The UK-based Standard Chartered Bank (Stanchart) is an international brand with a strong presence in the retail banking sectors of Asia, Africa, and the Middle East. However, it may be noted that Stanchart does not conduct retail banking in some of the markets it operates, including in the Sultanate of Oman and its home country, the United Kingdom. Bill Winters (pictured), CEO, who was recently in the Sultanate of Oman as part of his tour of the Middle East and North Africa region, spoke exclusively to the Observer about its role in Sultanate of Oman where it has been operating for over five decades.
Winters said, “The bank operates in over 60 markets and in one way or another has some presence in 130 countries. We have a long history in Oman, and it is very important for our business as the GCC broadly, which has been growing. We’ve got very strong relationships in Oman, both with the local corporations and the government, but also with our international clients, multinationals who are operating in Oman. It’s important for us, it’s growing, and we have really focused our business in on those things that we think where we can really add some value, including working very closely with the local banks.”
Oman is strategically important
Winters added, “The local banks are amongst our biggest clients and of course, the government continues to be. I think Oman is a strategically important country, both geopolitically, but also in the Gulf, playing a very constructive role through the ups and downs and ins and outs of geopolitics in this region and beyond. We are absolutely committed to the business that we’re doing here.
I just wanted to come and say thanks to the team because we’ve gone through a lot. We’ve made quite a few changes in the past few years and those changes are always hard, but I think it’s left us as a stronger, more focused operation that can really serve the clients that we’ve got in a differentiated way.”
Nature of business in the Sultanate
Winters said, “Clearly, it is financing for the government and related entities, financing for other local corporations, and providing the facilities for connection between the companies in the country and the rest of our network, whether that's through foreign exchange, risk management, or bringing international capital in, serving local subsidiaries of global companies. MNCs always like to have a common treasury framework for their markets around the world, and we have a common framework ourselves. A company that's operating with us in Dubai or Saudi Arabia or India knows what to expect when they come to the Sultanate, and we try very hard to deliver that out.”
Facing Crisis situations
“The one thing with Standard Chartered is at any point in time there's going to be some problems in some places, just given where we operate. And that's certainly been the case every year since I've been in the bank. I've been in the bank for almost eight years now. There's a problem somewhere, but when we look, the two pandemic years were very hard for the world. They were hard for Standard Chartered. But if you look at the progress that we made through that period we had begun before the pandemic, we were strengthening our business. We were investing in all our cross-border propositions and that continued to do better and better during the crisis. But during the Pandemic, it was hard because you had interest rates go to zero, which took a big chunk of our profits out. We took big credit provisions in 2020. As it turns out, we didn't need them. But we didn't know that in 2020 it looked like it was going to be quite bad and so we've been able to take those provisions back. But if you were able to draw a line through it, 2018, 2021, and 22 is a very good year, and 23, I think, will be a good year.”
Winters said, “This is one of our biggest areas of focus, and if I can say so, we're very good at it. I said five years ago we started putting very aggressive policies in place for our own business. So obviously we're reducing our own emissions. We've reduced our emissions by 50 percent already and we'll be net zero by 2025. We also said five years ago that we would finance no new coal-fired power plants or coal mining or the transportation of coal, which we've done.”
China and Hong Kong
On the big markets, China, and Hong Kong, that were in Covid-related lockdowns for a long period, Winters said, “The year 2022 was and even early 2023 was very tough in China with lockdowns. But we still managed to grow 10 percent in our offshore business in China last year, despite the lockdowns and the offshore business by 20 percent. In fact, we had some of our strongest financial performances ever in Hong Kong. But now it's looking much better. China is completely open, and Hong Kong is too. In fact, I'm going to Hong Kong. I've been to Hong Kong several times during the Pandemic, but I'll go to China for the first time since January of 2020. And I think we'll find that the economy is booming, the consumer spending is booming. Lots of travel between China and Hong Kong now, which is very good for our Hong Kong wealth business. China and Hong Kong are the biggest single market, but we're everywhere in ASEAN. The ASEAN markets are doing very well. We're pretty much everywhere in the middle east, which is doing very well. Booming south Asia. India is doing very well.
He said that India is a big market for us but there are some problems. Sri Lanka was a real problem a year ago, still unresolved. Bangladesh is fundamentally strong but has its own challenges.
“In Bangladesh, industries are being affected and they also are really affected by the strong dollar and higher interest rates. But the underlying economy is strong and it's going well. I think Bangladesh will be fine. Africa is where we've had the bulk of the problems, and obviously, we had a restructuring in Zambia, default in Ghana, and lots of stress in Egypt, which has been relieved largely by help from the IMF and from the Gulf.”
Nigeria has just gone through a very tense election. It's not completely settled yet, hoping that this new government comes in, pursues some orthodox monetary policy, and gets Nigeria back on track, because that's just a big economy and a big market for us. I'm encouraged in Pakistan that there's full recognition of the magnitude of the challenge that they face. And of course, the IMF is still engaged, although they haven't reached an agreement yet. There are some problems we could talk about. The real estate market in China is another problem.”
He added, “We have no credit losses last year except for real estate in China. And then because of the sovereignty downgrade where we have an operation, we take some provisions there, but even with both of those were bad. But our cost of credit was about 0.2% 20 basis points, which is very little higher than the year before. But what we told the market is that you should expect 30 to 35 basis points of credit cost from us. Last year was on the 20 with these two big things going wrong. So actually, the book is in very good shape.