State Bank of India, the country’s largest lender, today said its net profit rose 45.6 per cent to Rs 2,742.31 crore during the quarter ended March 2009 mainly on account of a rise in treasury and other incomes.
While the bank did not provide consolidated numbers for the quarter, the standalone numbers are not comparable as SBI merged its subsidiary, State Bank of Saurashtra, with itself during the last financial year.
Similarly, it did not disclose the treasury income during the fourth quarter. It however said that during the quarter, it booked a profit of Rs 1,508 crore on investment sale, which was more than five times higher than the profit of Rs 296 crore booked during January-March 2008. During the year, treasury income went up 171 per cent to Rs 2,566 crore due to investment sale, the bank said.
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For the year ended March 2009, SBI’s consolidated net profit rose 22.26 per cent to Rs 10,955.28 crore and income increased 25.35 per cent to Rs 113,093.09 crore. The bank has declared 290 per cent dividend, or Rs 29 per share, for 2008-09.
During the fourth quarter, the bank’s total income rose 34.57 per cent to Rs 22,060.61 crore, while net interest income was 0.86 per cent higher at Rs 4,841.9 crore than Rs 4,800.59 crore during the fourth quarter of 2007-08.
Due to the high cost of retail deposits mobilised by SBI and a decrease in lending rates, the bank’s net interest margin (NIM) fell by 14 basis points to 2.93 per cent at the end of March 2009 from 3.07 per cent a year ago. During the quarter, NIM fell by 22 basis points.
“NIM had gone down on the back of the increasing cost of deposits, lower yield on advances and growth in advances,” SBI Chairman O P Bhatt said at a press conference. He added that June onwards, NIM was expected to improve by five to ten basis points due to a calibrated reduction in deposits rates.
NIM came under pressure as SBI mopped up deposits to the tune of Rs 1,000 crore a day, which helped it increase its market share from 15.44 per cent at the end of March 2008 to 17.72 per cent at the end of March this year. The other reason for the pressure on NIM was the aggressive lending by the bank which resulted in SBI grabbing 16.03 per cent share of the market, compared with 15.20 per cent at the end of March 2008.
Though total non-tax provisions fell 14.91 per cent to Rs 1,377.66 crore during the fourth quarter, a large chunk was accounted for by provision for employee pension, said Bhatt. During the year, pension provision went up by over 67 per cent to Rs 960 crore from Rs 574 crore during 2007-08.
