SBH net down 7.48%, to raise Tier II capital

State Bank of Hyderabad, the largest among the six associate banks of State Bank of India, reported a 7.48 per cent drop in net profit to Rs 172.29 crore for the quarter ended March 31, 2009, as compared with Rs 186.23 crore during the same period last year. Interest income during the quarter increased 18.46 per cent to Rs 1,487.04 crore from Rs 1,255.21 crore in the corresponding period last year.

Bank managing director Renu Challu said the last quarter was very stressful as growth slowed down across the sectors. This resulted in a fall in exports and forced the bulk of the SME sector to default on the repayment of loans.

For the year ended March 31, 2008, the bank registered a 10.56 per cent increase in net profit to Rs 615.81 crore, as compared with Rs 556.99 crore last year. Total business touched Rs 109,629 crore for the year as against Rs 88,665 crore, up 23.64 per cent. SBH is the first associate bank of SBI to cross the Rs 1 lakh crore business during 2008-09.

Total deposits during the year stood at Rs 65,676 crore from Rs 52,650 crore last year, up 24.74 per cent. Advances increased 22.04 per cent to Rs 43,953 crore from Rs 36,015 crore.

The net non-performing assets ratio increased to 0.38 per cent for the year ended March 31 as compared with 0.16 per cent last year.

Challu said SBH would raise about Rs 800 crore debt by issuing subordinated bonds under Tier II capital during the current fiscal.  Of this, Rs 325 crore would be raised during the first quarter of fiscal 2009-10 and another Rs 500 crore before the fiscal end. The bank had a headroom for Rs 1,000 crore under Tier II capital. It would also approach its parent bank to seek further infusion of Tier I capital.

During the last fiscal, SBH restructured about Rs 1,600 crore of assets, of which 70 per cent belonged to the micro, small and medium enterprise segment. Challu said there could be a 20 per cent growth in credit off-take during the current fiscal.