StanChart doubles profit in FY15

Closes gap with Citibank but asset quality worsens

Standard Chartered Bank (StanChart), the largest foreign lender in India in terms of branch network, grew its net profit 93 per cent in FY15 to Rs 3,051.4 crore from Rs 1,584 crore in FY14. With this, the lender closed the gap in profit with Citibank, which was the most profitable foreign lender in the previous financial year.

StanChart has 100 branches in India, while Hongkong and Shanghai Banking (HSBC) has 50, and Citi has 45. In FY15, Citibank reported an 18.3 per cent rise in net profit from its India operations to Rs 3,423 crore from Rs 2,893 crore in FY14.

In FY14, StanChart had reported a 46 per cent decline in net profit on account of higher provisioning due to deteriorating asset quality. In FY13, it had emerged the most profitable lender in India after HSBC India's profit declined.

The British lender managed to improve its earnings in FY15 on account of lower provisioning and tighter cost control. However, the pressure on asset quality hasn't eased till now. In FY15, the gross non-performing asset (NPA) ratio increased to 8.90 per cent from 7.82 per cent at the end of March 2014. At the end of FY13, the lender's gross NPA was at 5.98 per cent. However, the percentage of net NPA to net advances improved to 0.34 per cent, compared to 0.45 per cent at the end of FY14.

In FY15, StanChart's total provisioning and contingencies declined to Rs 2,861.6 crore from Rs 3,742.7 crore in FY14.

On the other hand, Citibank's profit increased mainly on account of improved growth both in the retail and institutional business. The bank attributed its rise in profit to improved growth both in the retail and institutional business. In FY14, the net profit for Citibank had increased only by 6.4 per cent.

"During this period, our performance has been driven by balanced growth across each of our consumer and institutional businesses. As one of the leading banks in India, we'll continue to innovate and bring first-to-market digital solutions that support the growth and aspirations of our customers," said Niraj Parekh, chief financial officer, Citi India.

HSBC, the other foreign lender with large branch presence, is yet to report its FY15 earnings.

According to experts, foreign lenders managed to report better earnings in FY15 thanks to improvement in asset quality conditions as well as higher income from treasury operations.