, everyone. So remembering that unless I say otherwise, the comparisons I will give will be on a year-on-year and constant currency basis. Let's get straight into the numbers. Third quarter income of $4.4 billion was up 7% compared with a strong third quarter in 2022, mainly due to higher interest rates. Net interest income of $2.4 billion was up 20% on strong performances in both cash management and retail deposits. The normalized net interest margin was up 24 basis points to 167 basis points after adjusting for 4 basis points of one-offs. Other income of $2 billion was down 5%, as the continuing recovery in wealth management was offset by a lower financial markets performance relative to a very strong prior year comparator. Expenses of $2.8 billion were up 8% due to inflation, investment, and initiatives supporting business growth. But as guided, we were in line with, in fact, slightly lower than the prior quarter's run rate. Credit impairments remained relatively low by historic standards, but were up $62 million to $294 million, mainly because of further charges relating to our China commercial real estate exposures. Overall, we generated $1.3 billion of underlying profit before tax. ROTE of 7% was depressed by a higher than normal effective tax rate, mainly caused by increased rates-driven losses, largely in the U.K., where we have insufficient profits to shelter these losses. The effective tax rate can move around materially on a quarterly basis, so I focus on the full year outcome, and we are taking various actions to ensure that the full year effective tax rate will be around 30%. Now, let me cover Bohai for a moment. We took a $697 million below-the-line impairment charge relating to our Bohai investment, the details of which we've included in the slide in the appendices. Bohai's half year results were published in August and showed a meaningful reduction in net interest income, which accounts for most of their total revenue. This reduction, combined with a materially lower domestic interest rate outlook, resulted in the impairment. It is important to remember that Bohai is a largely domestic China business, which is very different to our own China franchise, where we now generate more of our income outside China than within it. Moving to the year-to-date view, we are on track to meet our full-year 2023 targets. Income is up 15% year to date. We continue to expect full-year income growth to be in the 12%-14% range. Costs are up 11% to date, resulting in 4% positive jaws. We remain on track for the around 4% jaws target for the full year and are willing and able to take more cost actions to protect that outcome. Credit impairment of $466 million represents an annualized cost of risk of 20 basis points within our expected 17-25 basis point range. We are not seeing any new areas of credit pressure emerging. Year-to-date ROTE of 10.4% positions us well to achieve 10% ROTE overall in 2023. Looking at NII and NIM in more detail, the headline here is that our NII was up 20% compared with the same quarter last year, albeit was 2% lower quarter-on-quarter. The decline from the second quarter reflects the normalized NIM being four basis points lower at 167 basis points. We believe that this quarter-on-quarter dip is temporary and does not reflect a more fundamental change in structural pricing dynamics. There are several moving parts which explain the reduction. The 2 basis point benefit from higher interest rates, which was net of higher pass-through rates in the quarter, was broadly offset by the impact on our hedging positions of the higher for longer rate environment. Adverse mix changes of 3 basis points were driven by three things: muted demand for client assets in a volatile rate environment, holding a higher level of treasury balances for most of the quarter as part of managing our elevated LCR, and some further CASA to TD migration in line with our expectations. We also saw a 1 basis point impact from asset margin compression in corporate lending. Taken together, this gets you to the third quarter normalized NIM of 167 basis points. We now think the 2023 average NIM will be approaching 170 basis points, a slight detuning from our previous language of around 170 basis points. We do not expect further NIM erosion in the fourth quarter. In fact, we see NIM expansion, and there are 4 primary reasons why this is the case. Firstly, we have taken a conscious decision to normalize our LCR ratio, some of which occurred in the third quarter, with more to follow in Q4. This has the effect of reducing lower returning treasury balances. Secondly, we expect negligible rate changes in the fourth quarter, so we do not expect an incremental drag from our hedges. Thirdly, we are progressively reducing our lower returning mortgage book. And fourthly, we see opportunities for further margin upside in treasury from reinvestment of some balances at higher yields. These actions should more than offset any underlying movements in pass-through rates or CASA to TD migration. For 2024, we are not changing our NIM guidance. We continue to expect the average NIM to be around 175 basis points. There are a number of reasons for this. Regarding our hedge positions, we see a material, a mechanical tailwind of 9 basis points, 8 of which come from expiry of our short-term income hedges, and 1 of which is due to part of our existing structural hedge maturing and being reinvested at higher yields. Furthermore, in both a more stable or lower rate environment, we expect client asset demands to increase. We expect momentum to return across trade, lending, and capital markets, and see ongoing growth in unsecured lending in retail, driven by our new digital platforms and partnerships.... In a lower rate environment, we would also look to increase our mortgage origination. We also expect to see some mixed benefit as higher yielding client assets increase as a proportion of total assets, relative to lower yielding treasury assets. These benefits will be part offset by ongoing CASA to TD migration and higher pass-through rates. To date, deposit pass-through rates and migration have broadly performed in line with our expectations. In our top four retail markets in Asia, deposit betas have been broadly stable for much of the year, so appear to be performing better than some Western markets. All else equal, if interest rates decline, we would expect some moderation in both deposit pass-through rates and migration, led initially by retail. NIM is complex to forecast. It is dependent on many moving parts and assumptions, more so for us than for others, and includes things beyond our control, such as rates, curves, and customer behavior. We keep it under review, and we'll update you if any of those factors or our assumptions change. As we approach the peak of the rate cycle, we're also looking to take further duration positions to dampen income volatility and mitigate the potential impact of a lower rate environment. We plan to build out our existing structural hedge position, mainly through increased use of hedge accounted swaps, which are efficient from a capital and leverage perspective. This hedge build out should also support NIM if rates fall. More on this at the full year results. Turning now to products. Third quarter cash management income was up 61%, and deposits were up 50%, as both businesses benefited from higher interest rates. This was supported by strong discipline on pricing and pass-through rate management. Trade was down 2% on lower volumes as trade activity was subdued, particularly in China and Hong Kong, as clients preferred local currency financing. Lending was down 26%, principally due to lower origination volumes in challenging markets. Mortgage income was down 78%, reflecting market dynamics, including the prime cap in Hong Kong, which led to margin compression and accordingly, our decision to limit new origination. CCPL income was up 2% on higher volumes, in part due to momentum in our mass retail partnerships, despite lower margins. The treasury loss of $274 million was mainly driven by the impact of a higher rate environment on our hedge positions and a higher drag from deployment of the commercial surplus. Moving to other income. In financial markets, market volatility was lower, and 2022 was a strong comparator period. As a result, income of $1.3 billion was 8% lower year-on-year, or 6% lower after adjusting for $28 million of one-off gains in 2022. Year to date, FM was flat or up 7%, adjusting for $244 million of one-off gains in the prior period. Macro trading was down 11% as FX rates and quantities saw lower income on reduced flows in a less volatile market. Credit markets was up 4%, as lower credit trading income on lower volatility was offset by stronger financing revenues from good deal execution. We also saw market share gains in G3 bond and loan markets, despite declining footprint market volumes overall. FM derives about 70% of its income from ongoing client liquidity and exposure management, including the business flows into FM from transaction banking. T his flow income of $910 million was up 3% on a reported basis, reflecting our past investment in digital platforms and cross-selling solutions. Conversely, the more episodic income of $343 million, which is more event and mark-to-market driven, was down 28% on a reported basis on subdued market volumes. Wealth management momentum was encouraging as the recovery here gained pace. Income of $526 million was up 18% year-on-year and up 7% quarter-on-quarter, our best quarter in wealth since the first quarter of 2022. Performance was broad-based, with all main wealth management product lines growing income year-on-year and quarter-on-quarter. Our seven largest wealth markets grew income at double-digit rates. Treasury products and banc assurance were up 14% and 30% respectively. Encouragingly, both managed investments and secured wealth lending also picked up. Affluent net new money more than doubled to nearly $18 billion, which is equivalent to around 9% of affluent AUM on an annualized basis. The addition of new to bank affluent customers continued at pace, with account openings in the third quarter at their highest level since 2021. Our success in monetizing these new affluent relationships has driven the strong performance in wealth year-to-date and is expected to underpin performance in future quarters. Turning now to the market view. Most of our main markets saw good momentum, albeit with strong rates tailwinds. Singapore and Hong Kong were standouts, w ith year-to-date income up 31% and 25%, respectively, delivering ROTE of 22% in Hong Kong and nearly 30% in Singapore. Across Asia, our income was up 18% and our underlying profits up 37% year-to-date. The performance is broad-based, with 8 markets delivering record third quarter income on a year-to-date basis, and 11 of 17 markets achieving a year-to-date ROTCE above 12%. In Africa and the Middle East, our income was up 30%, and our operating profit up 54% year to date, which was particularly commendable given the number of sovereign challenges in the region. The UAE was a particular standout, with year-to-date income of $612 million, up nearly 40%, and a ROTCE approaching 25%. Looking at China, as Bill said earlier, notwithstanding a difficult domestic environment, our China franchise continues to do very well. Our China franchise is not a proxy for China's domestic economic performance, but is instead a proxy for the ongoing opening up of China's economy. Our strategy is to capture the trade, investment, financial market, and wealth flows in and out of China that derive from this opening and China's greater participation in the global economy. On a year-to-date basis, our overall income from our China business of $2.5 billion was up 25%, comprising 2% growth inside and nearly 50% growth outside China. Our focus on the new economy is paying off, as the revenue contribution from clients in this sector is increasing at a faster rate than traditional sectors and is now approaching half of new corporate origination. Year to date, China-related profits are up threefold, notwithstanding taking further impairment charges in connection with the CRE sector. We're therefore making good progress on our aspiration to deliver $1.4 billion of profit from China in 2024, compared with the $0.7 billion that we delivered in 2021. Turning to expenses, costs of $2.8 billion were up 8%, resulting in 1% negative jaws in the quarter. Importantly, as guided, costs came in below the second quarter run rate. We said we wouldn't necessarily deliver positive jaws in every reporting period, albeit on a year-to-date basis, we have delivered around 4% positive jaws, which remains our full year target. The main drivers of the cost increase continue to be inflation of around 4% and investments into business growth in FM, wealth, sustainable finance, and China, all of which will help deliver sustainable top-line growth, reducing reliance on interest rate increases to grow income. For similar reasons, we continue to invest at pace in our digital initiatives, with strong momentum in Trust and Mox, justifying our decision to invest into these businesses some time ago. Investment spend was part offset by a further $67 million of cost efficiencies, and we are now over halfway to our 2024 cost save target of $1.3 billion. In retail, we are closing in on our 2024, $500 million cost save aspiration, having delivered 2/3 so far. T he credit impairment charge of $294 million was up $62 million, demonstrating the resilience of our portfolios, notwithstanding further pressure in China CRE. Retail impairment of $115 million was driven by expected portfolio flows into default, and we saw an additional $30 million charge in Ventures, mainly due to Mox growth. We do not expect the policy pressures in China CRE to ease in the near term, and with investor confidence at very low levels in China, we are not expecting a swift recovery. We have proactively managed this portfolio through very difficult conditions for the sector, and our exposures have reduced by more than 30% since the end of 2021 to $2.7 billion today. We continue to take a conservative approach and mark our books accordingly. We took a $186 million dollar charge on China CRE, mostly through top ups on already defaulted accounts. Within this, we increased the management overlay by $42 million dollars to $178 million dollars to reflect further downside risk. We are not seeing contagion from the property sector into other parts of the Chinese economy. This suggests that the idiosyncratic policy pressures in China CRE have so far been contained by the authorities. Our China book outside CRE is performing well, and we have provided further disclosure in the materials. Turning to sovereign pressures, assuming higher rates for longer, a consequent further period of US dollar strength and more discerning capital markets, we are not out of the woods yet, notwithstanding the commendable efforts of affected markets and the IMF to improve the situation. In part, due to proactive management of our sovereign exposures, we saw a net recovery of $7 million in the third quarter, as additional provisions in Nigeria were offset by recoveries in Pakistan and Sri Lanka. Exposures in Pakistan, Ghana, and Sri Lanka have reduced by more than half, about $5 billion since the end of 2021, and we continue to actively manage our position in other vulnerable markets. High-risk assets were up $500 million in the quarter. Early alerts were up $1 billion on new downgrades, including sovereigns, but this was partly offset by a $500 million reduction in Credit Grade 12 accounts and Net Stage 3 loans. On an underlying basis, customer loans were up $2 billion, or 1% to $281 billion. Higher trade loans, in part due to higher oil prices, offset small reductions in retail and wealth management. In retail, we continue to limit new origination in mortgages, which comprise about two-thirds of our total retail balance sheet, due to unfavorable pricing dynamics. For the full year, we expect assets to grow on an underlying basis at a low single-digit rate. Overall, customer deposits were down 3% or $14 billion to $453 billion. Lower balances in cash management reflected business as usual or expected movements. The decline in financial markets and treasury is mainly due to the decision to manage our LCR down towards more usual levels. As a result, the LCR ended up at 156%, down 8 percentage points in the quarter. These CCIB outflows were in part offset by an increase in retail time deposits. Time deposits are a high-quality source of liquidity, and in our major retail markets, are particular return accretive when used as an anchor product for affluent relationships. Risk-weighted assets of $242 billion were down 3% or $8 billion in the quarter. Optimizations in CCIB and treasury model benefits, the Bohai impairment, and favorable FX movements more than offset higher market RWA, asset growth, and mix changes, and a small amount of credit migration. Around $2 billion of further CCIB optimizations means we have nearly hit our 2024 optimization target of $22 billion. As we said at the half year, if we can do more here, we will. Looking ahead, we think RWA will be broadly stable this year, so around $245 billion at the year-end. The CET1 ratio of 13.9% was down 11 basis points in the period. In the third quarter, profits and lower RWA were more than offset by distributions, including the full impact of the $1 billion share buyback announced at the half year, and a larger accrual for the final dividend for 2023. The Bohai impairment was a net 18 basis point impact to CET1, as the $697 million impairment was partly offset by an RWA release of $1.7 billion. Since the half year, we have completed the $1 billion buyback announced in February, and have completed around $800 million of the $1 billion buyback announced in July. Several factors could move the CET1 as we approach the year-end, including RWA inflation from credit migration and business growth, and the completion of the sale of the aviation business. In the light of these factors, we will reflect on further distributions at the year-end, balancing our investment and return aspiration with the need to maintain a robust capital position. Just turning for a moment to what we are seeing since the end of the third quarter. In October, FM trading momentum improved as volatility has risen, although new deal financing and primary issuance levels are currently subdued. FM is a diverse business which can generate sustainable growth through the cycle. The trading business does better in more volatile markets, whereas the financing and capital markets businesses tend to do better in more stable markets. Trade exposures remain resilient, with further growth in working capital trade loans. In wealth management, market sentiment has become more challenging recently. However, October momentum is broadly in line with September. Although do remember that we usually see some seasonality in wealth in the fourth quarter as we close out the year. Our guidance for 2023 is, for the most part, unchanged. We still expect 2023 income to increase in the 12%-14% range at constant currency. We now expect a full year 2023 average NIM approaching 170 basis points. Our jaws guidance remains around 4% for 2023, excluding the levy at constant currency, and with the fourth quarter cost run rate expected to be similar to the second quarter. We continue to expect credit impairment to land within our 17-25 basis point range. We now expect an underlying effective tax rate of around 30% in 2023. We will continue to operate dynamically within the full 13%-14% CET1 target range. With one quarter to go, we remain on track to deliver 10% ROTE in 2023. In conclusion, we have delivered a solid third quarter performance with strong progress on our five strategic actions. Our liquidity profile remains strong, and our capital levels remain robust. As Bill said, we remain optimistic on the outlook for our markets, which we expect to continue to grow at attractive rates, notwithstanding some near-term pressures in China CRE and some weaker sovereign markets. As we look ahead, we're confident that the investments we have made in China, wealth, financial markets, and our digital platforms will support future top-line growth in a lower rate environment. Standing back, this is a business that has performed well through challenging markets in recent years. After 16% income growth last year, and assuming per our guidance, 12%-14% this year and 8%-10% next year, we are feeling positive about the outlook as we push through the 10% ROTE level for the first time in many years and on to 11% and above thereafter. With that, I will hand back to the operator for Q&A. Thank you both for the presentation. As a reminder, please submit your questions via the webcast or by pressing star one on your telephone keypad to join the queue. We will begin by taking phone questions, and your first question comes from the line of Jason Napier from UBS. Your line is open. Good morning. Thank you for taking my questions. Two on net interest margins. The first around LCR management. I wonder whether you, you might just expand a little bit on what we've been told, so far, and, and in particular, focusing on what it is you're looking to do in the fourth quarter. Is it, is it a, a matter of mix of HQLA? Is it level? You know, how, how low do you think the LCR ought to drift, to optimize that piece of the, of the equation? And then second, perhaps a, a question for Bill. Just taking a step back, you know, as you say, markets quite clearly, you know, are coming home to the view that we're gonna have rates that are higher for longer. If most of the asset base, other than the treasury holdings, are swapped back to floating, I just wonder, is there a tailwind into next year from asset yields? You know, 5.1% yield in Q3, you know, significant to developed markets is a, is a pretty good income yield. Where does that go, absent changes in pricing over the next 12 months in terms of just asset yield on its own? Thank you. Okay, Jason, let me, let me take the first one, and then, Bill, the second. So on the LCR, if you go back in time, we've been operating more in the mid-140% range. Earlier this year, with other events going on, we bolstered that up to the 165% o r thereabouts level, and as you can see from this print, we have slightly reduced that down to about 156%, I think it was, at the end of Q3. And I think our intent will be to continue to normalize that over the next quarter in particular. Now, what we're typically doing, LCR obviously has many moving parts. It is partly net outflow based, it is partly about the assets themselves. But where we can do, we are taking out the lower returning of the treasury assets. That was something that happened probably later in the third quarter. So to some of the NIM support for the fourth quarter, we will see more benefit of that coming through for the whole of the fourth quarter from the third quarter actions plus the fourth quarter actions. But overall, we are moderating the LCR back nearer to the sorts of levels that we have historically been at. Bill, did you want to pick up on the asset side? Yeah, Jason, thanks for the question. Obviously, there's lots of follow-through from the idea of higher for longer. Andy and I both commented on the pressures that this puts on, in particular, dollar borrowings for our sovereign clients and some corporations. We would also expect that this would keep the credit spreads on the assets across our portfolio at relatively high levels. And, as we both pointed out, the credit portfolio itself is in very good shape, with the obvious exception of China real estate, which is not interest rate driven. It's obviously price and price and volume and policy driven. So, we would expect that there would be some reasonably interesting opportunities to take advantage of higher yields in asset markets, in particular in areas where we've been relatively underweight. So Andy mentioned the continued build-out of our consumer credit portfolio, where certainly in the personal lending space, we would expect to see more attractive yields on our assets as we grow that book. I would point to other areas in the corporate space where we think we'll be able to take advantage of higher yields. Again, benefiting from the fact that we've got a very clean book going into what feels like a period of slightly more stress in markets ranging from leveraged finance to general corporate credit. I think I'm addressing the question that you asked, but that, on balance, I think we see the higher for longer as a positive thing, but are fully aware of the pressures that come with it. Thank you, Bill. So just to, just to check that I understand, aside from sort of mix change, you know, we should really think about the loan book as a, as a fully floating artifact, and it's, it's kind of done its thing for now. Is that right? Well, if you, if you're talking about interest rates, yes. I mean, the duration we're taking are clearly affected by the hedges and the composition of our treasury portfolio. Got it. Thanks very much. That's helpful. Your next question comes from the line of Joseph Dickerson from Jefferies. Your line is open. Hi, good morning. Thanks for taking my question. Can, can you just explain, in layman's terms, what the system migration is, the four basis points of NIM, just so we can understand why, why it's a run off-- one-off and not really come across that? Staying on the NIM, you had EIR adjustment in Singapore, is that something that you would expect to repeat, or is that just a, a slow grind? And then I guess overlaying all of this, you know, you've alluded to putting hedges on, later in the year. Can you just elaborate on what your hedging policy actually is, just so we can have some, clarity? Many, many thanks. Yeah. Okay, Joseph. So let me, let me pick those up. So the one-off adjustment in NIM, the origin of that was changing out a system. The system made visible a data feed that we had not been previously taking into account in the NIM calculation, which if we had done, we would have made a small adjustment in several prior quarters. We picked that up, and therefore we had a several quarter correction to make in the one quarter, and therefore we have pulled it out as being a one-off. And because its impact actually is not unique to the single quarter, it is correcting for several quarters prior. That is by far the biggest component. On the hedges, we, as I think we've talked about previously, a couple of years ago, we put in place essentially one longer term structural hedge and two shorter term hedges. Of the shorter term hedges, one retired in February, and the other one retires in the February coming, and our intent is at least one of those we will be building up to replace, given that rates now are so much higher, and that will provide more robustness in the event that the rates do peak and reduce. So we'll get the benefit of the drag being reduced, and that will be part of the reason why we're comfortable with the income growth projections we've got for next year, and we'll lock in to the higher rates that are in the market at the moment. Many thanks. Just on the EIR adjustment in Singapore, is that something that you see that wasn't that meaningful? That nevertheless would be helpful to have any clarification there as to if that's something that's gonna, you know, create some modest headwind to the margin going forward in other jurisdictions or also Singapore. Yeah, I mean, the EIR is an adjustment that is made off a sort of actuarial valuation from time to time. It was slightly bigger this time around, and it is a correction that is done that affects prior quarters. So again, because it was otherwise gonna be hitting the one quarter, when it actually represents more than one quarter, that is why we pulled it out. Thank you. Your next question comes from the line of Matthew Clark from Mediobanca. Your line is open. Good morning. A couple of questions on loan growth, please. So, firstly, the decline this quarter seems to be mainly coming from the corporate center. So I was wondering if you could just remind us what are this kind of $30 billion of loans in the corporate center, and whether the decline quarter-on-quarter is real, or whether it's kind of repos, or accounting noise? And then secondly, if you could give us some outlook for loan growth next year or the moving parts, how you see loan growth developing from here, that would be helpful. Thank you. Yeah. So, Slide 15 has got the loans and advances to customers data on it, and you can see from that, the $290 billion at the start of the quarter becoming $281 billion. The majority of the change was in treasury positions, which blinks back to, some of the comments earlier about the LCR management. If you strip those and the optimization and FX out, then the underlying was a growth of $2 billion. So two in one quarter, annualizing at eight for a full year on $281 billion, is about 3% per annum, underlying loan growth on an annualized basis. Now, next year, we'll obviously see where that sort of 3% goes to. I think there are a number of areas where we are feeling good about the prospects of the business. Clearly, wealth management side is growing at a clip. The financial markets, albeit it moves around a bit by, by quarter, has been growing nicely. We have got the Mox and Trust businesses growing at a pace. So we'll see, and we'll guide in February on where we see the asset growth side of things next year. But certainly our sense is that, we should be seeing a bit more demand for credit from clients over the period of the next 15 months or so. Thanks very much. We'll take a short break from phone questions. I'll now like to hand over to Gregg for webcast questions. Thank you. Question from Manus Costello at Autonomous. Why is Ventures generating negative deposit income, and do you expect this to be the case in the future? Over the long term, will this business rely on revenue from unsecured consumer lending? Yeah, so overall, the Mox and the Trust businesses, we've been very happy with the performance of them. It is still really fairly nascent in the development of both businesses, but the growth in customers, the feedback we've got from customers, market shares, et cetera, have been very strong. Where you see negative is in part about promotions that we're doing to generate deposits, and that will play a bigger part in the business in its early days, as it gets up and running and as it attracts the customer base. So it is a conscious decision we are taking, particularly in the CCPL area, to make sure that we are stimulating enough demand, and over a period of time, we'd expect the proportion of promotion to income to change in a favorable way. Yes, there will be a bit more unsecured in there. It all goes through very careful credit vetting, but over a period of time, we would see that negativity reducing and the two of those businesses continuing to grow strongly. Can we go back to the phone lines, please? Of course. Your next question comes from the line of Andrew Coombs, from Citi. Your line is open. Good morning. One, just a point of clarification on the increase in the Early Alerts you mentioned sovereign, but perhaps you could just go into a bit more detail on what's driving that $1 billion increase, Q-on-Q. Secondly, just on NIM trajectory, you've talked about some of the moving parts. Obviously, you've changed your definition to now approaching 170, so it gives quite a wide band, I think, for Q4 and the exit run rate. But given that you've got the 9 basis points hedge roll-off coming in February, and yet you're still guiding to 175 for the full year next year, do you expect the NIM to trend down throughout '2024, underlying X that hedge roll-off? Thank you. Okay, so you can see again on the slides, the total of the credit quality is up about $500 million. Although if you go back to the same period last year, it's up a little bit less than that. What we have got is an increase in the Early Alerts, and we have got a reduction in credit grade 12 and net Stage 3. So the latter actually are good, in the sense that they are, you know, known issues that have reduced. The Early Alerts are more a warning that things, you know, could be a bit more difficult, and particularly within that, there is a sovereign that we have put on early alert, as they move through the various phases of their restructuring. On the NIM, we have said that we expect Q4 to be slightly higher than Q3. We have not put a specific number, so there is some interpretational room for maneuver, I guess, on the word approaching, but limited to one quarter, it is not huge. So I think if you take a sort of reasonable estimate of a slightly higher Q4 than Q3, and you add nine basis points to it from the hedge alone, you know, you'd get to around 175 or thereabout. Phasing of the 175 within quarters by year, I'm sorry, we're not going to give you the phasing of it at this stage by quarter, but we are saying on the average, we think that the NIM for next year should be around that 175 number, which remains our previous view, notwithstanding the slightly lower Q3 NIM itself, so 2024 NIM, as we had previously envisaged. I guess the broader question is that if you look at the Fed curve, that's clearly moved up since you last gave that 1.75 guidance. Presumably, there's offsetting factors elsewhere, such as what's played out in Q3, that have been dragging your NIM guidance back to that 1.75. Yes, I think, I think that's a fair way to look at it. Okay. Thank you. Your next question comes from the line of Rob Noble from Deutsche Bank. Your line is open. Morning, all. Thanks for taking my question. Just a quick one. Your stated EPS has been hit by the Bohai impairment tax rate. Does it affect how you think about capital distributions at the end of the year, or is it purely capital ratio within the target base? Yeah, I mean, the decision on distributions will be very, very driven by the capital print, number one, and number two, the demand within the business for using capital to grow assets. So, I wouldn't say that... Well, the Bohai has had an impact on the capital, but we still printed a very high capital print. That's probably a better way of putting it. So when we come to the end of the year, we obviously start the 13.9 after taking that hit. We've got a bit of an uplift coming through from the aircraft disposal, which will help. On the other hand, fourth quarter profits tend to be a little bit lower. But I'm sure in February, we'll take a view where we see asset growth needing funding, we will reserve capital for it. Where we think we have got excess over and above that, then we can look at whether we do further returns. All right, thank you. Your next question comes from the line of Perlie Mong from KBW. Your line is open. Hello. Can I just come back to the previous question? So I guess, well, I mean, part of the reason why capital was probably better than expected, despite the Bohai writedown, was because RWAs came in lower. And when I look at the slide, it looks like the biggest benefit comes from optimization and efficiency. So just what actions have you taken specifically? And are they things that you're already working towards anyway, or have you taken further actions to ensure that the RWA movement broadly offset the Bohai writedown, as it were? Because those are consensus, the RWA reduction for the year end, so I think that's flat to previous year. It's $7 billion, and if you translate it to sort of free equity, it, I guess, broadly absorbs the charges. So is that how you're thinking about it? That's the first question, and the second one is on Mox again. Just noticing that the impairment is very high this quarter at $30 million versus $4 million last quarter. Just wondering what's happening there, because it's almost as high as the income this quarter. And loan growth, I mean, did grow, but it's only 5%-6% loan growth. So just wondering why it is that the impairment charge is so high this quarter. Yeah. Yeah, okay. So on RWAs, Bohai has clearly had some effect. The biggest effect, as you say, really though, is on the optimization initiatives that we have been undertaking. Those are not new. At the start of 2022, we said that over a three-year period, we expected the CCIB business to take out $22 billion of low-returning RWAs, and they are essentially at that $22 billion number already. So they have delivered that well ahead of time. Now, that is very helpful to the ROTE improvement, because obviously the capital being lower, it helps on that front. It is a big focus upon profitability of customers, and that has helped the overall returns for the bank. So we're not going to give up just because we got to the $22 billion number, but obviously, we have made a lot of progress there, and that has been the major reason why we have had the RWAs behaving so well. On Mox and the impairment, the accounting rules require us to accrue for the sort of 12-month forecast impairment charge at inception of new client relationship, and therefore, you do tend to have this sort of slightly strange effect that one is building up quite a lot of reserving in the very early days ahead of some of the income coming through. But having done that, thereafter, then the income comes through for that customer. So it's a sort of early days phenomenon. It's more visible in the Mox business because it is separated out from the rest of our reporting, but the largest part of that is a sort of formulaic application of accounting policy. So, and I just, just to clarify, but your loan growth is only about 5%, so what—so have you just, you know, got a lot of new customers on board, et cetera, et cetera, but haven't really expanded the loans? Is that what it is? Sorry, you're going back to Mox, are you? Yes. Yeah. Yeah, so as we take a new customer on, on day one, we have to accrue for an expected loss from that customer. Accounting-wise, it's one of the accounting rules, not just for Mox, but we do it more generally. Yeah. Before we move to the next question, a reminder for those of us joining online to please submit your questions via the question box on the webcast, or by pressing star one on your telephone keypad if you are joining us by phone. Your next question comes from the line of Aman Rakkar from Barclays. Your line is open. Morning, good morning, Andy. Two questions. Around your 8%-10% revenue expectations next year, I think you're possibly pointing to expectations of a kind of mid- to high-single-digit NII growth next year, predicated on some NIM expansion and some volume growth, and some double-digit fee income next year. So I guess the first part of it is could you just tell me, you know, roughly, does that sound sensible, or is there anything you'd push back against there? I guess related to that then, when you set out, you know, your cost envelope for 2024, is predicated on some fee income businesses that there must be an element of uncertainty around. I guess, you know, we can't be sure exactly on loan growth. We can't be sure about financial model. We can't be sure about wealth management, in 2024, 'cause so many moving parts and uncertainty. So kind of what's your approach to setting the cost base or, you know, the cost envelope for next year, given that uncertainty? That's kind of, you know, a big question one. The second one was a smaller one, actually. I was just noting Slide 31, the deposit dynamic, particularly within transaction banking. I noted that you actually seem to have seen a step-up in the proportion of deposits that are CASA in Q3. So, you know, is there anything you can call out then? Is that a reflection of some of the optimization efforts that you're doing, or is this the start of a trend, as we've kind of peaked out on, you know, the, you know, U.S. dollar rate cycle and maybe the, you know, the betas on CASA are more attractive than TD? Can you give us any color there on whether that's the kind of start of a trend or not? Yeah. Okay. So quite a wide, wide range of questions there. So let's take those in order. 8%-10% on income for next year. I guess you can put various parts of this jigsaw together. So a 1.75 NIM versus a 1.70 is, whatever that is, 2.5%-3% increase. Take a view on what you think of volume growth on the balance sheet will be, and, you know, you can probably get that to probably, you know, half that range or thereabout. And then fee income obviously being the rest. I mean, I could cut this a different way and say 8%-10%, 9% midpoint, the hedge benefit of nine basis points on NIM, if you turn that into numbers, is about three percentage points of income growth. From things other than hedges, we have to get 6% growth. I think 6% in the context of what we have done recently, the growth we've got in wealth management over a long period of time, in wealth management in FM as well, over quite a long period of time. The fact that we've got China onshore quite low at the moment, and Mox and Trust building up, you know, I think the 8%-10%, sort of for me, feels to be in a sensible range. 2024 on the cost front, as ever, this is a balance between driving efficiency into the business, opening up the jaws, but making sure we are investing into the areas that will be higher income generating in the future, so that post the period of rates rises, we have got as good an engine running on volume growth. Three percentage points of jaws, you know, opening up again next year on top of what we've done this year, on top of what we've done last year, is opening up certainly the profitability of the business very significantly. Slide 31 and the TB CASA, which I think you're referring to there, up slightly, 59%-61%. We have consciously reduced some of our CTDs, and that is a significant component of that. Although I would observe that over the quarters we've got in here, you know, we've been in a 59%-61% range over the whole of that period, so it hasn't moved around, particularly markedly over that period. ... Andy, maybe I could just come in, just to amplify a little bit, in particular on the growth, on the growth front. You know, the question we ask ourselves and our board asks us is, you know, what do we need to believe to think that we can deliver an 8%-10% growth in income next year? Andy took you through some of the mechanics, and some of that is very clear in terms of hedges. But from our perspective, you need to believe that the momentum that's gathering on the wealth side will continue. And obviously, we can construct the scenarios where the market sentiment sours badly on, you know, for any number of reasons. But everything that we're seeing underlying is that underlying growth rate and growth potential is very much there. And of course, we're feeling it right now, and we report, we reported on that basis. Second, you need to believe that we can get back to a little bit of growth in FM. Let's just remind ourselves where we've been in FM over the past few years. We had, you know, solid growth for several years, but by our measure, outperforming our peer group. We had a very strong performance in 2022. We've maintained that level of performance broadly in 2023, but obviously no growth. And again, as Andy said, given that 70% of our income is flow income, the remainder being these episodic things, which have been quite low this year, we think we can continue to grow that core flow income. And while we can't predict the episodic flows, our history has suggested that they fluctuate between 0% and 40% or 50% of income, and we're at closer to 0% right now. So that feels like a good source of growth. We've got underlying momentum in terms of building out our CCPL business. Obviously, slightly higher yielding, addressing some of the mix issues that we've had, as well as the asset growth issues. The digital partnerships that we set up, and are operating in, in addition to the digital banks, notwithstanding the ECL discussion that Andy just responded to, feel like it's a good source of growth. And we haven't talked about sustainable finance, but we're on track to broadly hit our targets this year and then into next year, which is another incremental source of growth. So, yeah, what do you have to believe? We have to believe that a bunch of things that we've delivered on consistently for several years, that we can continue that or pick up where there's been a bit of a lull in 2023. You can ask all the questions and put all the challenges on the table around all the things that could go wrong. We're very well aware of those, which is why we're sitting with a 13.9 CET1 ratio and a 150+ LCR. But that's, on balance, we feel very good about the growth target, and we think that bodes well for us hitting our, our return targets, through 2024 and beyond. Sorry, Andy, back to you. Nothing more from me. Thank you very much, both. Andy, I just wanted to say, if this is your last... I don't know if this is your last conf call, but on the, on the off chance that it is, thanks for your help, and wish you the best of luck going forward. Thank you. That is kind. Your next question comes from the line of Gurpreet Singh from Goldman Sachs. Your line is open. Hi, Bill. Hi, Andy. Good morning. Thank you for taking my question. It's regarding mortgages in Hong Kong and Singapore. As I understand, we are not particularly interested in growing in this area for now, given the ROTEs that they promise on the new book. At what point will that be different? In Hong Kong, we have the spread on new book now for the system at around 140, 150 basis points. Is that interesting enough? And then related to that, how important is it for new client acquisition? We see some good numbers on the wealth that you shared today, regarding new client acquisition in these financial centers, but then these wealthy do need some mortgage advice and balance sheet. So share with us how that plays into. Thank you. Yeah. So the margins on mortgages in Hong Kong at the moment have been very low, and therefore, we have throttled back. We have seen, however, as you can see from some of the slides, good growth in affluent and in wealth. And the point you're making about the linkage between those two, we are obviously cognizant of. So we're keeping monitoring the mortgage situation. We will make sure that the more affluent of the clients we have got are able to get what they need on a fuller product front, but we will not pursue standalone mortgages that are uneconomic on their own. But we will keep that under review. Your next question comes from the line of Guy Stebbings from BNP Paribas. Your line is open. Hi. Morning, afternoon, everyone. Thanks for taking the questions, a couple. Firstly, just on the Bohai change to carrying value, I don't suppose you could elaborate any further on the assumption changes there, which impact the value-in- use and, and sort of by association, how confident you are that these are sufficiently conservative now that you won't have any repeat? And then on the loan book, it sounds like you're making a sort of concerted effort to prioritize growth in high yield lending, such unsecured. Does that have any impact on your expectations for cost of risk in the medium term, or we're not really talking about sufficient moving the dial and, and generally you're very comfortable with credit risk, so it doesn't change expectations. Thank you. Yeah. So the change in our view on the value of Bohai is very largely driven by its most recent published net interest margin numbers, which have been lower than we had previously estimated. And when we run that through the models, one comes out with a lower carrying value, and hence we have written it down to that. You know, hopefully, we have now got it to a point where those NIMs will be delivered. Time will tell on that front, but we believe we have been appropriately conservative on that. On your second question, over a period of time, we will probably do a little bit more on unsecured, particularly Mox, Trust... not huge in terms of overall proportions to our business, therefore, is not going to hugely move the dial on the cost of credit. But obviously, we will factor that in when we do any further guidance on credit costs. But I'd just say, you know, it's at the perimeter in terms of the overall business, not a major issue. Okay, thank you. Your next question comes from the line of Nick Lord from Morgan Stanley. Your line is open. Hi, good afternoon, and, thank you for taking the question. Just really a question on Hong Kong, commercial real estate, and then thank you very much for the, the disclosure. I know you provided for, a couple of months now on the LTVs and everything. But just in terms of the, you note that on the office space, but it's not yet, office rental softness hasn't yet had any material impact on LTVs. I'm just wondering, if we did get to the stage where that began to happen, would we have to start putting aside some provisioning to take into account lower collateral values? And I just wonder if you could give us an indication as to whether or not you've got that in management overlay or, or whether it's something we should be, overly concerned about. Yeah. So overall, Nick, I'd say I don't think there is too much to be concerned about here. Slide 24 has got some more detail, but, essentially, if you look at our CRE and mortgages in Hong Kong, notwithstanding property prices having come down a bit over a period of time, we're still at around 52%-53% loan-to-value, so a lot of headroom sitting in there. The office rental part of the portfolio, by memory, is not particularly big. When we do go through it, we do look at realizable collateral, and we do make sure we are being thoughtful about those. But, I don't think in the overall scheme of things, that you should be concerned by that. Okay, perfect. Thank you. Your final question today comes from the line of Rahul Sinha from J.P. Morgan. Your line is open. Morning, Bill. Morning, Andy. Thanks very much for squeezing me in at the end. A couple of follow-ups, please, if I may. The first one is just coming back to the risk appetite for lending growth going forward. You know, I guess one of the things investors have struggled with in the past is changing loan growth for the sake of it, you know, wherever it's happened in the sector. And so could you perhaps outline for us, you know, whether or not any structural changes in risk appetite are kind of being planned? If we were to be in a situation where loan growth continued to be lower than your expectations, I guess that probably means lower RWAs as well, probably more capital. Should we then think about a scenario where investors can get perhaps higher capital returns, if there isn't any loan growth? Or do you think that your markets offer you enough underlying loan growth potential anyway, that you don't see yourself getting into a situation where CET1 is perhaps above 14%? That's the first one. And the second one is just on credit quality. I guess you've called out very clearly some of the challenging areas within the book. Outside of the book, things are pretty resilient, and you're obviously reiterating the guidance on loan loss provisioning. Moving into next year, are there any other areas that you would flag, that you would be monitoring very closely from a credit quality perspective? I guess that's one of the things that's perhaps weighing on the mind of investors as well. Thank you. Yeah. Okay. Thanks, Rahul. So on the risk appetite, no significant changes in the risk appetite. You know, I think quality of the balance sheet we've got now is a consequence of actually being very, very consistent with our risk appetite over a number of years. It doesn't just happen overnight. Clearly, within that risk appetite, there are areas that we have got more focused upon, and we've shown the reduction in the exposures to some of the sovereign challenged countries that are quite significant. We've shown the exposure overall to China, over a period of time, has come down about 30%—in fact, over two years, has come down about 30%. So, you know, we do move quickly within that to address issues where we have got them. If the growth on the asset side is lower, the RWAs are lower, then obviously it bodes well for returns. On the other hand, I think we'd probably like to get a bit more growth in the business as we go through next year. And as Bill has outlined, and I outlined, there are various reasons why, you know, we think that is realistic. So we'll get a balance there. We'll make sure the returns are holding up. We've announced just under $4 billion of the $5 billion. We've in fact executed nearly $4 billion of the $5 billion, just slightly under that. So we're very mindful of returns. If the growth is not there, then we will return to the extent that we can possibly do. On credit quality, I don't think there's anything, as I sit here today, that particularly concerns me. We did try on the slides just to sort of draw out the fact that if you put the China commercial real estate on one side, which clearly is a lot, you know, $1.2 billion, and some of the sovereigns, we actually haven't been taking particularly large charges on the whole of the rest of the portfolio, which is the vast majority. And in fact, the loan loss rates, if you X those two out, are in single digits, high single digits. So I think at this point in time, we are pretty comfortable with the quality of the overall book. It would be nice to be able to draw a line under the China commercial real estate, but we, we have to just monitor that as we go through. But overall, I'd say quality of balance sheet, we are, we are comfortable with. Okay, Operator, I think we will hand back to you, please. Thank you. That does bring us to the end of our Q&A session for today, and I would like to hand back over to Andy for closing remarks. Okay. Well, thank you all for joining today. Hopefully, that has provided a little bit more color. I think the key takeaways, to my mind, would be that the top line growth, we are absolutely still targeting the 8%-10% next year, and the 12%-14% this year. The ROTCE, 10% this year, 11% next year, and the overall momentum within the business, I think is very, very strong. Let me just hand over Bill and see whether you've got any other comments. Yeah, I'm gonna apologize. My line in from Saudi Arabia dropped briefly there, so I'm not sure exactly what Andy said. But I would note a few things in terms of risk appetite. First is, we're operating well within our risk appetite today. Y ou may say, "Yeah, go out and take some more risks, please." Or you may say, "That's quite prudent." You'll form your own view on that. We think we're about where we want to be. The clearly good news about that going forward is that we have plenty of appetite to step up our risk if, as and when we choose to do so. And that's gonna come in a number of different forms. Now, one, that probably isn't what you had in mind, Rahul, when you, when you asked the question is, you know, reintroducing some risk on the, on the structural hedge side, which obviously we're happier doing it 5% than at the earlier levels. And, but second is to continue to grow some of the risky asset pools in our portfolio, including the CCIB, the markets, as I mentioned, including in, in and around the leveraged finance market. And of course, we've learned a lot about how we can interact with borrowers. And, in particular, when I look at the way that we have been quite dynamic in terms of managing our exposure to sovereigns, just in my time in the bank, we've increased and decreased, and increased and decreased many times. We've commented on some of the very substantial reductions we made in a number of countries that subsequently restructured or could face some pressures going forward. At the appropriate time, we're very happy to move those numbers back up. And that obviously is, those are higher yielding assets that, amongst other things, would contribute to income growth and NIM. But we're perfectly aware of the fact that acquiring higher yielding assets brings some risk with it. I think we managed that quite well so far, and I would hope that we all have the confidence for us to continue to deploy capital into those situations as we see fit. And we've got plenty of capacity to do so. We're only gonna do it if we think its returns are accretive and better than the alternative use of capital, one of which is returning capital to shareholders. Okay, I think we are there. Thank you all very much for joining. Thank you, everybody. Thank you all for joining us. This does conclude today's conference call. Enjoy the rest of your day. You may now disconnect.