SBI Q4 net down 20%

MIXED BAG FOR INDIA INC

Higher provisioning to make good the erosion in the market value of its government bond portfolio pulled down the fourth quarter of the State Bank of India's (SBI's) net profit.

The country's largest commercial bank today reported a 19.86 per cent drop in net profit at Rs 853.29 crore in the quarter ended March 2006 compared to 1,064.88 crore in Q4 of the financial year ending March 2005.

"The bank had to make an additional provision of Rs 1,800 crore for investment depreciation and Rs 458 crore for the fringe benefit tax. Despite that the bank has put up good results," SBI Chairman AK Purwar told reporters.

The bank's operating profit for the period, however, was up 12.07 per cent at Rs 3,277.17 crore. For 2005-06, the SBI's net profit stood at Rs 4,406.67 crore, 2.37 per cent higher than the previous year's net profit of Rs 4,304.52 crore.

Operating profit for the year was Rs 11,299.23 crore as compared to the previous year's figure of Rs 10,990.36 crore. The SBI stock lost 4.41 per cent in a weak Mumbai market today.

The stock closed at Rs 868 on the BSE, 4.41 per cent lower than yesterday's Rs 908. SBI's total income went up by 9.19 per cent to Rs 43,183 crore in 2005-06 from Rs 39,547 crore last year.

The bank's deposit portfolio grew by 11.31 per cent to Rs 3,80,046 crore in 2005-06, compared to previous corresponding figure of Rs 3,41,419 crore. Its advances for the year, however, grew at a much sharper pace -- by 40 per cent to Rs 2,67,131 crore.

The credit deposit ratio of the bank stood at 66 per cent which might go up to 72-73 per cent in future, Purwar said. The bank expected the boom in infrastructure to generate significant demand of funds.

"With several mega projects in the pipeline in the infrastructure sector, we are expecting huge demand in credit," Purwar added.

Availability of funds was not expected to be a problem for the bank as it will be exploring all possibilities including borrowing, refinances income from cross selling.

Net non-performing asset (NPA) of the bank declined to 1.87 per cent from previous corresponding figure of 2.65 per cent and gross NPA stood at 3.88 per cent in 2005-06 as against previous corresponding figure of 5.96 per cent.

Interest earned on investment declined by 12.79 per cent at Rs 13,977.53 crore whereas interest on advances recorded at Rs 17,696.30 crore, 35.67 per cent higher than previous corresponding figure of rs 13,043.51 crore.

The bank also had to make additional provision of Rs 12,157 crore in 2005-06 over previous year's provison of Rs 69,073 crore for payments/provision for employees.

Collectively, net profit of the associated banks stood at Rs 1549.81 crore, 11.54 per cent higher over previous year's figure of Rs 1371 crore whereas operating profit posted 5.60 per cent decline at Rs 4030.67 crore.