The Hindu Business Line
Riding on higher other income including profits from treasury operations, State Bank of India posted a 46 per cent rise in net profit at Rs 2,742 crore for the fourth quarter ended March 31, 2009, up from Rs 1,883 crore during the corresponding quarter of last year.
The bank made a profit of Rs 1,508 crore on account of sale of investments in the quarter ended March 31, 2009, according to its Chairman, Mr O.P. Bhatt.
Other income for the quarter under consideration grew by 67 per cent at Rs 4,718 crore (Rs 2,817 crore).
The net profit for the year ended March 31, 2009 increased by 35.5 per cent at Rs 9,121 crore, against Rs 6,729 crore during the corresponding period last year.
The board of directors at a meeting here on Saturday recommended a dividend of 290 per cent or Rs 29 per share (215 per cent) for the year under review.
Treasury would continue to be an important pillar of growth for the bank, he maintained.
“Historically, treasury was our residual business but this year treasury has registered outstanding growth. We are now trying to offer products at par with other multinational banks. Our fee-based income, which was earlier growing in single digits, also grew by 30 per cent in 2008-09,” Mr Bhatt said explaining the reason for the growth in the bank’s net profit.
Referring to the lower growth in net profit in 2008-09 vis-À-vis 2007-08 when the growth was 48 per cent, he said, “It was due to the rise in overhead costs due to branch expansion, liquidity overhang and the cost of carrying it and also on account of higher provisioning for salary revisions and for pensions.”
A 30 per cent growth in advances also contributed to the growth of net profit, he said.
“There has been a robust growth in our advances not only in terms of volumes but also in terms of income,” he pointed out.
Performance
The bank’s core fee-based income for the year ended March 2009 grew by 29 per cent to Rs 7,617 crore contributed by commission, exchange, loan processing fee and account maintenance charges.
Other income increased by 46 per cent at Rs 12,691 crore (Rs 8,695 crore).
Domestic deposits grew by 33 per cent at Rs 6,96,340 crore (Rs 5,22,589).
Current Account and Savings Bank Account (CASA) deposits increased by 22 per cent to Rs 2,73,396 crore (Rs 2,23,627 crore) and term deposits grew by 41.5 per cent to Rs 4,22,944 crore (Rs 2,98,962 crore). The share of bulk deposits to total deposits declined to 10.81 per cent (14.13 per cent).
Advances went up 30 per cent at Rs 5,48,540 crore (Rs 4,22,331 crore). The credit-deposit ratio declined to 66.63 per cent (72.59 per cent).
“There has been an unprecedented flow of deposits since November 2008 to the tune of Rs 1,000 crore a day; on the other hand there has been a decline in credit offtake. This has led to a decline in CD ratio,” Mr Bhatt observed.
The net interest margin (NIM) declined to 2.93 per cent (3.07 per cent). “The huge growth in deposits, lesser growth and lower yield on advances has put a pressure on our margins,” Mr Bhatt said.
The bank witnessed a two basis point dip in NIM in April 2009. However, with the cost of deposits coming down, the bank was hopeful of either maintaining or registering a slight improvement in its NIM, he said.
NPAs flatThe net non-performing assets remained almost flat at 1.76 per cent (1.78 per cent).
“International NPAs increased by 955 crore as a result of economic slowdown, particularly in the US and Singapore.
Domestic NPAs increased by Rs 1,774 crore of which Ratnagiri Power alone contributed to Rs 1,651 crore,” Mr Bhatt said and added that the bank would be able to manage NPAs at the current level.
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