Advance tax shows banking slowdown

In an indication of a sharp fall in financial transactions such as derivatives trade and structured products, six of top 10 Indian arms of foreign banking firms seem to have lowered their profit expectations for the current financial year.

This is reflected in the advance tax payments for the second quarter ending September 2008. Based on their profit projection, companies pay 45 per cent of their tax liability by September 15.

According to government data, the 10 banks  together paid Rs 1,405 crore, a 13 per cent decline from Rs 1,617 crore that they paid in the same period last year.
 

LOSING SHEEN Advance tax paid by foreign banks in Q2 (Rs/crore)
Company	Q2, 2007-08	Q2, 2008-09	Growth in %
Standard Chartered	352.0	436.0	23.8
HSBC	310.0	409.0	31.7
Citibank	383.0	0.0	-100.0
Deutsche Bank	109.0	188.0	72.0
JP Morgan Chase	35.0	150.0	329.0
ABN Amro	154.0	84.0	-45.5
Bank of America	121.0	65.0	-46.0
Citigroup Global	65.0	54.0	-17.0
DSP Merril Lynch	40.0	20.0	-51.0
Macquarie Bank	48.0	0.0	-100.0

Companies pay advance tax in four installments — by June 15, September 15, December 15 and March 15.

Citibank, one of the largest foreign banks operating in India and a significant player in the derivatives business, has not paid any advance tax in the second quarter. It had paid Rs 383 crore in the same period last year. Australia’s Macquarie Bank has also not paid any advance tax. It had paid Rs 48 crore in the same period last year.

Other major banks that have paid less include the troubled Dutch bank, ABN Amro, which paid 45 per cent less than in the same quarter a year ago.

Other banks and financial institutions that paid less in September are Bank of America, Citigroup Global and DSP Merril Lynch.

Investment bank JP Morgan Chase is an exception as the advance tax paid by it grew a whopping 329 per cent in the quarter.

Back home, many Indian banks have also not fared well. ICICI Bank, Union Bank of India and Canara Bank have also paid lesser advance tax in the second quarter.

Advance tax collections have grown 11.5 per cent in the second quarter of this fiscal (at Rs 47,600 crore), as compared with 30 per cent growth in the same period last year.