Foreign banks ride high on low interest expenses

As the country's largest foreign bank, Citigroup, hits close to Rs 1,000 crore mark in terms of its bottomline, its smaller counterparts, American Express, and Singapore's largest bank, DBS Bank, achieved a turnaround in 2004-05.

While JP Morgan Chase Bank showed a significant jump in profits by as much as 200 per cent, Bank of Tokyo Mitsubishi India's profits plunged by 87 per cent.

Citigroup India's net profit in 2004-05 was Rs 930 crore, up 12 per cent from Rs 830 crore in 2003-04. Citigroup in India includes Citibank and non-banking finance companies including Citifinancial, Citicorp Capital Market and Citigroup Global Markets.

The bank alone, posted a net profit of Rs 600 in 2004-05, up 5 per cent against Rs 571 crore in 2003-04. This was partly on account of the fall in interest expenses to Rs 752 crore from Rs 923 crore, and reduction in provisions and contingencies to Rs 571 crore from Rs 661 crore in the preceding fiscal. Citigroup Global markets reported a net profit of Rs 60 crore while Citifinancial shored up its bottomline to Rs 129 crore.

JP Morgan Chase Bank equally reported good results in 2004-05, with a jump of almost 200 per cent in its bottomline to Rs 46.9 crore, from Rs 16.1 crore a year earlier. The bank's total income rose to Rs 132.7 crore from Rs 58 crore in 2003-04.

This was boosted by other income, which rose to Rs 92.7 crore in 2004-05, from Rs 20.7 crore a year back. Interest expenses of the foreign bank increased to Rs 16.3 crore from Rs 9.1 crore in 2003-04.

Two leading global banks saw a major turnaround in their Indian operations. DBS Bank's reported a net profit of Rs 8.99 crore in 2004-05 after posting a loss of Rs 8 crore in financial year 2003-04.

The turnaround was accomplished on the back of a sharp reduction in expenditure from Rs 40.46 crore in 2003-04 to Rs 29.10 crore in fiscal 2005. DBS Bank's interest expenses fell sharply to Rs 8.51 crore in 2004-05 against Rs 13.55 crore in 2003-04. Its total income rose to Rs 38.10 crore in 2004-05 from Rs 32.45 crore a year back.

Similarly, American Express Bank posted a net profit of Rs 16.6 crore, against its earlier reported loss of Rs 23.6 crore in 2003-04. This was despite the marginal drop in total income to Rs 520 crore from Rs 526 crore in 2003-04. Its interest expenses were lower at Rs 151 crore in 2004-05 against Rs 178 crore a year earlier.

The only foreign bank not to have fared well so far has been Bank of Tokyo-Mitsubishi. It has reported a sharp fall of 87 per cent in net profit in 2004-05 to Rs 10.58 crore, against Rs 82.57 crore in 2003-04. This fall has been on account of a 27 per cent decrease in income and a 39 per cent increase in expenditure.

The bank's interest income and other income stood at Rs 114.34 crore in 2004-05 against Rs 157.08 crore in 2003-04. The Japanese bank has total assets of Rs 1,135.34 crore in India, including a loan asset book of Rs 558.86 crore.