Standard Chartered Pakistan profit decline by 4.4 % in 2015

07:01 PM | 4 Mar, 2016
Standard Chartered Pakistan profit decline by 4.4 % in 2015
LAHORE (Staff Report) - Standard Chartered Pakistan profit decreased by 4.4 percent to stand at Rs 9.288 billion in 2015 showing bank’s struggling situation in the industry at times when major and mid-tier banks continued to show profit in the same year.

In 2014, the bank also reported a decline in profits that decreased to Rs 9.72 billion as against of Rs 10.52 billion recorded in 2013 depicting the bank’s survival of making growth in the profit for past couple of years.

This year, the British based bank’s profit before tax inched up by 1 percent to Rs 15.4 billion in 2015 whereas its revenue income merely increased by 4 percent to Rs 29.4 billion in 2015, with earning per share declined to Rs 2.40 from Rs 2.51.

The bank’s branches network continued to squeeze which reportedly now standing less than 100 in barely 11 cities, on the other hand, the bank failed to set up its digital branches in Lahore and Islamabad which it had been planning to promote their business through digital banking.

Despite of cutting-throat competition in the banking industry and various challenges to banks due to increase of taxes, the foreign bank seems to have rolled back its operations which is evident that it recently sealed a deal with Orix Leasing Company.

The bank sold out its 84% percent shares in the subsidiary of Standard Chartered Leasing Company to for its merger with Orix Leasing Company, which caused its divestment of Rs 666 million.

The deal got delayed to be concluded last month in 2016, otherwise the bank could have saved itself for showing profit in the balance sheet. The forthcoming deal of divestment is likely to give bank some respite in the coming months as stakes of its subsidiary Standard Chartered Modaraba will be sold out to another company.

Administrative costs continue to be well managed through operational efficiencies and disciplined spending, thereby leading to a 1 per cent decrease year on year.

On the liabilities side, the bank’s total deposits increased by 7% in 2015 whereas CASA deposits increased by 8%. The continuous increase in low cost deposits has significantly supported the bank’s performance with current and savings accounts comprising 93% of the deposits base.

This has resulted in the bank having one of the lowest cost of deposits in the industry. On the advances side, momentum in Retail assets is building up since the latter half of 2015 while the Corporate and Commercial segments continue with the strategy to build a profitable, efficient and sustainable advances portfolio.

These results are a testimony of the disciplined execution of the Bank’s strategy of improving profitability and efficiency, strengthening controls and enhancing customer experience. The growth in profitability is attributed to a steady revenue line which remains resilient and underpinned by high levels of activity across the businesses.

Final cash dividend of 12.50% (Re.1.25/- per share) has been recommended by the Board of Directors. This is in addition to 7.50% (Re.0.75/- per share) interim cash dividend announced during the year.

Commenting on the results Mr. Shazad Dada, Chief Executive, Standard Chartered Bank (Pakistan) Limited, said, “These results demonstrate our commitment to delivering consistent and sustained performance. We have a differentiated and valuable franchise, core financial strength, outstanding client relationships, strong controls and the right team of people.

We will continue to be disciplined in cost optimisation and invest much of these savings into the future of our business, especially to further enhance our digital banking capabilities. We will retain a strong balance sheet which both protects us from any economic volatility and positions us to capture future economic opportunities.”