State Bank of India (SBI)'s 24 per cent growth in advances for the first-half year ended September 30, 2004, is not sustainable, A K Purwar, chairman, said. At the same time, the bank has revised upwards its credit growth target for the current year up to 18-20 per cent from 16 per cent. Net interest margin of the bank is also "too good" at 3.15 per cent and the chairman expects it to stabilise at 3.08-3.10 per cent.
"We have achieved the 24 per cent growth thanks to the computerisation of all our semi-urban and rural branches which has freed our staff for other work. The reengineering of SBI and creation of specialised cells for lending to mid-corporates, SME and retail have all helped too...but this kind of 24 per cent growth is not sustainable," said Purwar speaking at the bank's analysts' meet held here on Saturday.
On the consolidation front, he said, SBI and its associates are open to acquisitions. This is in addition to the bank looking for acquisitions in Asia and Africa.
The largest commercial bank in the country did not carry out a transfer of government securities to shield its investment portfolio from interest rate hikes. Interest rates have risen by over 1.5 per cent since the start of this fiscal.
On why SBI did not undertake a transfer, Purwar said, "Currently, the yield on the 10-year government security is 6.99-7.00 per cent. This is the worst that can happen. From now onwards there should be improvement. But if yields rise further we will certainly consider a transfer at an appropriate time."
The bank's trading portfolio now has a duration of four years and can withstand more interest rate rise, he said. But he declined to quantify how much of an interest rate rise the portfolio could tolerate.
Bank of India, Corporation Bank and Syndicate Bank availed the scheme in second quarter and transferred securities to 'held to maturity' category.
| Kolkata branches merger put off Following resistance from customers and unions, the management of State Bank of India (SBI) has postponed its decision to merge three branches in Kolkata. SBI had earlier decided to merge branches at Taltala, B K Paul Avenue and Posta Bazar into one. Both the SBI Officers Association and Staff Association had opposed the merger who had requested the management to discuss the issue before arriving at any decision. |
