SBI expects double-digit profit growth in Q1 FY09

"We don't take short-term view on interest rates, but there is definitely an undercurrent of upward bias on the rates. There is pressure on the margin but we will maintain the net interest margin (NIM) at around 3 per cent for this financial year," SBI Chairman O P Bhatt said here.

SBI's NIM stood at 3.07 per cent for the year ended March 2008. The bank's net profit for the quarter ended March 31, 2008 stood at Rs 1,883.25 crore, a growth of 26.12 per cent over the corresponding period of the previous year.

However, there is no proposal now to tinker with the interest rates, he said.

Demand for loans for some sectors such as commercial real estate and auto has slowed down, but there is no impact on other sectors, including home loans and medium and large corporate loans, he added.

Last month SBI increased lending rate by 50 basis points and deposit rates by 75 basis points. On the bottom line, Bhatt said profit growth in April-June quarter is likely to be double digits. On the State Bank of Saurashtra (SBS) merger issue, Bhatt said they are awaiting the Cabinet approval for the same.

"We are awaiting government clearance. SBS merger is in the pipeline and there is no delay. Once we get clearance, it could be done within three months," he said. Bhatt had earlier said that after the merger of SBS, the process of amalgamation of other associate banks would begin afresh.