Standard Chartered India has demonstrated resilience in its financial performance, reporting an 11% rise in profit despite a contraction in its loan book. This seemingly paradoxical situation highlights the bank's strategic shift and its success in optimizing revenue streams beyond traditional lending.

In calendar year 2024, Standard Chartered's India profit before tax rose 3% to $308 million, impacted by a 1.5x rise in provisions. However, operating income increased 10% to $1.32 billion. The increase in profit was achieved despite a decline in net interest income, which was offset by strong trading and fee income. This diversification of income sources is a key factor in understanding the bank's performance.

One significant event contributing to the shrinking loan book was the sale of Standard Chartered's personal loan portfolio in India to Kotak Mahindra Bank. The deal, finalized in October 2024, involved a loan book with an outstanding balance of approximately Rs 4,100 crore (around $490 million). These loans were classified as "Standard Loans" according to the Reserve Bank of India (RBI) guidelines, indicating their healthy performance.

Standard Chartered's decision to divest its personal loan book aligns with its strategic focus on accelerating growth in the wealth, affluent, and SME (small and medium enterprises) segments. The bank aims to capitalize on its expertise in wealth management and corporate and investment banking to drive future growth in India. Standard Chartered views India as a key market and plans to continue investing and expanding its presence in the country.

Kotak Mahindra Bank, on the other hand, aims to strengthen its position in the retail lending market through this acquisition. The acquired loan book provides access to a high-quality customer base, particularly in the affluent segment, which aligns with Kotak's strategy to transform for scale and focus on customer-centric growth.

Looking at Standard Chartered PLC's overall performance, the bank logged a profit of $4.04 billion for 2024, a 17% increase compared to $3.47 billion in 2023. The reported earnings per share for 2024 was 141.3 cents. The bank's net interest margin (NIM) also increased to 1.94% in 2024, 27 basis points higher than the previous year. The Group Chief Executive of Standard Chartered, Bill Winters, stated that the bank's strategy of combining cross-border capabilities for corporate and institutional clients with wealth management expertise is driving an increase in return on tangible equity. The bank's Common Equity Tier 1 (CET1) ratio stood at 14.2% in 2024, compared to 14.1% in 2023.

While specific details of Standard Chartered India's 2024 performance are still emerging, the broader picture indicates a strategic realignment towards wealth management, affluent clients, and SMEs, alongside a focus on corporate and investment banking. The sale of the personal loan book is a tactical move to streamline operations and concentrate on higher-growth areas. Despite the shrinking loan book, the bank's ability to increase profit underscores its success in diversifying income streams and optimizing its business model in the Indian market.