Standard Chartered India reduces loss sharply

It had impairment losses on loans and other credit-risk provisions of Rs 6,251.52 cr in 2015

Standard Chartered Bank’s Indian operations saw a sharp reduction in losses in 2016, mainly due to the lowering of impairment charges and other credit-risk provisions even as its underlying operating income was 10.6 per cent lower, the global bank’s annual report showed. 

For 2016, the bank’s loss for the full year was $24 million (Rs 163 crore as of December 31, 2016), compared with $551 million (Rs 3,645 crore as of December 31, 2015) in 2015. 

The bank had impairment losses on loans and other credit-risk provisions of $945 million (Rs 6,251.52 crore) in 2015, and those shrank to $414 million (Rs 2,812 crore) in 2016.

While the annual report did not elaborate on the reason, the shrinkage in provision is likely to be because some accounts like Essar Global had repaid dues.  At a group level, the profits in 2016 were $409 million (Rs 2,778 crore), against losses of $1.52 billion in 2015 (Rs 10,055 crore). 

The operating income from Indian operations in 2016 shrank to $960 million (Rs 6,520.6 crore) from  $997 million (Rs 6,595.5 crore) a year earlier. 

The bank said the fall in income from India was “driven by local currency depreciation and margin compression from central bank interest rate cuts, which particularly impacted income from deposits and cash management. In addition, lending and trade finance income was impacted by actions we took to improve our risk profile”.

Bill Winters, group chief executive of the bank, decided to shrink the balance sheet as the bank incurred losses for the first time in a quarter of a century in 2015. The operating profits before impairment and taxes were $391 million (Rs 2,655.8 crore) in 2016 against $412 million (Rs 2,725.53 crore) in 2015. Loans to customers were about $14.97 billion (Rs 1,01,680.73 crore) in 2016 against about $16 billion (Rs 1,05, 845.9 crore) in the previous year. 

Standard Chartered in 2016 also got a new India CEO, Zarin Daruwala, who said in an interview to Business Standard that her focus would be on expanding the bank's retail operations. 

The annual report of the group said it had added more than 1,000 frontline full-time retail banking employees in India, Singapore and Bangladesh.

The bank said the priorities for the region would be to profitably build retail banking segments in key markets — Singapore, India, Malaysia, Bangladesh and Vietnam — through significant investments in client-facing and operationally efficient technology and by reshaping corporate and institutional banking. Among other strategies, the bank plans to “reshape or selectively exit businesses with a sub-scale or unprofitable position, while continuing to focus on cost and balance sheet efficiency to improve returns”. 

“With a deep-rooted presence for more than 150 years, our two largest markets are Singapore and India,” the annual report added.