Sbi Forex Earnings Slump By 28% To Rs 500 Crore
State Bank of India's foreign exchange earnings have shown a decline of 28 per cent in the fiscal year 1997-98 to touch Rs 500 crore from Rs 700 crore previously.
SBI officials, addressing the analysts on Thursday at Calcutta, said, this was basically due to the a squeeze in margins on account of increased competition. Obviously, the bank has not been able to compensate thinner margins with larger volumes. However a section of the market feel that the fall in earning is due to the fact that Reserve Bank has often asked SBI to intervene on its behalf.
In case of domestic treasury operations, the bank has shown a massive jump of 344 per cent in domestic sale of investments. The earnings have grown from Rs 25.9 crore to Rs 115 crore in 1997-98.
According to analyst who have attended the meeting, "The bank has indicated that the drop in forex income was on account of squeeze in margin backed by tough competition."
However the bank officials further stated SBI has not lost its market share in 1997-98. Since there was not a significant rise in the volume of forex transactions it lead to a lower earnings, reportedly SBI officials said to analyst.
Market sources said that the dip in forex earning could also be on account of "rescue operation" that the bank had undertaken to cool the volatility in the forex market. The year 1997-98 witnessed the rupee very volatile against the US dollar and thus on the instance of RBI, SBI had to intervene to cool the market.
During the first half of 1997-98, the bank had shown a drop 24.7 per cent in forex earnings and analyst expected SBI to cover the fall in earnings. The earnings had dropped from Rs 274.9 crore in the first half of 1996-97 to Rs 207 crore in 1997-98.
In case of domestic treasury, the SBI officials stated that during the current year the bank would be more active in trading of government securities.
SBI has announced a net profit of 1861.20 crore for 1997-98 following profits of Rs 1329 crore, up by 40 per cent.
In case of infrastructure lending, State Bank has disbursed Rs 350 crore and the bank has also set a targeted to deploy Rs 1500 crore in this sector for the current fiscal, said bank officials to the analysts.