Buoyed by impressive net interest income margins, State Bank of India (SBI), the country's largest lender, hopes for better than expected performance for the third quarter (October-December) of the current financial year.
The net profit is expected to be at least Rs 10,000 crore in 2011-12. "Our net interest income margins are very good. They are touching 3.8 per cent. SBI recorded net profit of Rs 1,550 crore in the first quarter and Rs 2,850 crore in the second quarter. On an average, SBI has been making profit of Rs 2,500 crore per quarter and we believe we can outperform this figure in this fiscal,” chairman Pratip Chaudhuri told reporters.
And: “The government of India has approved capital infusion of Rs 7,900 crore in SBI and we expect it to come before the end of March this year.” The infusion would help raise SBI's Tier-I capital to eight per cent. On revisiting interest rates in the aftermath of a pause in the monetary tightening cycle by the Reserve Bank of India (RBI), he said, “We'll definitely have a re-look at interest rates on loans. Our asset liability committee will meet soon to take a call. Our base rate for loans, at 10 per cent, is the lowest among all public sector banks.”
On raising interest rates on savings bank deposits, after the RBI announced deregulation on these, he said “We are currently offering four per cent on such deposits. Only three private sector banks — IndusInd, Kotak Mahindra and YES Bank are offering higher interest than us. But these banks have not witnessed any major inflow of customers, nor have we seen any appreciable dip in our customers.”
The bank is also to expand its international operations. "We are going to open a subsidiary in Australia within a year, also in the US and London.”
“SBI will also be opening a couple of branches in Bangladesh,” said Chaudhuri.
The bank recently opened a branch at the Qatar financial centre. SBI's balance sheet abroad is $30 billion, of which bonds constitute $6 bn. It is waiting for international market conditions to stabilise before going for more offshore bonds.
In the domestic market, SBI is planning to add 1,000 branches and 2,000 automated teller machines (ATMs) in 2012.
On exposure to telecom operators embroiled in the controversial 2G spectrum allotment, he said, “We have an exposure of Rs 2,500 crore to Idea Cellular and Tata Teleservices. Though some of their licenses have been quashed, these companies are in a position to pay back their loans.”
In the Orissa circle, SBI has 672 branches and 1,114 ATMs. It intends to add 40 branches and 100 ATMs in the state in 2012. It has covered all 468 villages allotted to it under the Financial Inclusion Plan by the State Level Bankers' Committee. Its total deposits in the state were Rs 37,000 crore and advances Rs 15,643 crore at the end of March 2011.
The bank says it has disbursed home loan worth Rs 2,245 crore to 17,000 customers and education loans of Rs 874 crore to about 100,000 students.
There has been a high level of focus on financial and capital markets with a slew of measures