Large foreign banks in the country appear to have weathered the economic slowdown with strong growth in earnings, but Standard Chartered Bank’s India operations don’t seem to have done as well.
The UK-headquartered lender’s net profit from India branches fell 15.7 per cent in 2011-12, as it made more provisions to cover the rise in non-performing loans.
Net profit narrowed to Rs 1,736 crore from Rs 2,059 crore, according to Deloitte Haskins and Sells’ audit report. Business Standard has a copy of the report.
Foreign banks' performance in India in ’11-’12
|Growth in net profit
- Standard Chartered Bank: 15.7%
- HSBC Bank: 30%
- Citibank: 35%
- Deutsche Bank: 31%
|Standard Chartered's India performance in 2011-12
- Net profit falls as provisions rise
- Gross NPA ratio at 5.50%
- Net NPA ratio at 0.70%
- Exposure to top 4 NPA accounts was Rs 1,989 cr
- Exposure to power sector was Rs 631 cr
- Exposure in real estate was Rs 5,479 cr
- The bank made Rs 2,765 cr of provisions
Standard Chartered Bank confirmed the figures mentioned in the auditor’s report.
According to norms, foreign banks have to file their financial year (April-March) results to the Reserve Bank of India. In addition, most foreign banks in the country also announce their calendar year results.
The bank, which has the largest network of branches among foreign lenders in the country, saw its gross non-performing assets (NPA) rise by Rs 2,064 crore. Net bad loans increased by Rs 296 crore during the year.
The Gross NPA ratio deteriorated by 321 basis points to 5.5 per cent, while the net bad loan ratio also increased by 43 basis points, to 0.7 per cent at the end of March.
According to the auditor’s report, total exposure to the top four non-performing accounts was Rs 1,989 crore in 2011-12, compared with Rs 336 crore a year ago.
In the services sector, net NPA ratio was 1.01 per cent of advances to the sector, while in industries it was 0.65 per cent.
The Rise in bad loans prompted the bank to make higher provisions, which surged to Rs 2,765 crore during the last financial year from Rs 1,817 crore a year earlier. Specific provisions against advances and claims more than doubled to Rs 1,955 crore from Rs 751 crore. The provision coverage ratio was close to 88 per cent.
The bank’s total credit risk exposure in the troubled power sector was around Rs 631 crore at the end of March, against Rs 373 crore a year ago.
In real estate, the exposure was Rs 5,479 crore, compared with Rs 5,396 crore a year ago.
The bank had Rs 20,770 crore of unsecured advances.
Standard Chartered advances from India branches grew 13 per cent during the financial year to Rs 55,570 crore. Deposits expanded by 9.5 per cent to Rs 63,964 crore. The capital adequacy ratio was at 11.05 per cent.
The performance is in sharp contrast with the financial results of other large foreign banks in the country.
Hongkong and Shanghai Banking Corp, the second largest foreign lender in the country, has seen a 30 per cent rise in profit after tax from India operations in 2011-12.
HSBC India’s financial performance had suffered after the 2008-09 crisis due to high delinquency rate in unsecured portfolio.
Foreign lenders such as Citibank and Deutsche Bank have also witnessed growth in India division’s net profit last financial year.
While Citibank’s profit after tax from India business grew 35 per cent, for Deutsche Bank, the net profit from India operations increased 31 per cent.