Standard Chartered eyes Africa, Brunei for Islamic growth

DUBAI / Reuters

Standard Chartered’s Islamic division is seeking banking licences in three African countries in order to offer its services to the continent’s large Muslim population.
Standard Chartered Saadiq could enter at least one of these markets – Nigeria, Botswana and Zambia – as early as 2017, Mohammad Ali Allawalla, who is head of Islamic banking for retail clients at the bank, said on the sidelines of a media briefing. The Muslim population in sub-Saharan Africa is forecast to more than double from about 250 million people in 2010 to nearly 670 million in 2050, according to Pew Research Center.
As well as talking to regulators in the three African countries, Standard Chartered Saadiq is also in discussions about gaining an Islamic banking licence in Brunei in South East Asia and working with the regulator there on guidelines for Islamic wealth management.
Standard Chartered Saadiq’s core markets are Pakistan, Malaysia, Bahrain, United Arab Emirates, Indonesia and Bangladesh and in 2014 it entered the Kenyan market, its first move into Africa.
“Nigeria is an interesting market in terms of size we are exploring and other markets like Botswana and Zambia, which are not big markets in terms of sheer size but in terms of pockets of customers they present a good opportunity,” Allawalla said.
Nigeria, the continent’s most populous nation, has around 77 million Muslims, according to Pew Research Center. Allawalla said the country presented challenges for retail banking because of the gap between rich and poor.
Standard Chartered already operates in Nigeria, Botswana, Zambia and Brunei and Saadiq would only venture into them if there was a need for an alternative Islamic products, Allawalla said.
“It’s not just a matter of what we would like to do, it’s also a matter of how mature the regulations are, what do the regulations allow you to do, what is the cost of setting up vis-à-vis the products you can roll out in the market,” he added.

StanChart’s ‘tough years’ in India are behind it

Bloomberg

Standard Chartered Plc is over the worst of its challenges in India that led to loan writedowns and dragged on profit, according to the lender’s South Asia head.
The London-based bank is now focusing on expanding its consumer and corporate businesses in the country, where it has operated since 1858, Ajay Kanwal, the company’s chief executive officer for South Asia and Asean, said in an interview with Bloomberg Television’s Haslinda Amin from Singapore. The lender has hired about 800 people for its Indian retail business this year, he said.
“We’ve had a few tough years, I completely agree, but those are behind us,” Kanwal said. “We want to make sure we get the most” out of the bank’s presence in India, he said. Since taking his position last year, Standard Chartered CEO Bill Winters has been shrinking the bank’s balance sheet and tightening lending standards, especially in India and other emerging markets, in an effort to boost profitability.
The lender said Tuesday losses on bad loans and other investments more than halved to $660 million in the third quarter. While it didn’t break out specifics for India, it’s poised for some relief there: The bank is set to get a $2.1 billion repayment from Essar Global, the steel-to-power conglomerate that’s been struggling to repay its debt, people with knowledge of the matter said last month.
Risky Lending
Standard Chartered’s nonperforming-loan portfolio may be reduced by about 20 percent if the Essar debt is repaid, according to an October note from Citigroup Inc.
Kanwal declined to confirm the repayment in a separate interview with Bloomberg News, citing client confidentiality. Standard Chartered’s woes in India are partly the result of loans that failed to fully factor in the risk of extending credit to companies like Essar, current and former bank employees said in November last year, speaking on condition of anonymity.
“If you look at our recent results announcement, the impairment number, you can see a drop on quarter, as well as a drop year on year,” Kanwal said. “While the environment remains challenging, loan impairments, which shows the quality of loans, are OK.”
Still, Standard Chartered’s third-quarter profit missed analyst estimates on a drop in revenue at all four of the bank’s divisions. Last year, record impairments contributed to the bank booking its first annual loss in more than a quarter century.
The bank’s shares sank 5.4 percent in London following the quarterly results. Its Hong Kong stock slumped 6.5 percent, the most since June, as of the city’s noon trading break.