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Standard Chartered India reported a 39 per cent decline in profit before tax to $378 million during January to June 2011, from $624 million in the corresponding year-ago period. While in 2010, India was the largest contributor to the group’s profits, in the first half of 2011, it fell to the third position.
The fall in profit was on account of lower income and higher provision, said Mr Neeraj Swaroop, CEO Regional CEO, India and South Asia.
The rising interest rates, which have impacted margins and the general slowdown in the macro environment, which has led to slowdown in projects, have resulted in lower profits, Mr Swaroop said, after announcing the results.
“The immediate outlook is somewhat challenging and we remain cautious,” he said.
Income from India operations declined to $893 million, during the first half, from $1.101 billion last year.
The charges on account of loan impairment increased to $72 million from $43 million. There was also an one-off specific impairment charge on corporate bonds of $50 million.
“We have made higher provisions as a prudent measure. At this point we are not seeing a rise in NPA. But the provision is in anticipation of potential rise in NPAs given the soft environment going ahead,” Mr Swaroop said.
The worry for potential credit loss is more from the wholesale and small and medium enterprises segment. The consumer banking, including credit cards and personal loans, is doing well, he added.
The operating profit in consumer banking division fell to $44 million ($53 million) and in wholesale banking fell to $334 million ($571 million).
The gross NPA as on June 2011 was $330 million against $250 million. The ratio of gross NPA to total assets was 2.7 per cent (2.4 per cent).
The year-on-year credit growth was 22 per cent and deposit growth was 12 per cent. For the full year, the bank is looking at both credit and deposit growth of 18-20 per cent.
The net interest margin was 3.1 per cent (3.8 per cent).
“The compression in NIM started in the second half of 2010. Our outlook is that it will be in the 3-3.2 per cent range for 2011,’’ Mr Swaroop said.
The bank is not holding any unused branch licence but will expand its offsite ATMs and upgrade branches. This year the bank will add about 300-500 to its net staff strength, Mr Swaroop said.
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