[CC may contain inaccuracies] So a buyback finally and you gave us some guidance on that earlier in the year but no dividend. What's the thinking and
what does it take to get a dividend from you. We were clear earlier this year that we were only intending to
pay one interim dividend at the middle of the year which we've done. We paid seven cents. We will do intend to pay a dividend
for the fund full year results. In between time we looked at our capital base. A 1 ratio is fifteen point nine percent. We want
to get back to being in our target range of 14 to 14 and a half the next year or so.
And so today's two billion dollar buyback is an important step I think and it shows confidence that we have the underlying
performance of the business and an outlook and shows a commitment to try and normalize our capital base.
No. The top line beat of six billion dollars in part driven by the
credit loss releases. Is this the top of credit loss releases. Well we've. We've released about 70 per cent now off the reserve
filled out that we had in credit losses last year that we built up in the context of the onset of Covid. We've we still retain
about one point two billion dollars of reserve build up. I think it will be much slower now what we'll see coming out in the next
two to three quarters. You've also released night information. You've got nineteen
point six billion dollar exposure to property. Noel already made it clear that you're not too worried about direct links to real
estate. What I want to know is what level of this nineteen point six billion dollars is red or orange or danger if things get
worse in the property market. When none of that nineteen point six billion dollars is direct
lending exposure to any Chinese property developer who is in the red category so we're reasonably confident and comfortable with
the credit exposure we've got to the Chinese real estate market at the moment. We've obviously just been through an exercise as
a result of these results of looking at credit provisions in China. We are comfortable. We've managed to write back a
significant amount of PCL reserves this quarter and I think you should read into the buyback. The fact that we are confident
about where we're sitting at the moment and our risk positions. Give me your perspective. No talked about the second and third
round impact on capital markets and bond markets. You and given the ongoing Evergreen saga do you think we're only beginning to
see the impact on markets or are we nearer the end. I think the evergreen situation has been well telegraphed to the
market for months now so people have been able to adjust takes years. So I'm not saying never but you know our view is that
we're not going to see any material fall and as a result of this.
Do you think the Hong Kong. I mean Hong Kong is a critical market for you. Is the Hong Kong property market insulated. Do
you get a sense from from what's happening with overground Hong Kong. As you say it's a third of the group's profits. Its
most important market. Yeah I think that Hong Kong real estate market has proved to be
resilient through many many cycles. There is effectively a shortage of good quality property in Hong Kong and no exposure
to the Hong Kong property market is significant. But our coverage ratios are high and we don't see any particular
spillover impact of movement into Hong Kong. A few friends that left Hong Kong a few years ago be happy to
hear that guidance from me in terms of the scarcity value. We've had lots of names talk about risk aversion to China. I
don't need to give you a laundry list. Do you think global investors risk appetite for Chinese assets is weakened
materially weakened. Well we can see it through the lens of our own business
revenues and China were up 20 per cent year on year. Our profits were up 30 per cent. We're continuing to invest heavily. We
started up in years. Life insurance venture the sheer pinnacle already up to close to 500 advisors into that business. So for
us we continue to be very bullish about the long term growth opportunity in China.
What about the investment bank you in. What was the performance like there. We got barnstorming numbers from the Americas and
Goldman and Morgan Stanley. How did your investment bank do. It did. Okay. I think it's important to note that we've got a
different business makes a number of the US fears were a lot smaller in the US where smaller and equities were smaller and an
advisory overall revenues for global banking and markets were down 3 percent. Within that we had two good performances and
some of the product lines like equities security services and capital markets and advisory. And we managed to do that even
though we've ran risk weighted assets down 7 per cent over the year. So
it wasn't a barnstorming performance as you saw out of some of the US investment banks. But I think on a like for like basis
we're comfortable that it was a good performance this quarter. Jane Fraser he says I want to crush the competition. Are you
losing market share in America. She wants to crush the competition. And I'm Brian Moynihan says there's a war out there
and he's winning it. Well we want to compete in the US for the companies that we
think are consistent with our business model. You know those companies that want to trade internationally with the biggest
trade bank in the world. We've got undoubted strengths in Asia that crushes I think any of our US competitors.
And the crushing blow is the important point when it comes to closing closing the deal. What can you tell me from the customer
side in terms of the supply chain bottlenecks. And where is it geographically most manifest when you talk to the customers.
Look we can definitely see supply chain impacts impacting our customers. Yeah. It's also denting confidence. If there was any
slight disappointment in the numbers this quarter was we had expected commercial loan growth to be stronger than what it was.
And we are seeing customers having to build up and maintain high levels of working capital at the moment as a result of their
supply chain issues. So it is definitely having an impact. We do think it will be relatively temporary
and that should and flying over time we get back to 22. We should see much more sustainable solid growth.
Do you think inflation topside mid 20 22 is Yellen said overnight.
Look we're not we're not believers in stagflation at the moment. A little bit of inflation is very very good for us. It brings
the prospect of a rate rises where very interest rate sensitive stock. So we would welcome a bit of inflation and better
interest rates. You're a gift to me. Let's talk about the British bank because
Bank of America say that that's where you've got the most sensitivity to rates.
So let's start with the U.K. Bank of England looks as if as live in November. The market's pricing at one point two percent by
the end of next year. Can you see that magnitude and speed of hikes in the U.K.. You
certainly are. Remember we're currently at about 300 year lows in U.K. policy rates. I think the economy can afford higher
rates but certainly you could see two or three rate rises between now and the end of next year.
Do you think we could get to 1 percent by the end of next year. Yeah
yeah I think that's possible. What would that do to your business.
Yeah it would add I think on a forward run rate basis yes several hundred million dollars of additional net interest
income in addition to the growing book and volume growth on in the UK. It would be welcomed by us overall for the bank 100
basis point parallel shift and interest rate is at about seven billion dollars of revenue to us.
Look the flip side of that is as I'm using Danny Blanchflower but anybody you can pick anybody you want. Is that it would be a
serious error to hike into rising national insurance Covid risk furlough coming off a myriad of other tax rises. You would you
see it as a potential policy error a policy mistake to hike rates in the UK.
There is clearly a path to navigate through that for the policy makers. But I think you know interest rate rises. Interest rates
rising to 75 basis points 100 basis points. It is not going to be the dominant driver of
preventing a recovery here in the UK. What would be the biggest prevention to recovery.
Look we continue to be concerned about terrible risks and new variants emerging out of it.
We continue to see around the globe a very startling recovery in some places as a result of the
impact of the Delta variant. I think in the UK where we're through the worst of that. But if we were to see new variants
merged we could have a material impact on the business. You as you look at 2022 we're trying to understand the narrative for
2022 when I'm moving into more rate hikes this year than we had. Rate cuts last year.
What is the biggest risk going into 2022. Is it. Is it a rate shock or something else.
Look for us. I mean I think that if today's results you see a much more confident tone from us about 2022. So know we do think
we'll be back into a period of more sustained volume growth. Interest rate rises will be a further CAC on that. We are seeing
some inflationary pressure coming through on wage bill. Total compensation costs are about 19 billion dollars out of the 70
billion dollar cost base. But overall I think you know what. What would we be concerned
about is some kind of significant dislocation to the markets denting recovery confidence.
And that could be any grey swan you talk about income. Let's just close off this. Jamie Diamond called in from having tea
with the queen on forcing you're only having an interview with me to tell his wealth managers
that they were going to get a review in their and their pay structure. You and I know was Bloomberg and it's not Windsor
Castle but can you afford not to review your wealth managers pay structure and comp in the eye of Jamie Diamond.
We are seeing inflationary pressure in our wage bill globally not just in wealth management but in a number of sectors and a
number of geographies. We want to play competitively. And we have increased the size of our variable fatal this year
consistent with that. So I think we recognize there is a war for talent in many places including the wealth management sector.