British lender Standard Chartered Plc has posted its first yearly loss since 1989, citing ‘deterioration of financial markets in India’ as one of the main reasons.
The lender reported headline pre-tax loss of $1.5 billion in 2015, and it said this was after taking into account restructuring charges of $1.8 billion, which is within the $3 billion indicated in November 2015, covering redundancy costs, impairments and a goodwill write down.
“While 2015 performance was poor, the actions we took on capital throughout last year and particular in December, have positioned us strongly for the current macro environment,” Bill Winters, Group Chief Executive said, while commenting on the performance. “The challenging external environment is not an excuse for our performance. We are not unwitting victims,” he added.
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Its underlying loan impairment rose a staggering 87 per cent to $4 billion, and 40 per cent of the increase was due to “a number of exposures beyond our tightened risk tolerance,” the bank said.
“The balance (60 per cent) was mainly driven by falling commodity prices and deterioration in financial markets in India,” it said. High restructuring costs and weak commodity prices took a toll on the lender, which focuses on emerging markets and as a result, the underlying profit before tax plunged 84 per cent to $800 million.
“Corporate & institutional clients and commercial clients’ loan impairment increased significantly to $3.2 billion. We have reviewed the portfolio extensively through 2015 and have increased provisioning, largely to reflect lower commodity prices as well as further deterioration in India,” the bank said.
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The bank said none of its executive directors would be paid a bonus for 2015, while bonuses across its workforce were down an average 22 per cent over the previous year.
In November last year, Standard Chartered decided to reduce its unsecured retail and corporate business in India as a part of its global restructuring exercise that will cut 15,000 jobs worldwide. The largest foreign lender in India, in terms of branches, is however keen to invest in the private banking and secured retail lending business in India.
The British bank has appointed former ICICI Bank head of wholesale banking Zarin Daruwalla as its new CEO, replacing Sunil Kaushal, who moved on to lead the Africa and Middle East business at the end of September.
It has appointed former ICICI Bank head of wholesale banking Zarin Daruwalla as CEO