SBM net profit up 44% to Rs 75 crore in Q1

The bank plans to raise Rs 500 crore through a rights issue to augment Tier-I capital during the Q3

Aided by a decent growth in net interest income and higher Casa (current account savings account) deposits, the State Bank of Mysore (SBM) reported a robust 44 per cent growth in net profit at Rs 75 crore for the first quarter ended June 30, compared with Rs 52 crore in the corresponding quarter the last financial year.

Its total income went up 13 per cent to Rs 1,868 crore compared to Rs 1,653 crore in the corresponding quarter last year. The operating profit went up 6.7 per cent to Rs 303 crore from Rs 284 crore in the year-ago quarter.

Sharad Sharma, managing director, SBM, said: “Our net profit growth was aided by a good rise in other income and recovery on written off accounts, which yielded Rs 17 crore and reduction in bulk deposits from 20 per cent a year ago to 12 per cent in the first quarter of this year.”

Provisions were marginally lower at Rs 198 crore compared with Rs 206 crore in the year-ago period. The lender reported 15.3 per cent growth in net interest income at Rs 527 crore against Rs 457 crore in the first quarter last year. The net interest margin improved five basis points to 3.08 per cent in the June quarter. The provision coverage ratio went up to 65 per cent from 57 per cent year on year. Casa deposits increased from 33.25 per cent to 34.88 per cent since March 2014.

The return on assets improved to 0.41 per cent from 0.31 per cent a year ago. The percentage of net non-performing assets declined to 2.72 per cent from 3.43 per cent. The bank reduced its NPAs to the extent of Rs 329 crore to Rs 2,490 crore during the first quarter compared to Rs 2,819 crore as of March 2014.

The capital adequacy ratio marginally dipped to 11.16 per cent from 11.49 per cent under the Basel-III norms.

The Tier-I capital stands at 8.72 per cent and Tier-II is at 2.44 per cent. The bank plans to raise Rs 500 crore through a Rights Issue to shore up its Tier-I capital sometime during the third quarter, Sharma said.

The Bank has taken approval from its board, SBI and the government and is waiting for the interest rates to come down before launching the Rights Issue, he said adding that post issue the Tier-I capital would go up by 50-60 basis points.