NEWS & ADVICE : FIXED DEPOSITS
StanChart's profits shrink by 15.7%; mainly due to provisioning of bad loans
By Neelima Shankar
Jul 11, 2012
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Standard Chartered Bank, Indian arm of the leading global bank has registered reduced profits. The bank's bottomline for the FY12 stood at Rs. 1,736 crore; down from Rs. 2,059 crore a year ago.

The reduced profits are primarily due to the provisioning it had to make on account of rising nonperforming assets (NPA). The foreign banks in the country have to make filings of their annual results with the central bank.

Standard Chartered, which has the largest branch network among the foreign banks in the country saw its gross NPA increase by Rs. 2,064 crore; while the net NPA increase by Rs. 296 crore. A major chunk of NPA came from four accounts which contributed nearly Rs. 2,000 crore this fiscal against Rs. 336 crore last year.

Increasing bad loans made the bank made higher provisioning to cover those accounts; it created provisions of Rs. 2,765 crore up from Rs. 1,817 crore it made in the preceding year. The UK based bank also saw an increases exposures in power and real estate sectors.

The bank's deposits grew by 9.5% to Rs. 63,964 crore, while the bank disbursed Rs. 55,570 crore for the same period, a growth of 13%. The capital adequacy ratio for the FY11-12 was 11.05%.

The results for StanChart is totally different from those of its peers; other major foreign banks, Deutsche Bank and Citibank both registered a healthy positive growth in their net profits. While HSBC Bank, the main competitor of the bank registered a growth of 30%.


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