StanChart India sees 37% surge in profit despite rising NPAs...

Standard Chartered Bank India today said that its operating profit increased 37 per cent to $943 million (Rs 4,914 crore) in 2008 despite a rise in provisions for impaired assets.

The results are, however, not comparable since the 2007 numbers did not include the income or profits of American Express Bank, whose integration was completed last year.

In addition, Standard Chartered India’s income of $1.75 billion (Rs 9,098 crore), included the $146 million (Rs 758 crore based on today’s exchange rate) it received from the sale of its asset management company (AMC) to IDFC. Including the sale amount, the bank’s total income has increased 33 per cent from $1.31 billion in 2007.

 

Its provisions for asset impairment rose 74 per cent to $157 million (Rs 816 crore) at the end of 2008, as against $90 million (Rs 468 crore). “The rise is mainly on the consumer banking side and concentrated on personal loans and credit cards, though there is no significant change in credit cards. But it is lower than the industry and well within our parameters,” said Standard Chartered Regional CEO Neeraj Swaroop.

Expecting deterioration in asset quality on the mortgage and small and medium enterprise portfolio, the bank has made “slightly higher” provisions. “As the economy slows down, there is a possibility of an increase in non-performing assets (NPAs) and the higher provisions are based on the early trends in 2009,” he said.

Standard Chartered had slowed down its personal loan business and the credit card base was almost stagnant at 1.5 million, while the outstandings were seeing moderate growth. The bank’s gross NPAs have increased from 1.1 per cent in 2007 to 1.4 per cent in 2008.

Consumer banking has a much smaller share in Standard Chartered India’s operations. Last year, the segment saw a 13 per cent rise in operating profits at $71 million (Rs 370 crore). Operating profit from wholesale banking rose 16 per cent to $726 million (Rs 3,785 crore).

After Hong Kong, Standard Chartered India is the second largest contributor to the group profits with a 21 per cent share. Standard Chartered Plc reported a 13 per cent rise in profits for 2008 to $4.5 billion. India was the fastest growing market for Standard Chartered after Singapore.