SBI net falls on higher provisionIng

Consolidated profit falls 22.5 per cent as bank provides Rs 2,162 crore for loan-loss provisioning.

State Bank of India (SBI), the country’s largest, reported a 22.5 per cent drop in consolidated net profit for three months to September 30 compared to the year-ago period as it made higher provisions for bad loans. Its consolidated net profit fell to Rs 2,363.95 crore from 3,050.99 crore in the corresponding period of the previous year.

The bank reported a standalone net profit of Rs 2,501 crore compared with Rs 2,490 crore in the same quarter a year ago. Total income on a standalone basis rose to Rs 23,813.3 crore from Rs 21,301 crore.
 

PERFORMANCE IN THE QUARTER ENDED SEPTEMBER
(Rs crore)	Standalone		Consolidated
	10-Sep	% Chg*	10-Sep	% Chg*
Interest earned	19,808.09	11.43	27,919.03	11.6
Other income	4,005.21	13.62	10,006.41	23.78
Total income	23,813.30	11.79	37,925.44	14.57
Interest expended	11,693.22	-3.89	16,458.74	-4.01
Net interest income	8,114.87	44.68	11,460.29	45.59
Net profit	2,501.37	0.46	2,363.95	-22.52
*Over previous year                                    Data compiled by BS Research Bureau Source : Capitaline

The bank provided Rs 2,162 crore for loan-loss provisions to take its provision coverage ratio to 62.78 per cent. Reserve Bank of India rules require it to achieve 70 per cent provisioning coverage ratio by September next year.

“We have made an extra provision of Rs 449 crore to improve our loan coverage ratio. This is over and above the regulatory requirement for normal provisioning,’’ Chairman Om Prakash Bhatt said in New Delhi. “We intend to increase the coverage ratio for bad loans by two to three per cent every quarter to reach the 70 per cent norm prescribed by RBI.’’

The bank reported a 4 5 per cent rise in net interest income to Rs 8,115 crore during the quarter to September 2010 from Rs 5,609 crore a year ago. Interest expense was lower by 3.9 per cent over the year-ago quarter.

The bank’s gross loans grew 19.5 per cent, or Rs 1,12,987 crore, to Rs 693,224 crore as on September 30. Interest income on advances increased 15.1 per cent, compared with 10.3 per cent growth a year earlier, on a 19.5 per cent rise in advances. The bank increased its market share in loans to 17.03 per cent, compared with 16.57 per cent a year earlier.

The loans were likely to grow as much as 19 per cent in the full year to March, Bhatt said. Deposits are expected to rise 15 per cent. There was an upward bias in interest rates in the short run, he said, without elaborating.

The bank’s net interest margin (NIM) grew to 3.3 per cent in September 2010, compared with 2.43 per cent in September 2009 and 2.64 per cent in March this year. The bank’s NIM would be either the same or higher in the quarter ending December, Bhatt said.

Gross non-performing assets (NPAs) rose to 3.35 per cent of loans, compared with 2.99 per cent in September 2009 and 3.05 per cent in March 2010. Gross NPAs also rose as the bank absorbed State Bank of Indore and Rs 854 crore of its bad debts. Still, its net NPA was little changed at 1.7 per cent.

Its market share of deposits fell to 16.57 per cent from 17.19 per cent a year ago as it reduced its bulk deposits, the bank said.