StanChart India's net up 51%

The UK-based Standard Chartered Bank today reported 51 per cent year-on-year rise in net profit from its Indian operations in 2005-06, as buoyancy in the economy helped boost revenues and also on the back of bad loan recoveries.

Standard Chartered, with a net profit of Rs 905.9 crore in 2005-06, is the fifth largest bank in India in terms of net profit, after State Bank of India, ICICI Bank, Punjab National Bank and Canara Bank.

Citibank, which nearly had the same net profit as Standard Chartered in 2004-05, is still to make its 2005-06 results public.

A total of Rs 1,300 crore capital was infused by the bank in its Indian operations in 2005-06 to spur growth, which included Rs 900 crore of fresh investments and Rs 400 crore in the form of retention of profits.

"Further capital infusion in 2006-07 will be enough to fund our growth. It could be of the same order (as in 2005-06)," said Neeraj Swaroop, the bank's CEO-India.

The bank's total income jumped by 28 per cent to Rs 3,877 crore in 2005-06 from Rs 3,018 crore in 2005.

The growth was driven by 26 per cent year-on-year rise in deposits to Rs 28,459.8 crore and 20 per cent increase in advances to Rs 24,076.7 crore. The cost to income ratio in 2005-06 dropped to 35.9 per cent from the 44.1 per cent a year earlier.

Swaroop said "the growth was driven by buoyant economy, strategy of adding new products and expanding the geographical reach , increased revenues in the diversified product lines and the bank's commitment of investing India."

The bank forayed into project finance, micro finance an consumer finance in 2005-06.

In the year 2005-06, India's contribution to the global profit was around 8 per cent, which has fallen from just over 10 per cent due to the acquisition of a large Korean bank in 2005-06.

The wholesale and consumer banking contributed equally to the topline, while wholesale banking's share in the bottomline was 75 per cent.

The after tax impact of recoveries against bad loans in 2005-06 was Rs 80 crore, Swaroop said.

The bank's non-interest income, which includes fee income from consumer and wholesale banking offerings, fee on treasury products and profit on sale of investments was higher at Rs 820 crore in 2005-06 against Rs 525 crore in 2004-05.

In the next two to three years the bank expects to grow advances portfolio at 20 per cent plus.

Swaroop said "liquidity continues to be an issue and that remains a challenge. There is no constraint in raising resources, but the issue is how much you pay for it."