StanChart India profit falls 39%, IDRs up 1%

Mumbai: UK-based Standard Chartered PLC today reported a 39 per cent dip in its India operations (IDRs listed on BSE) during the first half of the current fiscal and said its business in the country was getting affected due to 'governance concerns'.

While the bank attributed fall in its profit to rising interest rates and growing competition from rivals, it also expressed concern over business sentiment in India being "impacted on the back of governance concerns."

During January-June 2011, Standard Chartered (India)'s operating profit fell to USD 378 million, from USD 624 million in the same period last year. Besides, it reported a 12 per cent drop in its income.

In a statement, the bank said with exception of India all other regions have shown healthy growth in income. India has been giving high profits to the bank in the past.

The profit declined due to "rising interest rates and increasing competition resulting in falling net interest margins, the bank said.

"Project and deal flows has slowed as business sentiment is impacted on the back of governance concerns in the market".

A Prime Minister's Advisory Panel recently admitted that the spate of corruption related controversies has consumed the energies of government and has led to an unintended slowing down of initiatives to restore investment and economic confidence.

The bank, however, is optimistic about India's growth prospects and said "given our strength and competitive position, we are well positioned for the upturn".

However, across the group Standard Chartered PLC posted a operating profit before tax of USD 3.64 billion in H1 2011, up from USD 3.12 billion in the year ago period, a growth of 17 per cent.

This is the 9th successive time that the group posted profit in the first six months period.

"Wholesale banking and consumer banking saw increased business activity across a number of products and services, as the group captured market share from our competitors," the bank said in a statement.

Globally, income from consumer banking segment grew 15 per cent, while wholesale banking saw a rise of 9 per cent.

"Our growth is resilient and diverse. With a unique position at the heart of growing trade and investment flows between Asia, Africa and the Middle East, with their

fast-expanding middle classes, we continue to see significant opportunities for profitable growth across our network," said Peter Sands, Group Chief Executive, Standard Chartered.

The bank, which has listed its Indian Depository receipts (IDRs) on BSE, focuses mainly on emerging markets.

Standard Chartered's operating profits grew by 55 per cent in Hong Kong, 11 per cent in Singapore and 30 per cent in South Korea.

However, profits from America, UK and Europe nearly doubled during the period.

Standard Chartered PLC, listed in London, Hong Kong and Mumbai, has around 85,000 employees.

Meanwhile, media reports quoting Sands said, the bank would add about 1,000 jobs in 2011.

StanChart had axed 1,170 jobs in the first six months of the year as part of its cost cutting exercise.

Source: Financial Express