Profit before tax quadrupled to $337 million in 2020 from $79 million in 2019, making India the second biggest profit centre for the bank, behind Hong Kong and ahead of China, among the nine key markets for the bank across the world. It is up from number seven in 2019.
Profit rose mainly as operating income increased 19% to $1.24 billion from $1.04 billion. Total loans and advances in India fell 9% to $14.25 billion from $15.67 billion. However total deposits of the bank increased 9% to $15.05 billion from $13.80 billion in 2019 in line with other local banks as customers chose the security of bank deposits over investments in 2020.
“In India, despite COVID-19, we more than quadrupled operating profit and improved returns. The growth in lower cost liabilities has improved margins and supported clients in strategic transactions. Expenses remain tightly controlled benefiting from increased client digital adoption,” the bank said in a press release on its website.
The Indian results were in contrast to the parent’s results as net profit fell 68% to $751 million in 2020 from $2.34 billion in 2019 mainly due to provisions for bad loans more than doubled to $2.29 billion from $906 million in 2019.
Core profitability of the bank also suffered in 2020 as net interrest income dropped 11% to $6.88 billion from $7.69 billion in 2019. Net interest margins, the difference between what a bank earns on loans and that it pays for deposits also fell to 1.31% from 1.62% in 2019.
Standard Chartered said the fall in global profits was partly due to a $489m goodwill impairment in India, UAE and Indonesia.
“This was primarily due to lower forward-looking cash flows, lower economic growth forecasts and higher discount rates reflecting lower interest rate environments,” the bank said in its annual results.
The bank said it expects the business sentiment to improve in 2021.
“We expect pressure on credit impairments to reduce this year compared with 2020. Expenses are likely to increase slightly in 2021 as we continue to invest in our digital capabilities but should remain below $10 billion at constant currency and excluding the UK bank levy, supported in part by restructuring actions in 4Q’20 and through 2021,” the bank said.
