Georges Elhedery: Sure. Aman, so what historically we’ve been giving you is NII sensitivity. But there is a big component that is rate sensitive in our earnings, which doesn’t sit in NII. It sits in non-NII under funding cost of the trading book. And what we’ve been doing, and hopefully, that slide was meant to clarify it, but I’m assuming now we have to take probably more offline with you to go through it. What we’ve been doing is showing the sensitivity of both the NII to rates as well as the sensitivity of the funding cost of trading book to rate. And then giving you the full sensitivity of banking NII to rate because that would be a better representation of how sensitive our earnings are to rate, and it will take away the noise that is created by ongoing commercial decisions on how much we’ve — how much funds we provide the trading activity or take away from the trading activity in year.
It kind of cleanses that information out because it’s just giving you the total that is relevant for our overall earnings. That sensitivity has reduced by more than half over the year in part at least for 30%, 40% of it due to our structural hedging activity. With regards the fee income, you mentioned FX having a good and decent income. A couple of things about GB&M to call out. First, the PBT of GB&M was more than 20% or 25% higher year-on-year. So clearly, a business that increases PBT. Its return on tangible equity has exceeded our cost of capital. It’s something that has been not achieved for many years. It’s above 12%. And to be also fair to GB&M, it’s return tangible equity only increased by about 10% because there are some corporate center related adjustments, which is affected them.
Otherwise, the return on tangible equity could have followed the trend of PBT growth because their RWAs were down, and they could have seen close to 20%. And therefore, well above their cost of equity. So we’re comfortable with how the business is continue to transform itself, focusing on their strength and adjusting their footprint, and that momentum continues. In terms of distribution, well, first, it remains our ambition to have a rolling series of share buybacks as long as our capital supports it and the outlook for capital does support it, but this remains subject to ongoing macroeconomic developments and regulatory approvals, etcetera. And one thing to call out with regards our bolt-on acquisitions is when we look at an acquisition, obviously, the first parameter is making sure it’s a strategic and accelerating growth area that we strategically want to grow.
But the second parameter that we also use equally is that it is accretive compared to a share buyback. So we’re making sure that when we go for a bolt-on acquisition, the investments is more accretive than the investment in buying our own shares. And this is — this would be a disciplined measure to make sure we’re doing M&A that is both strategic and accretive. And finally, in terms of other parts of the distribution, 50% dividend payout ratio for 2024, which we reaffirmed. And then if you want to give a — if you want to have a benchmark on where we would operate on a target basis, our CET1 ratio, it will be in the 14 to 14.5 range, which we reiterate, but we recognize we may not meet that target because we may be well above it for a few quarters in particular, thanks to Canada, but also to our own capital generation.
Noel Quinn: And the pace at which we can get back down to that target is going to be dictated by two things: the capacity of the market to take buybacks; and second, are there alternative uses of that capital to support growth. But I think it’s fair to say there’s going to be excess of our CET1 over our target range more in the near term because probably the capacity of the market to take the volume of buybacks that could be done.
Aman Rakkar: Thank you so much. Can I just clarify? So is it reasonable then to expect that — is it reasonable to target year-on-year growth in GB&M, the fee income businesses in GB&M? Is it in those various moving parts should we think about growth?
Georges Elhedery: Yes, in the strategic area, certainly, I mean, the areas we called out such as foreign exchange such as payments, such as supporting trade. We do expect also growth. And as Noel mentioned earlier, in capital market activity, if and when rates come down, we see progress in this area of the fee income space. Clearly, GB&M has focused itself and the kind of the message is that in the areas where they’re focusing strategically, yes. In the areas where they have exited or are downsizing, then this would be nonstrategic areas that they will continue doing downsizing.
Aman Rakkar: Okay, thanks so much.
Noel Quinn: Listen, I just wanted to say thank you all for joining. I also want to just say, look, I’m — clearly, I’m really pleased that we’ve had a record profit year in 2023, and the best returns that we’ve had for a decade. Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2008 and three share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline. I want you in no doubt on that. We expect to have further opportunities to grow revenue, and we’re very focused on it because we’ve come out of that 4-year transformation phase with a very strong focus on growth.
We continue to target a mid-teens RoTE in 2024. And I just want to say thank you for joining us. And Neil, the team are available should you need them. I hope to see many of you here in Hong Kong in April when we hold our inaugural Global Investment Summit. Looking forward to being back here at the end of March and for the Investment Summit in early April. Thank you all very much.
Georges Elhedery: Thank you for coming.
Unidentified Company Representative: Thank you, ladies and gentlemen. You may now disconnect the call.
