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Mumbai, Feb. 29: Standard Chartered Plc today said India had dropped to the third spot, behind Hong Kong and Singapore, in its contribution to the bank’s total profit.
The bank’s Indian operations showed a 33 per cent drop in operating profit for 2011 at $804 million against nearly $1.20 billion a year ago.
In 2010, India had overtaken Hong Kong as the largest contributor to StanChart’s profit.
The Hong Kong and Singapore arms have reported operating profits of $1.55 billion and $1 billion, respectively. Both the regions showed a rise of at least 40 per cent.
Group chief executive Peter Sands indicated that the decline in profit in India was because of a challenging macro-economic environment.
“To tackle inflation, the RBI hiked interest rates 13 times in two years. This had a predictable impact on economic growth — down from 8.5 per cent in 2010 to 7 per cent in 2011 — and also affected business confidence. In addition, a combination of protracted political and corporate governance issues sapped business confidence, resulting in many investment projects being delayed or cancelled,” he said.
Sands, however, is confident about the long-term growth prospects of the country.
In India, operating profit from the consumer business segment dropped 3 per cent to $98 million, while it dipped 35 per cent to $706 million in wholesale banking.
According to analysts, besides the tough environment in India, the foreign bank felt the heat because a large part of its income was from wholesale banking.
“This (wholesale banking) depends on business sentiment and other activities such as cross-border transactions. Because of the slowdown and the uncertainty in the Eurozone, corporate activity was affected, thereby impacting the bank’s wholesale banking division,” said an analyst.
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