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| No MTM losses so far in Q2, says Bhatt |
| BS Reporter / Mumbai Sep 09, 2009, 00:27 IST |
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The country’s largest lender, State Bank of India (SBI), today said there was no marked-to-market (MTM) losses from its treasury operations till date in the current quarter.
“At the moment, there are no marked-to-market losses at our treasury. But we still have some time to go for the quarter to end. It will depend on how yields rise (till end September),” OP Bhatt, chairman of SBI, said on the sidelines of a seminar organised by Indian Banks’ Association and Federation of Indian Chamber of Commerce and Industry (Ficci). The benchmark 10-year government bond has risen by 35-40 basis points since July. Since June, yields have hardened by about 40 basis points.
Bhatt ruled out any interest rate hardening because of ample liquidity in the system.
 Bhatt also said that the bank was expecting a 30-35 per cent increase in profit in the current quarter. The bank had reported a 42 per cent year-on-year profit growth at Rs 2,330 crore in the first quarter of the current financial year, which was mainly driven by treasury gains. He also hinted that loan growth in the second quarter would be better than that in the first quarter.
“Credit growth in the first quarter was flat due to huge repayments from some sectors. In the second quarter, we are growing at about Rs 5,000 crore every month,” Bhatt said.
From April 1 to August 14, credit growth in the banking sector was a mere 1 per cent compared with 3.3 per cent a year ago.
Bhatt, however, said loan growth in the retail sector was robust, evident from the fact that retail loans in the first quarter have almost doubled compared to the previous corresponding quarter.
On provision for non-performing assets, Bhatt said the bank was provisioning as per the requirement of the Reserve Bank of India.
Media reports suggested that the central bank wanted SBI to increase its provisioning coverage ratio. SBI provisioning coverage ratio came down to below 40 per cent in the last quarter of 2008-09, and was 42 per cent for the first quarter of the current financial year.
SBI had earlier said it would increase its provisioning coverage ratio to 50 per cent over the next couple of years.
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