StanChart ups NPA provision

Standard Chartered Bank has tripled its provision for bad debts for its Indian operations to $59 million in calendar year 2003 as compared to $21 million in the preceding year.

This is largely on account of defaults arising from the credit card business, said StanChart Bank CEO Chris Low.

According to the bank's annual report 2003, "the bad debt charge increased by $21 million to $59 million. This was largely driven by increased provisions on a specific vintage of the card portfolio."

Bad debts emerged from the bank's credit card portfolio launched in 2001. "We have made the suitable provisions with the help of a strong balance sheet," said Low.

The bank has reviewed the experience with plastic card programme and has taken steps to improve the system, said bank officials.

According to the bank's annual review report 2003, StanChart aggressively grew its card (credit, debit and co-branded) business. StanChart revenue for its Indian operations has increased by 10 per cent to $244 million.

According to the bank's global balance sheet, "more than half this growth was customer driven growth in trade and lending, custody and global markets.

Traditionally, StanChart's consumer banking business in India has been driven by liabilities, resulting in short term margin pressure, stated the report.

The bank is now expanding its mortgage book, indicating that assets would grow strongly, thereby generating good revenue growth in 2004, the review said.

On the rise in bank's revenue, its operating profits for the domestic market grew from $114 million in 2002 to $150 million in 2003, reflecting a rise of 32 per cent.

"We are the most profitable foreign bank in the country today and the fourth in the entire banking system," said Low.