Hefty increases in provisioning for bad loans have resulted in the Indian arm of HSBC and Deutsche Bank record a modest rise of 8 per cent and 11 per cent, respectively, in net profit for the year ended March 2009.
HSBC’s bottomline stood at Rs 1,291 crore for 2008-09 as compared to Rs 1,192 crore in the previous year, while Deutsche Bank recorded a net profit of Rs 430 crore as against Rs 386 crore in the previous year.
HSBC’s total income grew by 27 per cent to Rs 9,026 crore from Rs 7,096 crore. In a statement, the bank said the growth in income was “primarily in trade and credit facility fees, higher foreign exchange income and higher net interest income due to higher interest-free current account balances and improved asset margins.”
Deutsche Bank’s total income rose 18 per cent to Rs 2,901 crore for the year ended March 2009, up from Rs 2,463 crore in 2007-08, while interest income grew 30 per cent to Rs 1,881 crore over the same period. The lender’s net interest margin increased to 5.3 per cent as against 3.8 per cent at the end of the previous year.
HSBC said the 65 per cent increase in provisioning for bad loans was on account of a deteriorating credit environment. While overall expenses, including provisions and contingencies, grew 31 per cent, operating expenses were only marginally up by 2 per cent as a result of “tighter controls on costs and lower retail asset origination costs.”
Deutsche Bank saw a three-fold increase in provisions and contingencies at Rs 249 crore for 2008-09 as compared to Rs 76.82 crore at the end of the previous year. The lender’s net non-performing assets (NPAs) as a proportion of total advances stood at 0.88 per cent, up from 0.22 per cent at the end of 2007-08. Gross NPAs were 2.7 per cent of total advances in the period.
Both the lenders cut back on advances in 2008-09. HSBC’s loan book shrank by 8 per cent to Rs 27,588 crore as compared to Rs 29,944 crore crore at the end of the previous year. Deposits, on the other hand, grew by 17 per cent to Rs 49,970 crore as on March 31, 2009, compared to Rs 42,620 crore in the previous year.
Deutsche Bank marginally reduced the size of its loan book to Rs 8,797 crore from Rs 8,960 crore at the end of the previous year.
