SBI profits rise on loan write-back

State Bank of India’s (SBI)- the country’s largest bank - first quarter profit rose by 15.08 per cent on write-back of bad loans.

Profit rose to Rs 1,640.79 crore in the three months ended June 30, 2008, as compared with Rs 1,425.81 crore in the corresponding period last year. Profit rose despite its non-tax provisions and contingencies rising nearly 10-fold to Rs 1,549.47 crore during the quarter as compared with Rs 159.37 crore last year.
 

(Rs crore)	Quarter Ended June
	2007	2008	% Change
Interest earned	11,090.50	13,799.20	24.42
Other income	1,138.59	2,403.87	111.13
Interest expended	6,889.12	8,981.54	30.37
Operating profit	2,361.46	3,962.34	67.79
Net profit	1,425.81	1,640.79	15.08

The bank wrote off Rs 247.40 crore as loan losses. In the absence of this entry, the bank would have reported a net profit of Rs 1,393.39 crore, which would have been 2.27 per cent lower.

While most banks have had to take a mark-to-market (MTM) hit on their investment portfolio due to a rise in the yields on government securities, SBI had to make additional provisions on bonds worth Rs 10,000 crore it received from the Centre for the rights issue in March. The bank made MTM provisions of Rs 1,656.61 crore on its investment portfolio.

Its pre-tax losses from treasury operations widened to Rs 816.86 crore at June-end, as against Rs 316.71 crore during April-June last year.

Income from treasury, however, went up by 86 per cent to Rs 4,328 crore.

Total income grew 32 per cent to Rs 16,203.07 crore (Rs 12,229.09 crore) in the corresponding period last year, while expenses were 24 per cent higher at Rs 12,240.73 crore.

While interest income rose 24.4 per cent to Rs 13,799.20 crore, other income more than doubled from Rs 1,138.59 crore at the end of June last year, to Rs 2,403 crore during April-June this year. Interest expenses were 30.37 per cent higher at Rs 8,981.54 crore.

The bank managed to keep the level of gross non-performing assets at around the same level. Gross NPAs were estimated at Rs 11,408 crore, compared with Rs 11,380 crore during the corresponding period last year.

As a proportion of advances, it fell from 3.30 per cent at the end of June 2007 to 2.54 per cent at the end of June this year. Net NPAs were estimated to have increased 14.4 per cent to Rs 6,298 crore (Rs 5,504 crore) in the period. In percentage terms, it fell from 1.62 per cent of advances to 1.42 per cent.

Despite the increase in interest rates, SBI reported a 30 per cent rise in advances to Rs 4,48,327 crore, while its deposit base grew nearly 25 per cent to Rs 5,61,857 crore.

The bank saw a 30.79 per cent growth in its mid-corporate advances, a 23.16 per cent jump in its SME loans and a modest 9.3 per cent growth in its agriculture loans. A similar growth was registered in auto and housing loan portfolios, which went up by 41.31 per cent and 17.4 per cent, respectively.