Jaspal Bindra, executive director and Asia CEO of StanChart Group, announcing the bank’s annual results in Hong Kong on Tuesday. (Reuters)
Mumbai, March 5: Standard Chartered Plc will continue to bet big on India and feels that the nation will play a key role in its future growth story.
The foreign bank isn’t fazed by the weak numbers that its Indian operations have reported in 2012 with operating profit declining 16 per cent to $676 million, led by its wholesale banking business that was impacted because of the weak corporate environment. It had reported operating profits of $804 million in 2011.
In contrast, the bank’s global operations reported an 8 per cent growth in income at $19.1 billion and a 1 per cent rise in profit before tax at $6.9 billion.
The bank said income at its Indian operations — which is its third largest geography — fell 12 per cent to $1,585 million ($1,805 million in 2011).
The wholesale banking operation accounts for the biggest slice of its business in the country but it was badly affected by the current economic slowdown. Even as income fell 13 per cent to $1,145 million from $1,323 million in 2011, the operating profits plunged 18 per cent to $581 million ($706 million).
StanChart said its performance in India was affected by a difficult macroeconomic environment. Lower corporate activity and currency depreciation also crimped its performance during the year.
On the other hand, consumer banking saw a smaller dip in operating profit as the bank concentrated more on secured assets. Operating profits in consumer banking stood at $95 million, a dip of 3 per cent from $98 million in the preceding year. Income fell to $440 million from $482 million in 2011, a decline of 9 per cent.
India is a core market for StanChart, which started operations here in 1858.
StanChart group CEO Peter Sands said conditions in India were challenging with the GDP slowing sharply from an average of 7.9 per cent over the previous five years to 5.2 per cent, and the rupee depreciating 15 per cent year on year.
The bank said business momentum plummeted as political deadlock and governance scandals rocked confidence. As a result, the India business slowed, with income falling 12 per cent.
Sands said the bank also saw an increase in impairments, resulting in profits falling 16 per cent.
“The mood in India has changed noticeably since last summer. The economic reform agenda appears to be back on track, and business and investor activity has undoubtedly picked up. We have a great business in India, and are confident that this will be a huge part of our future growth story,” he still added, reflecting the confidence of the foreign bank on the country.
StanChart now has 99 branches in India and is present in 42 cities.
The bank is worried by a European Union proposal to cap bankers’ bonuses at double their salary.
“We are concerned about it because we are a global bank and 97 per cent of our staff are outside the EU and we're concerned about our ability to be competitive in attracting and retaining talent,” Sands said.
Asked if this could prompt the bank to leave London, he said it was “too early to draw conclusions on what action we would take as we don’t know what we are dealing with”.
Standard Chartered said it had cut its 2012 bonus pool by 7 per cent from a year earlier to $1.43 billion, after it was fined $667 million by the US regulators for breaching sanctions related to Iran and three other countries.
Sands said his bonus would fall 10 per cent in the year to $3.15 million.