Sbi 6-Month Net Seen At Rs 700 Cr

Top SBI officials refused to give an indicative figure but said the results of the bank are excellent.

The bank is due to announce its six-monthly results on November 28.

Banking analysts at WI Carr project the net profit at Rs 650 crore, which is 18 per cent higher than the previous six months. An analyst with the an UK-based security firm pegged it at Rs 670 crore.

However, Raamdeo Agarwal, director, Indian Equity Research, says the profit will be close to Rs 850 crore.

Top SBI officials attribute the optimism to the lack of depreciation in the current year as against a massive depreciation provision of Rs 918 crore in 1995-96. In fact, there has been an appreciation in the securities held in the current portfolio.

 

This is so because last year the current portfolio was marked to market with the yield to maturity pegged at 14 per cent on government securities. SBI officials point out that for the first six months this year, the YTM is pegged at 13.85 on 10-year paper.

SBI has decided not to write back the appreciation in the its current portfolio to the profit-and-loss account in order to boost profits. The SBI officials point out that the excellent perfromance is not due to any write back of appreciation.

In SBI, which has marked 65 per cent of its portfolio to the market, is planning to increase it to about 70 per cent.

Since there is already an appreciation in the investment portfolio, marking to market of an additional five per cent will not require additional provisioning.

The other reason for the expected rise in profits is the high investment income of the bank. Most of the recent securities purchased by the bank were at the high interest rates. That apart the `other fee income which includes advisory services is high. The bank also earned a very high interest income in the first six months of 1996-97. Even though the prime lending rate was reduced by SBI twice in these six months, the average yield on advances was 17 per cent.

That apart even though the credit of SBI saw a fall in the level of credit from September 1995 to September 1996 rose by 17 per cent. Credit which stood at Rs 47,000 crore on September 1995 rose to Rs 58,000 crore in September 1996. Besides, SBI has been able to bring down its non-perfroming assets which has pushed up income.

Top SBI officials say the net NPA which stood at 6.6 per cent and the gross NPA which was 16 per cent on March 1996 has fallen further.

The exact quantum of the fall is being worked out. The net NPA stood at 9.3 per cent and the gross at 20 per cent in March 1995.