Standard Chartered Regulatory News (STAN)

Standard Chartered PLC

3Q'23 Results

26 October 2023

Registered in England under company No. 966425

Registered Office: 1 Basinghall Avenue, London, EC2V 5DD, UK

Table of contents

Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar.

The information within this report is unaudited.

Unless context requires within the document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea. Asia includes Australia, Bangladesh, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Thailand, Vietnam, Mainland China, Hong Kong, Japan, Korea, Macau, Taiwan; Africa and Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Côte d'Ivoire, Egypt, The Gambia, Iraq, Kenya, Lebanon, Mauritius, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, UAE, Uganda, Zambia, Zimbabwe; and Europe and Americas (EA) include Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Ireland, Jersey, Poland, Sweden, Turkey, the UK, and the US.

Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful.

Standard Chartered PLC is incorporated in England and Wales with limited liability, and is headquartered in London. The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC. Stock codes are: LSE STAN.LN and HKSE 02888.

All figures are presented on an underlying basis and comparisons are made to 2022 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on pages 29-34.

Bill Winters, Group Chief Executive, said:

"We have continued to make strong progress in the third quarter against the five strategic actions outlined last year, delivering a solid set of results. Wealth Management has continued its recovery with double digit income growth and the Financial Markets performance has been resilient against a strong comparator period. We remain highly liquid, and well capitalised, with a CET1 ratio towards the top of our target range and confident in the delivery of our 2023 financial targets, including a return on tangible equity of 10%."

Selected information on 3Q'23 financial performance with comparisons to 3Q'22 unless otherwise stated

? Return on tangible equity ("RoTE") of 7.0%, down 2%pts year-on-year ("YoY"), primarily due to a higher tax charge in 3Q'23

? Income up 6% to $4.4bn, up 7% YoY at constant currency ("ccy")

- Net interest income ("NII") up 20% at ccy to $2.4bn; Other income down 5% at ccy to $2.0bn

- Normalised net interest margin ("NIM") 1.67%, a transient reduction of 4bps since 2Q'23; reported NIM 1.63%, including 4bps from one-offs

- Financial Markets ("FM") down 8% at ccy, down 6% excluding $28m gain on mark-to-market ("MTM") liabilities in 3Q'22

- Wealth Management ("WM") up 18% at ccy, supported by continued strong Affluent client onboarding

? Expenses increased 8% YoY at ccy to $2.8bn; down $56m or 2% quarter-on-quarter ("QoQ")

- Increase due to inflation, business growth and targeted investments, partially funded by productivity saves

? Credit impairment charge of $294m, up $62m YoY, up $148m QoQ; includes China Commercial Real Estate (CRE) charge of $186m, of which $42m related to the management overlay, now $178m

? Underlying profit before tax of $1.3bn, down 2%

? Reduction in China Bohai Bank ("Bohai") value-in-use calculation led to an impairment charge of $0.7bn reflecting subdued 2Q'23 Bohai earnings and challenging macroeconomic outlook; 18bps impact on the CET1 ratio

? Tax charge of $494m: underlying effective tax rate of 38%, up 14%pts reflecting profit mix and increased losses in the United Kingdom where we cannot recognise a tax benefit

? The Group's balance sheet remains strong, liquid and well diversified

- Customer loans and advances of $281bn, down $9bn or 3% since 30.06.23; up $2bn or 1% on an underlying basis

- Customer deposits of $453bn, down $17bn or 3% since 30.06.23; down $14bn or 3% at ccy; managing liquidity coverage ratio (LCR) and business as usual outflows in Transaction Banking Cash

- LCR 156% (30.06.23: 164%); Advances-to-deposit ratio 54.5% (30.06.23: 53.6%)

? RWA of $242bn, down $8bn or 3% since 30.06.23

- Credit risk RWA down $9bn, primarily from optimisation and efficiency actions, and China Bohai Bank impairment

- Market risk RWA up $1bn and Operational RWA stable

? The Group remains strongly capitalised

- CET1 ratio 13.9% (30.06.23: 14.0%), towards the top end of 13-14% target range

- ~$1.8bn of the $2bn buy-backs announced in 2023 completed

Selected information on YTD'23 financial performance with comparisons to YTD'22 unless otherwise stated

? RoTE of 10.4%, up 1%pt YoY

? Income up 11% to $13.4bn, up 15% YoY at ccy

- NII up 30% at ccy to $7.2bn; Other income up 1% to $6.2bn

- NIM up 30bps YoY to 1.66% YTD'23

- FM flat at ccy, up 7% excluding non-repeat of $244m gain on MTM liabilities in YTD22; WM up 9% at ccy

Page 1

Standard Chartered PLC - results for the third quarter ended 30 September 2023

? Expenses up 8%, 11% at ccy; increase due to inflation, business growth and targeted investments partially funded by gross productivity saves

- Positive 4% income-to-cost jaws YTD, with cost-to-income ratio improving 2% pts to 62%

? Credit impairment charge of $466m, down $30m YoY

- Annualised loan-loss loss rate of 20bps, down 2bps YoY

- China CRE portfolio Expected Credit Loss provisions $1.1bn on Stage 3 exposures of $1.4bn; cover ratio including collateral 88%

? Underlying profit before tax of $4.6bn, up 19% at ccy

? Underlying earnings per share (EPS) increased from 89.6 cents or 10% to 98.4 cents; Reported EPS down 21% to 74.9 cents

Update on strategic actions for YTD'23 unless otherwise stated

? Drive improved returns in CCIB: Income RoRWA of 7.9%, ahead of 2024 target of 6.5%; ~ $22bn RWA optimised since 1.1.22, nearly achieved $22bn target over a year ahead of plan

? Transform profitability in CPBB: Cost-to-income ratio of 58%, improved by 11%pts YoY, ahead of 2024 target of 60%; $0.3bn of gross expense savings since 1.1.22

? Seize China opportunity: China onshore and offshore profit before tax up ~3x YoY to $1.0bn

? Create operational leverage: $0.7bn gross productivity saves since 1.1.22; Cost-to-income ratio improved by 2%pts YoY to 62%

? Deliver substantial shareholder returns: $3.9bn of total returns announced since 1.1.22

Other highlights

? Aviation exit: announced the sale of our global aviation business in August, with the transaction expected to be completed by the end of the year and increase CET1 ratio by 19bps in the fourth quarter

Outlook

We remain confident in the delivery of our RoTE targets, supported by continued strong progress on our five strategic actions.

For 2023 our guidance is as follows:

? Income to increase in the 12-14% range at ccy

? Full year average NIM to approach 170bps

? Underlying asset growth in the low single digit percentage range in 2H'23 (from 30.6.23)

? RWA to be similar to 31.12.22

? Positive income-to-cost jaws of around 4%, excluding the UK bank levy at ccy

? Full year loan loss rate to be in the range of 17-25 bps

? Underlying effective tax rate expected to be around 30%

? Operate dynamically within the full 13-14% CET1 target range

? RoTE of 10%

All 2024 guidance remains unchanged. We continue to expect income growth to be in the 8-10% range at ccy and we remain confident of achieving greater than 11% RoTE.

Page 2

Statement of results

1 Variance is better/(worse) other than assets, liabilities and risk-weighted assets. Change is percentage points difference between two points rather than percentage change for total capital ratio (%), common equity tier 1 ratio (%), net interest margin (%), advances-to-deposits ratio (%), liquidity coverage ratio (%), leverage ratio (%), cost-to-income ratio (%) and return on ordinary shareholders' tangible equity (%). Change is cents difference between two points rather than percentage change for earnings per share, net asset value per share and tangible net asset value per share

2 Underlying performance for relevant periods in 2022 has been restated for removal of (i) AME exits (ii) Aviation Finance and (iii) DVA. No change to reported performance

3 Profit attributable to ordinary shareholders is after the deduction of dividends payable to the holders of non-cumulative redeemable preference shares and Additional Tier 1 securities classified as equity

4 When calculating this ratio, total loans and advances to customers excludes reverse repurchase agreements and other similar secured lending, excludes approved balances held with central banks, confirmed as repayable at the point of stress and includes loans and advances to customers held at fair value through profit and loss. Total customer accounts include customer accounts held at fair value through profit or loss

5 Represents the underlying or reported earnings divided by the basic weighted average number of shares. Prior period refers to 9 months ended 30.09.22

6 Calculated on period end net asset value, tangible net asset value and number of shares

7 Net interest margin is calculated as adjusted net interest income divided by average interest-earning assets, annualised

8 Not meaningful

9 Reported performance/results within this interim financial report means amounts reported under UK-adopted IAS and EU IFRS. In prior periods Reported performance/results were described as Statutory performance/results

Page 3

Group Chief Financial Officer's review

The Group delivered a solid performance in the third quarter of 2023

Summary of financial performance

1. Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2. Change is the basis points (bps) difference between the two periods rather than the percentage change

3. Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to reported performance

4. To be consistent with how we the compute Net Interest Margin (NIM), and to align with the way we manage our business, we have changed our definition of Underlying Net Interest Income (NII) and Underlying Other Income (OI). The adjustments made to NIM, including interest expense relating to funding our trading book, will now be shown against Underlying Other Income rather than Underlying NII. Prior periods have been restated. There is no impact on total income

5. Goodwill and other impairment include $697 million impairment charge relating to the Group's investment in its associate China Bohai Bank (Bohai)

6. Not meaningful

Page 4

Group Chief Financial Officer's review continued

Reported financial performance summary

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Change is the basis points (bps) difference between the two periods rather than the percentage change

3 Not meaningful

The Group delivered a solid performance in the third quarter of 2023, supported by strong progress on the five strategic actions. The Group's underlying profit before tax of $1.3 billion was 2 per cent lower than in the prior year. Income grew 7 per cent on a constant currency basis with a 20 per cent increase in net interest income partly offset by a 5 per cent reduction in other income. Expenses increased 8 per cent at constant currency but were down 1 per cent compared to the previous quarter. The credit impairment charges in the quarter of $294 million included further charges relating to the China commercial real estate sector. The Group reduced the carrying value of its investment in China Bohai Bank by $697 million resulting in reported profit before tax declining by half to $633 million, with an 18 basis points impact to the CET1 ratio. The Group remains well capitalised and highly liquid with a CET1 ratio of 13.9 per cent, an advances-to-deposits ratio of 55 per cent, and a liquidity coverage ratio of 156 per cent.

All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2022 on a reported currency basis, unless otherwise stated.

? Operating income of $4.4 billion was up 6 per cent in the third quarter and increased 7 per cent on a constant currency basis, as the Group benefitted from a year-on-year increase in the net interest margin and a strong recovery in Wealth Management income

? Underlying net interest income increased 18 per cent, or 20 per cent on a constant currency basis as the net interest margin increased 14 per cent or 20 basis points. This was despite a year-on-year incremental 12 basis points drag from hedges. Over the past year, the Group increased its pricing on assets and the yield on its Treasury portfolio more quickly than it repriced its liability base, reflecting strong pricing discipline and passthrough rate management albeit the rate paid increased more quickly than the gross yield on assets during the quarter

? Underlying other income decreased 5 per cent as Financial Markets income was lower on the back of reduced market volatility and the non-repeat of $28 million of gains on mark-to-market liabilities in the third quarter of 2022. This was partly offset by strong growth in Wealth Management income, which continues to benefit from strong Affluent client onboarding and positive net new money

? Operating expenses increased 8 per cent reflecting the impact of the Group's continuing investment into business growth initiatives and strategic investments, and higher inflation partly offset by cost efficiency actions. The Group generated 1 per cent negative income-to-cost jaws while the cost-to-income ratio increased 1 percentage point to 63 per cent

? Credit impairment was a $294 million charge in the quarter, a $62 million increase on the third quarter of 2022, and double the amount booked in the prior quarter. Impairment charges in the quarter include $186 million in relation to the China commercial real estate sector and $115m in relation to the Consumer, Private and Business Banking portfolio. The year-to-date loan loss rate annualises to 20 basis points

Page 5

Group Chief Financial Officer's review continued

? Profit from associates and joint ventures decreased $13 million to $3 million due to lower profits at China Bohai Bank (Bohai)

? Restructuring and other items totalled $683 million in the quarter. The largest item was an impairment charge of $697 million reflecting a reduction in the carrying value of the Group's investment in Bohai following a refresh of the value-in-use calculation. Restructuring charges of $7 million primarily reflect redundancy and property optimisation charges partly offset by the profit from Aviation Finance and Principal Finance while movements in Debit Valuation Adjustment (DVA) were a positive $21 million

? Taxation was $494 million on a reported basis, with an underlying year-to-date effective tax rate of 31 per cent compared to the prior year rate of 25 per cent reflecting a change in the geographic mix of profits and increased losses in the United Kingdom where we cannot recognise a tax benefit

? Underlying return on tangible equity (RoTE) decreased by 240 basis points to 7.0 per cent primarily due to a higher effective tax rate partly offset by lower tangible equity benefitting from distributions to shareholders. On a reported basis, return on tangible equity was a negative 40 basis points

Operating income by product

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Underlying income for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to reported performance

3 Shipping Finance is now reported under "Financing Solutions & Issuance" which was reported under "Financing & Securities Services" in Q1'23

4 Not meaningful

The operating income by product commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2022 on a constant currency basis, unless otherwise stated.

Transaction Banking income increased 42 per cent. Cash Management income was 61 per cent higher reflecting strong pricing discipline and passthrough rate management to take advantage of a rising interest rate environment. Trade & Working Capital decreased 2 per cent reflecting lower balance sheet and contingent volumes partly offset by higher margins as the Group focused on higher-returning trade products.

Financial Markets income was 8 per cent lower compared to a very strong third quarter performance last year and was down 6 per cent excluding the non-repeat of prior year fair value gains on mark-to-market liabilities. There was 3 per cent growth in flow income which was more than offset by a 28 per cent reduction in episodic income, driven by subdued market volatility and the non-repeat of the gains on mark-to-market liabilities. Macro Trading was down 11 per cent with double-digit declines in FX and Commodities.

Page 6

Group Chief Financial Officer's review continued

Credit Markets income was up 4 per cent with lower Credit Trading income offset by higher Financing Solutions & Issuance, with the closure of a number of financing deals and strong origination volumes in primary markets leading to market share gains. Excluding the non-repeat of $28 million of gains on mark-to-market liabilities, Financing & Security Services income was down 14 per cent as higher Securities Services income benefiting from rising interest rates was more than offset by adverse movements in XVA.

Lending and Portfolio Management income decreased 26 per cent with an increase in losses in relation to portfolio management activities, and a decline in lending income from lower volumes, and increased cost of funding on undrawn commitments.

Wealth Management income grew 18 per cent with strong double-digit growth across Bancassurance, up 30 per cent and Treasury Products up 14 per cent. partly offset by lower income from managed investments. There was continued strong growth in net new money , which offset adverse market movements as Wealth Management AUM remained broadly stable.

Retail Products income increased 17 per cent. Deposit income was up 50 per cent due to low passthrough rates in a rising interest rate environment partly offset by migration from CASA into time deposits. Mortgages & Auto income decreased 78 per cent on the back of lower volumes and the impact of the Best Lending Rate cap in Hong Kong restricting the ability to reprice mortgages, despite an increase in funding costs from higher interest rates. Credit Cards & Personal Loans income increased 2 per cent reflecting growth in balances in both Credit Cards and Personal Loans.

Treasury income was a $274 million loss in the quarter primarily due to the $267 million loss from structural and short-term hedges in a rising interest environment and costs for holding additional liquidity centrally rather than it being recharged out to the products. This was in part offset by gains from RoTE-accretive cross-currency FX swaps which were funded by deposits.

Profit before tax by client segment and geographic region

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to reported performance

3 Not meaningful

The client segment and geographic region commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2022 on a constant currency basis, unless otherwise stated.

Corporate, Commercial & Institutional Banking (CCIB) profit increased 5 per cent. Income grew 11 per cent with Cash Management benefitting from disciplined pricing initiatives in a rising interest rate environment partly offset by lower episodic income within Financial Markets and lower Lending income. Expenses were 10 per cent higher and credit impairment increased $72 million reflecting further provisions in the China commercial real estate sector.

Consumer, Private & Business Banking (CPBB) profit increased 38 per cent, with income up 17 per cent as the benefit from higher interest rates on Retail Deposit income and a continued recovery in Wealth Management. This was partly offset by lower Mortgage income negatively impacted by the Best Lending Rate cap in Hong Kong. Expenses increased 6 per cent while credit impairment was $29 million higher.

Page 7

Group Chief Financial Officer's review continued

Ventures loss increased by over a third to $117 million, reflecting the Group's continued investment in transformational digital initiatives. Income more than tripled to $35 million but this increase was offset by increased expenses, albeit expenses were flat quarter-on-quarter. The impairment charge increased $26 million to $30 million reflecting increased delinquencies in Mox and the build of expected credit loss provisions as credit portfolios grow.

Central & other items (segment) recorded a loss of $491 million, an increase of $232 million, with hedge losses increasing by $170 million to $267 million driven by increased US Dollar interest rates. Expenses increased by $20 million while there was a net release in credit impairment relating to exposure reductions. Associate income reduced by $13 million reflecting lower profits at Bohai.

Asia profits were stable as income grew 10 per cent offset by a 9 per cent growth in expenses and a $118 million increase in credit impairments. The income growth reflects strong double-digit increases across Cash Management, Retail Deposits and Wealth Management partly offset by lower Mortgage income and a loss in Treasury Markets. The increase in credit impairment reflects further provisions relating to the China commercial real estate portfolio. The profit share from Bohai reduced by $11 million.

Africa & Middle East (AME) profits increased 83 per cent as income increased 19 per cent with strong growth in Cash Management and Retail Deposit income partly offset by a loss in Treasury Markets following de-risking actions in certain markets. This was partly offset by expenses increasing 9 per cent while credit impairment charges reduced by $71 million, reflecting a non-repeat of the prior year's sovereign-related impairments.

Europe & Americas recorded a loss of $90 million as income reduced by 44 per cent, reflecting the increased cost of hedges within Treasury whilst strong growth in Transaction Banking income was partly offset by lower Financial Markets income. Expenses increased 18 per cent reflecting the impact of inflation and higher investment spend. There was a $16 million reduction in the credit impairment release booked in the quarter.

Central & other items (region) recorded a profit of $70 million compared to a $101 million loss in the third quarter of 2022. The return to profitability is mainly due to higher returns paid to Treasury on the equity provided to the regions in a rising interest rate environment while expenses reduced by 22 per cent.

Adjusted net interest income and margin

1 Variance is better/(worse) other than assets and liabilities which is increase/(decrease)

2 Adjusted net interest income is reported net interest income less funding costs for the trading book and financial guarantee fees on interest-earning assets

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Adjusted net interest income divided by average interest-earning assets, annualised

5 Not meaningful

Adjusted net interest income increased 18 per cent due to a 14 per cent increase in the net interest margin which averaged 163 basis points in the quarter, increasing 20 basis points year-on-year but decreasing 8 basis points compared to the prior quarter. Normalised net interest margin, excluding the impacts of one-offs from a system migration and effective interest rate adjustment in relation to the Singapore mortgage portfolio, averaged 167 basis points in the quarter:

? Average interest-earning assets increased 2 per cent in the quarter with growth primarily from an increase in the cash and balances at central banks and loans and advances to customers. Gross yields increased 45 basis points compared with the prior quarter with an underlying 31 basis points increase in the quarter, adjusting for one-offs, due to the impact of rising interest rates on customer loan pricing and on Treasury portfolio yields partly offset by a 2 basis points quarter-on-quarter additional loss from hedges

? Average interest-bearing liabilities increased 2 per cent in the quarter due to an increase in customer accounts and debt securities in issue. The rate paid on liabilities increased 55 basis points compared with the average in the prior quarter with an underlying 38 basis points increase in the quarter, adjusting for one-offs, due to the impact of interest rate movements and a slight deterioration in the liability mix

Page 8

Group Chief Financial Officer's review continued

Credit risk summary

Income Statement

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2 Underlying credit impairment for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME and (ii) Aviation Finance. No change to reported credit impairment

Balance sheet

1. Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2. Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $10,267 million at 30 September 2023, $10,950 million at 30 June 2023, $24,498 million at 31 December 2022 and $18,032 million at 30 September 2022

3. Change is the percentage points difference between the two points rather than the percentage change

Asset quality remained resilient in the third quarter, with an improvement in a number of underlying credit metrics albeit credit impairment charges increased in the quarter. The Group continues to actively manage the credit portfolio whilst remaining alert to a volatile and challenging external environment including increased geopolitical tensions which has led to idiosyncratic stress in a select number of markets and industry sectors.

Credit impairment was a $294 million charge in the third quarter, a $62 million increase year-on-year and represents an annualised year-to-date loan loss rate of 20 basis points. There was a further $186 million impairment charge relating to the China commercial real estate sector, including a $42 million increase in the management overlay which now totals $178 million. The Group has provided $1.1 billion in total in relation to the China commercial real estate sector primarily over the last two years. There was a net release of $7 million relating to sovereign downgrades while there was a $115 million charge in relation to the CPBB portfolio and $30 million charge in Ventures primarily from portfolio growth and increased delinquencies in Mox.

Gross stage 3 loans and advances to customers of $7.5 billion were 2 per cent lower as repayments, client upgrades, reduction in exposures and write-offs more than offset new inflows. Credit-impaired loans represent 2.6 per cent of gross loans and advances, broadly flat on the prior quarter.

Page 9

Group Chief Financial Officer's review continued

The stage 3 cover ratio of 62 per cent increased by 3 percentage points compared to 30 June 2023, while the cover ratio post collateral at 79 per cent increased by 1 percentage point due to an increase in stage 3 provisions in relation to the China commercial real estate sector and a reduction in gross stage 3 balances.

Credit grade 12 balances decreased $184 million to $1.1 billion in the quarter. Early Alert accounts of $5.4 billion have increased by $960 million since 30 June 2023, reflecting new inflows relating to a select number of clients including sovereign-related exposures. The Group is continuing to carefully monitor its exposures in vulnerable sectors and select markets, given the unusual stresses caused by the currently difficult macro-economic environment.

The proportion of investment grade corporate exposures remained stable in the quarter at 74 per cent.

Restructuring, goodwill impairment and other items

1 Restructuring, DVA and other items for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA from underlying operating performance

2 Goodwill and other impairment include $697 million impairment charge relating to the Group's investment in its associate China Bohai Bank (Bohai)

The Group's reported performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are significant or material in the context of the Group's normal business earnings for the period and items which management and investors would ordinarily identify separately when assessing underlying performance period-by period.

The Group has signed sale agreements to exit seven markets in the AME region and will focus solely on the CCIB segment in two more markets . Additionally, following the Group's announcement on 11 January 2023 that it intends to explore alternatives for the ownership of the Aviation Finance business, the Group signed agreements on 28 August 2023 for the sale of its global aviation finance leasing business to Aircraft Leasing Company ("AviLease") for consideration of US$0.7 billion (the "Consideration"), giving rise to an estimated gain on disposal of US$0.3 billion and an increase in Common Equity Tier 1 capital ratio by around 19 basis points. The Consideration is subject to adjustment with reference to the net asset value of the business sold on completion. The $1 billion Aviation Loan businesses will be sold separately, and it is anticipated this will also be completed before the end of 2023. As a result of these announcements, effective 1st January 2023, the Group has not included the exit markets and the Aviation Finance business within the Group's underlying operating profit before taxation but will report them within restructuring.

The Group has also classified movements in the debit valuation adjustment (DVA) out of its underlying operating profit before taxation and into other items.

To aid comparisons with prior periods the Group has removed the exit markets, Aviation Finance business and DVA from its underlying operating profit before taxation for 2022.

Restructuring loss before tax $7 million reflects the impact of actions to transform the organisation to improve productivity, primarily additional redundancy charges and optimising the Group's property footprint partly offset by the profit from the Aviation Finance business and gains on the remaining Principal Finance portfolio.

Other impairment of $697 million is in relation to a further reduction in the carrying value of the Group's investment in its associate Bohai, to align to a lower value-in-use computation reflecting lower forecasted interest rates and a lower net interest margin reported by Bohai in its half-year financial reporting. The carrying value of the Group's investment in Bohai has reduced to $0.8 billion from $1.5 billion.

Movements in DVA were a positive $21 million driven by the widening of Group's asset swap spreads on derivative liability exposures. The size of the portfolio subject to DVA did not change materially during the quarter.

Page 10

Group Chief Financial Officer's review continued

Balance sheet and liquidity

1 Variance is increase/(decrease)comparing current reporting period to prior reporting periods

2 The Group now excludes $21,241 million held with central banks (30.06.23: $24,749 million, 31.12.22: $20,798 million, 30.09.22: $21,683 million) that has been confirmed as repayable at the point of stress. Advances exclude repurchase agreement and other similar secured lending of $10,267 million (30.06.23: $10,950 million) and include loans and advances to customers held at fair value through profit or loss of $5,935 million (30.06.23: $5,368 million). Deposits include customer accounts held at fair value through profit or loss of $15,930 million (30.06.23: $15,026 million)

The Group's balance sheet remains strong, liquid and well diversified:

Loans and advances to customers decreased by $9 billion or 3 per cent from 30 June 2023 to $281 billion. This reflects the impact of a $7 billion reduction from Treasury and securities backed loans, primarily reverse repurchase agreements, held to collect, a $2 billion reduction from risk-weighted asset optimisation actions primarily in CCIB and $2 billion reduction from currency translation . Excluding these adjustments, loans and advances grew $2 billion or 1 per cent, in the quarter.

Customer accounts of $453 billion decreased by $17 billion or 3 per cent since 30 June 2023. Excluding a $3 billion reduction from currency translation, customer accounts reduced by $14 billion, or 3 per cent, with lower balances in Cash Management and Financial Markets partly offset by an increase in Retail Time Deposits. The reduction in customer accounts reflect actions undertaken by the Group to manage its liquidity coverage ratio.

Other assets decreased 1 per cent in the third quarter with an increase in cash and balances held at central banks and derivative balances more than offset by a reduction in investment securities and unsettled trade balances. Other liabilities increased 1 per cent with an increase in debt securities in issue partly offset by a reduction in derivative liabilities and unsettled trade liabilities.

The advances-to-deposits ratio increased to 54.5 per cent from 53.6 per cent at 30 June 2023. The point-in-time liquidity coverage ratio decreased 8 percentage points in the quarter to 156 per cent and remains well above the minimum regulatory requirement.

Risk-weighted assets

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

Page 11

Group Chief Financial Officer's review continued

Total risk-weighted assets (RWAs) decreased $7.6 billion or 3 per cent since 30 June 2023 to $241.5 billion :

? Credit Risk RWA reduced by $8.9 billion in the third quarter to $188.3 billion. There was a $3.7 billion reduction from optimisation actions, primarily in the CCIB low-returning portfolio, a $1.9 billion reduction from currency translation, a $1.7 billion benefit from model and methodology changes. The impairment of Bohai further reduced RWAs by $1.7 billion. This was partly offset by a $0.6 billion increase from asset growth & mix

? Operational Risk RWA was flat in the quarter

? Market Risk RWA increased $1.2 billion to $25.4 billion due to increases in Internal Models Approach traded risk positions and market volatility

Capital base and ratios

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2 Change is percentage points difference between two points rather than percentage change

The Group's CET1 ratio of 13.9 per cent was 11 basis points lower than as at 30 June 2023. A reduction in CET1 from shareholder distributions and Bohai impairment was offset by underlying profit accretion and a decrease in RWAs. The CET1 ratio remains 3.4 percentage points above the Group's latest regulatory minimum of 10.5 per cent and at the top of the 13-14 per cent target range.

The Group is part way through the $1 billion share buyback programme which it announced on 31 July 2023, and by 30 September 2023 had spent $469 million purchasing 51 million ordinary shares. Even though the share buyback was still ongoing at 30 September 2023, the entire $1 billion is deducted from CET1 in the period, reducing the CET1 ratio by 40 basis points. Including the buyback that was announced on 17 February 2023 and completed on 29 September 2023 , the Group has purchased 168 million shares during the year to 30 September, reducing the share count by approximately 6 per cent.

The Group is accruing a foreseeable dividend in respect of the final 2023 ordinary share dividend in the third quarter. This is not an indication of the Group's final 2023 ordinary share dividend, which will be proposed by the Board at the presentation of the 2023 full year results. The increase in the foreseeable dividend for ordinary dividend and AT1 coupons reduced the CET1 ratio by 17 basis points

The $697 million impairment of Bohai also resulted in an RWA reduction of $1.7 billion, the net effect of which resulted in a reduction of the CET1 ratio by 18 basis points

The above CET1 ratio headwinds were partly offset by 36 basis points uplift from underlying profit accretion in the quarter and 22 basis points from an underlying $3.9 billion reduction in RWA.

The Group is expecting a further 19 basis points uplift in the CET1 ratio upon completion of the sale of its Aviation Finance business, which is anticipated to occur before the end of 2023.

The Group's leverage ratio of 4.7 per cent is 4 basis points lower than at 30 June 2023. This is primarily driven by reduced CET1 capital partly offset by a $21 billion reduction in leverage exposures. The Group's leverage ratio remains significantly above its minimum requirement of 3.7 per cent.

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Group Chief Financial Officer's review continued

Outlook

We remain confident in the delivery of our RoTE targets, supported by continued strong progress on our five strategic actions.

For 2023 our guidance is as follows:

? Income to increase in the 12 to 14 per cent range at constant currency

? Full year average net interest margin to approach 170 basis points

? Underlying asset growth in the low single digit percentage range in 2H'23 (from 30.6.23)

? RWA to be similar to 31.12.22

? Positive income-to-cost jaws of around 4%, excluding UK bank levy at constant currency

? Full year loan loss rate to be in the range of 17-25 basis points

? Underlying effective tax rate expected to be around 30 per cent

? Operate dynamically within the full 13-14 per cent CET1 target range

? RoTE of 10 per cent

All 2024 guidance remains unchanged. We continue to expect 2024 income growth to be in the 8 to 10 per cent range at constant currency, and we remain confident of achieving greater than 11 per cent RoTE.

Andy Halford

Group Chief Financial Officer

26 October 2023

Page 13

Supplementary financial information

Underlying performance by client segment

1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

2 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to reported performance

3 Goodwill and other impairment include $697 million impairment charge relating to the Group's investment in its associate China Bohai Bank (Bohai)

4 Not meaningful

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Supplementary financial information continued

Corporate, Commercial & Institutional Banking