Banking giant bullish on China market

Standard Chartered's CEO sees growth potential as nation furthers opening-up

China will remain a pivotal market for Standard Chartered Bank as the company aligns strategic priorities with the country's domestic and international agendas, its senior executives said.

With China reporting a 20 percent income surge in the first half of this year, group CEO Bill Winters expects continued growth thanks to the further opening-up of the capital market, the internationalization of the renminbi and the development of key city clusters inside the country.

"We've already participated in the opening-up of China, and have been facilitating and promoting trade and investment flows between China and other parts of the world," Winters told China Daily. "And that continues to be an enormous priority for us… and the source of our earnings growth."

Winters said China is the earnings engine for much of the world but most notably much of Asia. And the increasing prevalence of Chinese trade, commerce and investment within that broad area overlaps completely with the bank's footprint in Asia, the Middle East, and many countries in sub-Saharan Africa.

"We've all heard that globalization is in reverse, but there's actually no sign of that in terms of China's trade and investment flows," he noted.

"In particular, as China continues to liberalize the capital accounts, the opportunity for a bank like us to make more connections between China and the rest of the world is very key."

Winters said he saw Chinese companies, Asian companies and Western companies all reconfiguring their supply chains, which fostered more interdependence between China and the rest of the region.

"Today, more than 50 percent of the trade is actually intra-Asia. We think that percentage will go up if both sides of the buyers and sellers… are all in Asia," said Ben Hung, Standard Chartered Asia CEO. "With the rise of the middle-income group, more consumption is being done in this part of the world."

Standard Chartered also sees itself in helping global capital flow toward China and yuan-denominated assets, either through direct China Interbank Bond Market or through Bond Connect and Stock Connect.

"The world is underweight in renminbi-denominated assets. We have global central banks with only 2 percent of their reserve currency in renminbi," Hung noted. "This will structurally go up significantly… the SDR basket is around 11 percent (for RMB). We also try to play a role in helping that process of diversification."

Another area of focus is to expand the presence in serving the affluent population, in which Winters sees explosive growth and surging needs.

"Whether through the Greater Bay Area Wealth Connect or through other increasing developments, a higher proportion will be on international products rather than on domestic products. But the business is domestic; we're serving local investors with their local needs to offer a broader range of products," he said.

The development of key city clusters, such as the Guangdong-Hong Kong-Macao Great Bay Area and the Yangtze River Delta region, is also key to Standard Chartered's growth trajectory.

"For instance, right after the COVID-19 outbreak, we announced we would invest $40 million to establish our GBA center, comprising front line, middle office and back offices to pave the way for our long-term development in the region," said Jerry Zhang, Standard Chartered's Cluster CEO of China and Japan.

The bank is positive on the Chinese economy, looking at an 8.8 percent growth target for this year. It also recognized the growth to normalize in the post-COVID recovery phase when some of the stimulus is being phased out.

"This is actually a sign of strength for China, that the country could get back to a normal monetary fiscal status at a time when most of the rest of the world was still highly stimulated," Winters said.