Banks in India are heading for a slowdown due to the challenging economic environment, according to Standard Chartered Bank.
“The situation is increasingly becoming challenging and banks’ businesses will definitely be impacted,” Standard Chartered Bank’s regional chief executive, India and South Asia, Neeraj Swaroop said at a press conference.
Standard Chartered Bank reported a 89 per cent rise in operating profit to $606 million in January-June this year, compared with $320 million during the first half of 2007. The bank, however, refused to disclose its net profit.
The operating profit includes $146 million generated from the sale of the bank’s asset management arm to IDFC earlier this year. Excluding this transaction, Standard Chartered’s operating profits from India rose 44 per cent to $460 million in the first half of 2008. Income was 73 per cent higher at $975 million.
Globally, the bank’s operating profits grew 31 per cent to $2.59 billion and operating income rose 33 per cent to $6.99 billion.
“Most of our businesses in India have not seen any slowdown despite the challenging environment. We will continue to focus on our wholesale and consumer banking businesses. We have grown our unsecured consumer loans business, which resulted in higher loan impairment this year,” said Swaroop.
The bank’s loan impairment numbers grew to $47 million for the half year, compared to $32 million for the same period a year ago.
Standard Chartered has not witnessed any significant slowdown in the credit growth so far, but profits from the credit card business have dipped in the first half, the bank said. The bank’s net interest margin stood at 3.9 per cent during the first half, slightly higher than the corresponding period last year.
