StanChart 2002 profit sharply up


BY IZWAN IDRIS

STANDARD Chartered Bank Malaysia Bhd has recovered strongly to post a pre-tax profit of RM367mil for the year ended Dec 31, 2002, sharply up from RM26mil the year before, with loan loss provisions significantly lower at RM33mil against RM434mil previously.  

The bank said its total net income for 2002 was RM856mil, achieved in a very competitive environment.  

Kai Nargolwala

Net interest income rose to RM621mil on the back of strong growth in mortgage loans, offset partly by narrower spreads. But non-interest income was 7% lower due to losses arising from interest rate derivative trading.  

“We have achieved a significant turnaround in the results of the Malaysian operations,'' StanChart's wholesale bank (corporate & institutional banking and global markets) chairman, Kai Nargolwala, told StarBiz.  

He added that the story in Malaysia had been one of very good control over bad debts, fairly subdued loan demand especially in wholesale banking, but significant growth in consumer banking. 

“We've had a 13% increase in consumer banking revenues and very good take-up of our products like MortgageOne, which has been very popular, credit cards (with 450,000 issued in Malaysia), and we continue to be a leader in distribution of third-party mutual funds with about RM500mil under management,'' Nargolwala said. 

The significant turnaround was not only in the results for the year but also in the general shape of the bank's portfolio. 

“Overall the credit performance in our portfolio and generally in the market has been quite good and that's reflected as well in the non-performing loans (NPLs) in the banking system in Malaysia, which is around 7%-8% and which is quite good compared with some of the other countries in Asia,'' he said. 

“More stringent credit controls helped net NPLs decline by 30% last year, resulting in a lower NPL ratio of 5.04% (7.4% in 2001). This was reflected in the loan loss coverage, which improved to 75.9% against 67.5% the previous year,'' StanChart Malaysia said in a statement. 

Gross loans, advances and financing grew RM450mil or 3% year-on-year. Property financing grew 21%, with residential and non-residential loan financing achieving 16% and 73% growth respectively. 

In contrast, loans and advances to the manufacturing and the general commerce sectors both fell by 22% year-on-year following the repositioning of the bank's corporate loans book. And customer deposits fell RM865mil or 6% due to the maturity of some short-term foreign currency fixed deposits. 

“Following strong performance in the first half, the bank had declared an interim dividend of RM190mil in June 2002. For the full year 2002, the bank is declaring a final dividend of RM159.3mil, taking the total ordinary dividend for the year to RM349.3mil,'' the statement said. 

The risk-weighted capital ratio of the bank remained strong at 13.17% (14.18% in 2001) after taking into account the proposed final dividend. 

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