State Bank of India, the country’s largest lender, today reported a 68.11 per cent rise in its consolidated net profit to Rs 2,758.53 crore during the first quarter of the current financial year, thanks largely to the performance of its treasury.
The bank’s total income went up 39.52 per cent to Rs 33,132.70 crore during April-June 2009, against Rs 23747.43 crore during the corresponding period last year. On a standalone basis, SBI’s net profit went up 42.03 per cent to Rs 2,330.37 crore, while total income was 29.86 per cent higher at Rs 21,041.51 crore.
While net interest income rose 4.30 per cent to Rs 5,025 crore, there was a 48.46 per cent rise in other income to Rs 3,568.75 crore during the first quarter of the current financial year. The treasury operations generated pre-tax profit of Rs 4,075 crore during the quarter-ended June 2009, as against a loss of Rs 817 crore during the corresponding period last year.
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The bank’s net interest income was affected due to a rise in interest payments that went up 38.5 per cent due the deposit mobilisation under the 1,000 day scheme, under which the bank was paying 10.5 per cent interest in October. The scheme had resulted in a mop up of around Rs 1,000 crore on a daily basis for a few months.
The pressure was also seen on the net interest margin (NIM), which fell by 73 basis points over the last 12 months to 2.30 per cent at the end of June 2009. Compared with the 2008-09, NIM, at the end of the first quarter of the current financial year, the decrease was to the tune of 63 basis points. SBI Chairman
O P Bhatt said he expected NIM to improve by four to six basis points during the second quarter but it would still be below his comfort level of 3 per cent.
With operating expenses rising 51 per cent, thanks mainly due to higher provision (of Rs 767 crore) for wage revision and a higher pension liability (Rs 429 crore), SBI’s operating profit for the quarter fell by 7.28 per cent to Rs 3,673.87 crore.
On non-tax provisions, there was a decline of nearly 89 per cent to Rs 172.73 crore as it reversed provisions of Rs 1,200 crore on investment depreciation. During the first quarter of the last financial year, SBI had provided Rs 1,656 crore partly due erosion in the value of its bond and equity portfolio. In contrast during April-June 2009, bond yields were stable and the value of equities went up, reflected in an increase of almost 50 per cent in the BSE Sensex.
The reversal of the provisions also masked the steep rise in provisions for bad debt, which went up to Rs 1,234 crore, as against a write-back of Rs 247 crore on loan-loss provisions. The level of gross non-performing assets went up over 41 per cent to Rs 15,318 crore. But compared with the March-end level of Rs 15,589 crore, there was an improvement. SBI said it had restructured loans to the tune of Rs 8,000 crore.
