SBH net down 12%

State Bank of Hyderabad (SBH), an associate bank of SBI, reported a 12.27 per cent decrease in net profit to Rs 232.04 crore for the quarter ended September 30, 2011, due to higher interest expenditure and higher provisioning for non performing assets (NPA). Net profit in the corresponding period last year stood at Rs 264.48 crore. The bank's retail lending registered poor returns impacting the overall profitability during the three-month period.

Total income grew 32.67 per cent to Rs 2,821.91 crore for the quarter from Rs 2,127 crore in the same quarter a year ago. Of this, interest income was Rs 2,559.3 crore, an increase of 33.4 per cent over Rs 1,918.47 crore in the corresponding previous quarter.

However total expenditure, excluding provisions and contingencies, increased 35.35 per cent to Rs 2,265.35 crore from Rs 1,673.65 crore. The statutory provisioning towards NPAs nearly doubled to Rs 174.91 crore from Rs 90.30 crore as net NPAs rose to 1.92 per cent from 0.64 per cent in the corresponding previous quarter.

Also the profit yields of retail banking, the mainstay of the bank with a total revenue of Rs 2,083.33 crore from the segment that was higher by 28 per cent compared to the corresponding previous quarter, were down 37 per cent at Rs 192.62 crore.

The segment that stood firm to help contain further downslide in profits for the quarter was corporate and bulk lending business, which grew 43 per cent though the profits from the segment doubled to Rs 356.15 crore during the second quarter this year.

SBH managing director M Bhagavantha Rao said the downturn in businesses had influenced the quarterly performance especially on the NPA front as had happened with other public sector banks. In spite of the dip in net profit, the bank could maintain a higher net interest margin (NIM) of 3.53 per cent (3.33 per cent in the same quarter a year ago).

For the second half of the current year, the bank expects 17 per cent growth in advances as compared with 20.62 per cent in the first half. SBH has announced several new measures such as reducing the minimum balance norm and loans on gold coins sold by it though it has adopted a wait-and-watch approach with regard to savings bank interest, which already has been raised by a few private sector banks.