Standard Chartered Bank in India (StanChart) has reported an operating profit of $943 million in 2008, depicting a 37% rise, led by a 33% increase in come to $1.75 billion. The results include the proceeds of $146 million from the sale of its asset management business in India. While the bank saw an increase of 33% in its income and a 41% rise in its working profit, loan impairments saw a rise by 74% in 2008.
Neeraj Swaroop, regional chief executive, India-south Asia, Standard Chartered Bank, said that India with a 21% share, was the second largest contributor to the group’s profits after Hong Kong. Swaroop noted that businesses like financial markets, transaction banking, corporate advisory, SME banking, private banking, wealth management and mortgages, showed notable performances.
“Standard Chartered managed to significantly build on its reputation as a flight-to-quality institution, with customer deposits rising 30%. At the same time, deposits grew by 28%. Due to deterioration in the market conditions, there has been a rise in loan impairments,” explained Swaroop.
In 2008, Standard Chartered strengthened its presence by the acquisition of the banking operations of the erstwhile American Express Bank, which reinforced Standard Chartered Private Banking with a presence across five cities. The acquisition of a 74.9%-stake in Standard Chartered Capital Markets was another key move, adding equities trading capability to the wealth management business and supporting corporate finance and advisory through its investment banking division. Wholesale and consumer banking have contributed 22% and 19%, respectively, to the bank’s business.
The bank is investing in the Indian property in a big way. “We have acquired new premises in Delhi, Mumbai and Bangalore. We have also invested heavily in core banking. We will continue to invest in people and infrastructure,” noted Swaroop. Talking about the outlook for 2009, Swaroop noted that bad market conditions were impacting the bank as well. “We are not claiming that we won’t be affected. While opportunities still persist, there are challenges in the moderating economy.”
Swaroop noted that the bank plans a rise in non-performing assets (NPAs), especially in the consumer finance business, owing to the downturn in the economy. “We have seen a rise in delinquencies in personal loans at 4% -4.5%. Hence, we have slowed down on our personal loan portfolio since the second quarter of last year. However, credit card delinquencies have remained flat,” said Swaroop, adding that the credit growth focus would remain on SME and mortgages for 2009.
“There are some sections in the wholesale industry that are exhibiting early symtoms of stres. Hence, we are taking steps to curtail it. Going forward, we will be careful with the wholesale business. We will go slow on consumer lending, especially on unsecured loans,” he said.
The bank infused $800 million into the Indian operations last year, out of which $300 million was a part of retained profits and the remaining was from fresh capital, without repartition of funds. Standard Chartered obtained licences for 4 new branches in 2008 which will be opened in 2009.
