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So overall, as I said, very pleased with the results that we delivered in 2023. I believe that these are excellent results. We have seen sales growth in the first two months of 2024. March and April of 2024 will have base effects, given the fact that we saw a resurgence in March 2023 and April 2023 on account of the border opening. We are in early days of the execution of our strategy, and we are already seeing some measurable progress against our strategy execution. And a combination of these factors lead us to believe that we are increasingly getting confident in terms of delivering our two financial objectives, which is 15% to 20% growth on new business profit to 2027 and the acceleration of cash on the value that we generate. We are also increasingly confident of our strategic objectives and are effectively deploying capital to drive organic, profitable growth, but at the same time looking a sharp-eye out on extending and expanding our distribution footprint through partnerships.

I also wanted to, at this juncture, thank our people, thank our agents, and thank our partners. Without their dedication and commitment, these results simply would not have been possible. So thank you very much again for joining us. I would like to now start by introducing our management team. On my right, Ben Bulmer, our Chief Financial Officer. Next to Ben, Dennis Tan. Dennis Tan manages a cluster of our ASEAN markets and is also responsible for wealth. Next to Dennis, Catherine Chia. Catherine is responsible for human resources. And at the far right is Avnish Kalra, our Chief Risk Officer. On my left, Lilian Ng. Lilian runs Greater China, in and along customer as well as distribution for the company. Next to Lilian, Solmaz Altin. Solmaz runs, again, a cluster of markets in Southeast Asia, in ASEAN, alongside India, Africa, as well as is responsible for health and technology.

Over and above, he is geographic responsibility and on the far left, Bill, who we appointed as the incoming CEO of eSpring in the middle of last year. So on that note, back to you, Patrick.

Patrick Bowes: Thank you. Thank you, Anil. And we'll turn over to the Q&A in a second. Obviously, proceedings are taking on the basis that you've only read the materials that have been published on the website. So please do read the rubric. Sebastian is just going to give instructions for people as to asking questions online. If you just bear with me, Michael, and then we'll come to you. And Charles will come to you in a second. I know you're keen. Sebastian, over to you just to give the instructions for people to ask, to lob in their questions online.

Operator: Thank you. [Operator instructions].

Patrick Bowes: Okay. Ready to open up. Michael did have his hands up first. So he gets the he gets the microphone first. No, behind you. There we go. Behind you.

Michael Chang: Thanks. My name is Michael Chang from CGS International. Just two questions for us. Primarily on Hong Kong, China and the strength over there, especially in relation to Hong Kong. And it does look like 2024 has had a strong start to the tourist numbers. So extrapolating forward, firstly, if I take a look at the 2027 new business profit targets, management did say they are increasingly confident. And it does work out that 9% to 15% new business profit growth, CAGR is required to achieve those targets. Now, I know some people in Pru and when they talk about internal target setting, it just seems that, Pru sets targets to maximise their potential. And I just think that single digit, that 9% new business profit target sounds very pedestrian.

I just want to know, in terms of updating those targets, under what conditions could those targets be a bit more aligned to your more strenuous internal targets? When would investors look forward to such a situation? Maybe you can just elaborate on that and then in the case of China, China agency business doing quite well. Bank Assurance, as management has flagged previously, continues to be a drag. And it does look like, if I take a look at slide 27, the base effects get much easier in the second half. So could management just share some details on how much bank assurance contribution in terms of the new business profit there was in FY23 and how confident management is about a turnaround in China and roughly when can we look forward to that?

Thanks a lot.

Anil Wadhwani: Thanks, Michael. It's good to see you. Many questions in that. So let me try and start with the Hong Kong question. And then I will turn to the 15% to 20% and then we'll come back to China. And I'll also ask Ben and Lilian to provide any additional comments that they might have. So starting with Hong Kong, clearly very pleased with the rebound. We grew market share both in domestic as well as in the Mainland Chinese visitor segment. Particularly in agency, we saw some really strong performance. The momentum, as you rightly mentioned, has continued in the first two months. But at the same time, just to remind you that we did see a resurgence in May 2023 and April 2023 on account of the border opening. We believe that the growth prospects in Hong Kong continue to be solid.

The government is indicating a growth of 3 to 3.5% in terms of GDP. We are also encouraged with some of the steps that the government is taking in terms of attracting further international traffic into Hong Kong. A little bit more color on MCV. So in terms of MCV, despite the strong growth that we saw, Michael, the traffic levels in 2023 were close to about 60% to 65% as compared to what we witnessed in 2019. And we don't see any fundamental impediments for the traffic to go to 2019 levels, if not exceed it, over a period of time. Additionally, the ticket sizes saw a surge, as I mentioned, in March and April, and then started to normalize from May 2023 onwards. We saw the ticket sizes held up quite well in quarter three and quarter four. And as we transition to the first two months of 2024, we also believe that when we talk to our customers, and we do that quite often, the fundamental need for and the attraction for the Hong Kong health infrastructure alongside the products that we offer in Hong Kong, that remains pretty undiminished.

And if you simply look at the new to Prudential customers in MCV, they were close to 70%. So that kind of gives us a fair amount of runway to broaden the relationship. So that hopefully kind of gives you a good sense as to why we feel optimistic about the growth prospects of our Hong Kong business. Moving to your second question, clearly, 45% new business profit growth would have prompted that. And I just want to go back to the conversation that we had when we announced our strategy, which was the late part of August last year. And what we had said is we are going to be growing all our four geographies, which is greater China, ASEAN, India, and Africa. And we have the capital strength and the capital flexibility to do so. Clearly, having delivered what we have in 2023, you can almost infer, as you rightly did, as to what those growth numbers would look in '24, '25, '26, and '27.

However, I do want to remind you that we don't cap our aspiration on the 15% to 20% growth target. And just again reiterating that we do have a capital strength and capital flexibility. And as you would have noticed in 2023, we have deployed that effectively to grow profitable organic growth. And at the same time, looking at expanding our distribution partners, our partnership. So that is where the increasingly confident part comes with respect to the target comes through. In terms of China, right, so let me try and provide a little bit of color before I hand it to Ben and Lilian for any additional comments that they might have. So just stepping back, we believe and we see this that the fundamental demand drivers in China haven't changed. The demand for long-term savings, for retirement, and for protection remains highly intact.

The GDP is slated to grow at 5% as China pivots to a more sustainable, high-quality, consumption-led economy. You simply have to look at the deposit velocity last year in China, grew by 9%. So that illustrates the opportunity that insurance companies, and specifically companies like Prudential have, to be able to cater products and services to address those needs. Yes, we took certain hard decisions on bank assurance. Our bank assurance margin on an ex-economics basis increased by 8%, in combination of the regulatory guidance that we saw in the second half of the year, clearly the volumes on bank assurance got impacted. Agency did quite well. But having now taken the hard measures, having pivoted to a different product mix, and we are already starting to see the early progress of that.

In the back half of 2023 and as we transition to 2024, we believe we have poised our China business to grow both across banker and agency as we move forward. We have a strong partner, multi-channel distribution, and as I said, the pivot from predominantly a savings product mix to now a much more balanced product mix, now allows us and gives us, as I said, the optimism to grow our China business further. So I'm just going to stop. I'm first going to go to Ben and then see if Lilian has any additional color to add.

Ben Bulmer: Yeah, thanks. Thanks, Anil. Hi, Michael. I think you had a specific question on China banker contribution to NBP. So that was 45% in 2023, down from about 69% the year before. What you will have seen in the slides, no doubt, is the fruits of the labor, if you like, of repricing, shifting the product mix. And actually, we were able to build our China banker margins as we move through the year by eight points to end in the late 30s, early 40s. And because those are structural changes in the mix, the sort of ending margin, if you like, of around 42% is something I'd kind of guide you to in terms of thinking about '24. Similar story, really, in Hong Kong. Very, very pleased with the margin expansion that we saw in the second half of the year.

You will have seen in the slides health and protection increasing as we move through the year in terms of number of policies. Not quite yet at sort of 2018, 2019 levels. So I think there's a bit of potential there. No doubt, though, you will have seen kind of rates up at the moment. So for now, when you're thinking about Hong Kong margin outlook, again, I'd guide you to around the 72% that we closed at for the full year.

Lilian Ng: Maybe just to add, Michael, when we de-emphasized the non-par savings product, we actually shifted to annuity and savings as well as longer term payment term. So with that, actually, annuity and savings product for our banker channel contributed to actually 65% in 2023 and actually contributed to 44% of MVP and similarly on the longer pay. Now, having said that, what we are seeing is now you mentioned about the momentum on 2024, and we are seeing that distinct shift to continue to more health and protection as well as par savings and longer term. So that will inform you how we're going to drive the business in 2024.

Patrick Bowes: Okay, let's go to the next question. Charles, have a go.

Charles Zhou: Thank you. Charles Zhou from UBS. I also have two questions for you. First, let's talk about China. So as we all know, China is now facing probably a prolonged low interest rate environment. So can I ask you how are you going to cope with this environment? Maybe talk about it both from the insurance sales, about your guarantee rates, your product mix going forward, and also from your investment, how do you do your asset allocation? So this is my first question. Second question is related to the ASEAN or Indonesia, Malaysia, and Singapore. If I combine those three markets, I think overall growth may not be as exciting as Hong Kong. So can I ask you about how do you see the outlook for ASEAN in 2024 and also going forward? Thank you.

Anil Wadhwani: Thanks, Charles, and good to see you again. So let me start, and I'm going to ask Ben to speak to specifically the investments and the asset allocation. So notwithstanding the rate environment, the fundamental needs, the fundamental insurance needs, what we are seeing, and the guidance that we are getting from the regulators is more shifting towards long-term savings, towards retirement. And you can see the pillar three focus that the government is employing, and we are obviously crafting value propositions and products to be able to address that specific need as well as protection. So that fundamentally does not change. To your point around the interest rates being lower, we already took those hard measures, and we took those hard measures of repricing the guaranteed product much in advance of the market.

And as I said, some of the regulatory guidance that came in quarter three in many ways ratified our decision. When the rest of the market obviously took those or made those adjustments much later in 2023. So I think the fundamental needs don't change. We have significant experience in managing power business and crafting power value propositions, and we believe that as we go through 2024 and beyond, you will see the shift from non-power into power increasingly. And that's really what we've been focused on. I'm going to stop and ask Ben to specifically comment on the investment and the asset allocation.

Ben Bulmer: Yeah, thanks, Anil. Hi, Charles. I was going to say a very similar thing in terms of I think what sets us apart is our experience in lower for longer environments and our capabilities on the with-profit side. When you look at CPL's portfolio, it has a diverse set of products, both protection and savings. Within the savings book, half to two-thirds of the liabilities, we can actually vary the benefits depending upon the investment return. So it's par, it's ILP. You've seen in 2023 management take action actually ahead of the market to lower cost of liabilities and shift mix, and candidly shift mix towards par. When I think about the yields on the assets that we're earning, we're still earning very decent spreads over and above the cost of liabilities.

You say the re-pricings have the effect of lowering the cost of liabilities, and actually we've lowered our fund earned rate expectations as well. In terms of the assets, and there's a slide in the appendix to my slides that kind of shows you the snapshot, 70% of those backing assets, Charles, are fixed income. A significant proportion of those are government debt and other state-owned entity bonds, if you like. I mean, the business is very active in managing its balance sheet and will continue to be to optimize risk-reward trade-off.

Anil Wadhwani: So Charles, coming to your second question on ASEAN, clearly a very important segment for us. And again, we are delighted with the market positions that we have been able to establish in many of the ASEAN markets, if not all the ASEAN markets. I mean, you have to look at the strengths that we have, for example, in Malaysia across conventional and Shariah, which resulted in the growth that we witnessed, which was pretty strong. In Indonesia, again, strong positions, both against, again, in conventional and Shariah. And the early green shoots of transformation is playing out. Likewise, Singapore, quality franchise, in Vietnam, despite the challenges that the market is witnessing, we were able to grow market share.

It underscores and speaks to the quality of our agency and bank assurance distribution. So we have significant market positions in a market that is home to roughly about 650 million people, so we cannot not be excited about the growth prospects. Having said which, we also have called out to deploy our capital in ASEAN specifically to expand our distribution. So we are actively looking for bank partnerships, which will then go and complement the existing bank relationships that we have, UOB and Standard Chartered, as well as the scale of agency that we have in every single geography. So we believe that going forward, ASEAN will be a bigger part of our growth story. I again want to remind you that if you look at the composition of our embedded value, ASEAN countries today contribute to 43% of that embedded value.

So cannot not be excited about our position as well as the growth prospects that ASEAN has to offer.

Patrick Bowes: Thank you. Let's go back to one more question from the room and then we'll go to the phones. Edwin?

Edwin Liu: Hi. Thank you for the opportunity to raise questions. I'm Edwin Liu from CLSA. Two questions, one on Hong Kong and one on ASEAN. So on Hong Kong, given the medium term NBP outlook and just Charles' comment on ASEAN, I think the future growth will still very much rely on Hong Kong. Can we expect that the Hong Kong NBP growth will be higher than average for potential group, but also in particular for MCV, should we expect high teens or even higher than that medium term growth? And if you can provide more color, just what you have observed in terms of pre-pandemic and post-pandemic behavior of your MCV customers, but also your agents, where you hire agents from, what is the current agent profile for your MCV business?

Second question on ASEAN, you mentioned inorganic opportunities, particularly on bank assurance. Just wonder if you can provide more color in terms of which market that you see more active opportunity in terms of bank assurance that can satisfy your IRR requirement, which market would be more competitive and more challenging to secure bank assurance deals? Thank you.

Anil Wadhwani: Thank you. Thank you for those questions. So let me start with the Hong Kong question and the growth prospects in Hong Kong. And I'm going to go to Solmaz specifically on the Bangkok question. I'll kind of tee it up and then have Solmaz provide you greater color in the way we are thinking about driving a distribution in ASEAN. So firstly, as I said, you have to step back and look at the guidance that we've provided in the medium term, which is 15% to 20% new business profit growth. As I mentioned earlier, as you look at our 2023 results, you can almost infer the growth rate that will get us to that range, right to the lower versus the highest rate. However, I want to underscore the point that we are not capping our growth to that guardrail.

That is a guardrail. We have the capital flexibility and strength. And we demonstrated that in 2023, we will manage our markets to its fullest potential. And Hong Kong being a big part of our business, you can again infer the same logic for our Hong Kong business. I've always been emphatic about the fact that that is exactly why we are growing the multi market growth model, because what we can't control is how and at what speed some of these markets will grow up. What we can control is how we compete in those markets, how we serve our clients and how we gain market share, which is exactly what we were able to illustrate and demonstrate in 2023. And as I said, Hong Kong has solid potential and we'll continue to work towards expanding our footprint and expanding our market share.

In terms of ASEAN, again, going back to the strategy we had illustrated, multi market, but we will also be focused on multi distribution and it's becoming a much more acceptable norm that you require bank assurance in all your geography to complement the strength that we have in agency. And we've always been clear that's exactly how we're going to grow. Bank assurance is lower margin as compared to agency, but it's not low margin. Even if you simply have to look at the results of 2023, the bank margin were about 37%, which I think is a very acceptable margin. And we would love to do more bank partnerships if we are able to deliver that kind of margin through bank partnerships. But I'm going to stop here. I'm going to turn to turn to Solmaz specifically to talk about how he's thinking about expanding his footprint in ASEAN.

Solmaz Altin: Well, thank you very much, and thanks for the question. We are always interested in expanding our banker distribution and there are a number of opportunities coming up in ASEAN countries. And let me mention a few. In Indonesia, there is an opportunity in the Shariah segment. We will certainly be interested in pursuing that opportunity. We are already number one in Indonesia by market share. We have gained 1.7% market share in 2023. So that is an opportunity we're pursuing. We are very strong in agency, as Indonesia with the biggest agency force. Now we want to also diversify Indonesia more. We already are active with SCB and UOB there, but we are very keen on diversifying even further. Malaysia is another good example.

We have grown 36% banker last year. It's an amazing team that can do banker very well. So again, Malaysia for us is an opportunity both in conventional and Takafu to grow our footprint. Philippines is mostly an agency channel for us. There has been little opportunity in the past in terms of banker deals, but we are working actively and also evaluating more banker opportunities in Philippines. And the same can be said for the CML countries, Cambodia, Myanmar, Laos. We are mostly a banker company, but we are again interested in doing more. So as you can see, we have already an amazing footprint in banker. We are well diversified, but we are particularly keen on Indonesia and Malaysia and Philippines in terms of banker deals.

Anil Wadhwani: Just a couple of follow up points. So we were able to establish the CIMB partnership in Thailand. Again, a good illustration of our intent to grow bank distribution and it allows us further diversification within the bank assurance channel in Thailand, which is again an important market for us. And I do also want to reiterate that as we think about these bank partnerships, we are also going to put this through a return lens. We are very conscious of the fact, remember we've given two targets, 15% to 20% new business profit growth, but also employer discipline where we are converting this value into cash. So having strong internal hurdles and having strong return hurdles is absolutely going to be the way we are going to be evaluating these bank partnerships. I hope I was able to answer that question.

Patrick Bowes: Okay, I think Michelle, if you just bear with us, we'll go on the phones and then we'll come back to you first soon just to even it up. Okay, Sebastian, could you just remind everyone how to lob in their questions on the phones and then go to the first caller, please?

Operator: Of course. [Operator instructions]. And our first question comes from Farooq Hanif from J.P. Morgan. Please go ahead.

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