Consolidated total income rose to Rs 43,156 crore in October-December as against Rs 36,967 crore a year before. On a standalone basis, net profit rose 16.1 per cent to Rs 3,262 crore during the quarter. Net interest income (NII) increased 26.7 per cent to Rs 11,466 crore, while the net interest margin (NIM) improved to 4.05 per cent from 3.6 per cent a year before.
Chairman Pratip Chaudhuri said, “Our NII figures are an all-time high. We have been able to contain cost of resources by shedding high-cost bulk deposits and focusing on retail deposits. Better yields on advances helped to improve margins and bottom line.” He said the bank expected an NIM around 3.8 per cent for the current financial year.
While interest income rose, the performance on non-interest income was a disappointment. It declined 35.8 per cent to Rs 2,126 crore from Rs 3,314 crore. It booked a loss of Rs 1,090 crore on sale of investments as against income of Rs 220 crore on this a year before.
“The decline in the non-interest income is due to about Rs 800 crore loss in the equity investment portfolio of an airline company,” Chaudhuri said.
Concerns, plans
The bank also saw a rise in bad loans. Gross non-performing assets (NPAs) reached Rs 40,000 crore or 4.46 per cent of gross advances, as compared to 3.2 per cent a year before. There were fresh slippages of Rs 8,161 crore, though there was Rs 2,000 crore worth of recovery and upgrade. Slippages from restructured accounts were Rs 1,932 crore, of which Rs 1,500 crore was due to an airline company, loans to which slipped into the NPA category, said Soundara Kumar, deputy managing director looking after stressed asset management. While the bank restructured loans worth Rs 2,188 crore in the third quarter, the total restructured book was Rs 31,000 crore.
Deposits grew 13.9 per cent to Rs 10,00,965 crore at end-December against Rs 8,78,979 crore in December 2010. The share of low-cost deposits – savings and current accounts – were 47.5 per cent, Chaudhuri said.
Gross advances increased 12.6 from Rs 7,39,971 crore in December 2010 to Rs 8,69,393 crore in December 2011. SBI said demand from the corporate sector was muted, with capital expenditure on hold.
Chaudhuri said the bank’s Asset Liability Management Committee would meet soon on the lending rates. Though the possibility of a reduction in the benchmark lending rate, or the base rate, is low, Chaudhuri said the bank may reduce interest rates on education loans. SBI's base rate is 10 per cent.
With capital infusion of Rs 8,000 crore from the government and retained profit, the bank expects its tier-I capital to go past nine per cent, with the overall capital adequacy ratio seen above 13 per cent. Chaudhuri said the bank would approach rating agencies, especially Moody’s Investor Service, to review its rating .
In October last year, the rating agency had downgraded SBI’s bank financial strength to ‘D+’ from ‘C-’, on concerns of capital and asset quality. As on end-December, the capital adequacy ratio was 11.6 per cent, with 7.59 per cent tier-I capital. Chaudhuri projects profits of Rs 10,000-11,000 crore in the current financial year.
SBI shares declined two per cent to close at Rs 2,129 on the Bombay Stock Exchange on Monday.
