SBH may see pressure on NIM by 22 basis points
Public sector lender, State Bank of Hyderabad (SBH), on Thursday said that there could be some pressure on its net interest margin (NIM) because of the central government indicating that the interest rates should come down, according to the bank's managing director M Bhagavantha Rao.
“This year, the banking sector deposits are going to be under a lot of stress because of the small savings offering a good rate of interest, in addition to tax concessions. And, banks have to compete with them. So, this is going to be a problem as we cannot go on cutting down our deposit rates,” he told mediapersons here on Thursday.
SBH’s NIM stood at 3.47 per cent during the 2011-12 financial year, as compared to 3.51 per cent in the previous year.
“The pressure on NIM could be in the range 3-4 basis points (bps) during the first quarter as we are yet to take a decision on our interest rates. We would be happy to end the NIM at 3.25 per cent (with a pressure of 20-22 bps) in FY13,” Rao said.
Q4 net up 6.81%
SBH reported a net profit of Rs 481.04 crore for the fourth quarter ended March 2012, as compared to Rs 450.35 crore in the corresponding quarter a year ago, reflecting a growth of 6.81 per cent. For the full year, the net profit grew 11.32 per cent to Rs 1,298.27 crore, as against Rs 1,166.24 crore.
“The increase in profitability is primarily on the back of higher net interest income, which grew 31.29 per cent quarter-on-quarter to Rs 1,052.55 crore, as compared to Rs 801.69 crore in March 2011, and 18.11 per cent year-on-year to Rs 3,364.49 crore, as against Rs 2,832.26 crore,” Rao said.
As on March 2012, the bank managed with gross non-performing assets (NPAs) of Rs 2,007 crore (2.56 per cent) and net NPAs of Rs 1,002 crore at 1.30 per cent. While infrastructure companies and the beverages sector contributed 15 per cent and 13-14 per cent to SBH's NPAs, steel, textiles and sugar comprised the rest.
“The Rs 2,007-crore gross NPAs will not be breached this financial year. Certainly, this will see a downward spiral in the months to come,” Rao said.
Total business grew by Rs 23,146 crore to touch Rs 1,80,143 crore, a growth of 14.74 per cent, while total deposits reached a level of Rs 1,01,806 crore, recording a year-on-year growth of 11.19 per cent, over Rs 91,560 crore as on March 2011.
“Our immediate focus is to have a total business of Rs 2 lakh crore by September 2012. The full year target will be set after our assets and liability committee meeting scheduled to be held next week. Broadly, we would like to grow at 21 per cent in deposits and between 18 and 20 per cent in advances,” Rao said.