Provision rise drags StanC's Q3 profit growth in India

MUMBAI: Standard Chartered Bank (StanC) reported a modest 3% rise in profit before tax in India in calendar 2024 due to higher provisions even as operating income increased 10% to $1.32 billion.

Profit before tax increased to $308 million from $299 million in 2023.

During the year, India dropped one place to become the bank’s fifth-most profitable market, with the US pushing down UAE to become the third-most profitable market with a profit before tax of $564 million.

Higher fee and trading income helped the Anglo-Asian lender turn a profit last year. During the year, operating income rose due to higher fee and trading income even as net interest income (NII) declined.

A 1.5 times surge in provision costs hit profit growth. Total provisions increased to $106 million from $42 million in 2023. This was mainly due to a more than sixfold jump in non-credit provisions to $72 million in 2024 from $11 million in 2023.

NII—the difference between the interest earned on loans and that paid on deposits—dropped 1% to $646 million in 2024. However, a strong 34% jump in trading income and a 7% increase in fee and commissions more than made up for the drop. Trading income climbed nearly 34% to $441 million from $330 million, while fee and commission income increased 7% to $236 million from $221 million.

The bank's India loan book declined 2.4% to $13.50 billion, while customer deposits remained little changed at $18.60 billion in 2024 compared to $18.70 billion.

StanC reiterated its focus on serving the needs of internationally mobile, affluent Indian clients, through its wealth hubs in Hong Kong, Singapore, UAE and Jersey.

The bank plans to add over 100 relationship managers, increase entry thresholds in its wealth management business, and leverage corporate banking associations, a senior official told ET in November.

In October, StanC sold its Rs 4,100 crore personal loan portfolio to Kotak Mahindra Bank, exiting that business after more than two decades.

Globally, the bank reported a pretax profit of $6 billion in 2024, up from $5.1 billion the year before. It announced a new $1.5 billion share buyback on Friday after reporting its annual profit rose 18% backed by record growth in its wealth business and a strong performance of the markets division, driving its shares to a near-decadal high.