SBM Q4 net profit up 148%

This was despite that bank’s Q4 total income remaining stagnant at Rs 1053.31 crore mainly on account of a sharp drop in treasury income. Its operating profit in Q4 jumped 60 per cent year-on-year (Y-o-Y) at Rs 290.91 crore.

The sharp growth in profit in was mainly on account of a big rise in net interest income (interest earned minus spent). Its interest earned was Rs 918.48 crore, up 4.2 per cent Y-o-Y but interest expended was 19 per cent lower at Rs 545.19 crore against Rs675.61 crore in the same period last year.

Explaining the factors behind the jump in profits, SBM Managing Director Dilip Mavinkurve said, “our interest cost in Q4 was the lowest in the last financial year. Overall trend of lower interest rate regime in banking and several cost cutting measures taken by us helped lower our cost.”

He, however, does not expect the same trend of high net interest income to continue in the current fiscal because interest costs are likely to go up with the RBI’s monetary policy.

Higher other income, mainly on account of income tax return, is another reason for big rise in profits. Mavinkurve also clarified that the Bank’s earlier plan to raise Rs 600 crore through a rights issue is still waiting for the procedural clearance.

Gross/net NPA up

Further, the bank also announced that for the financial year ended 31 March 2010 its net profit increased to Rs 445.77 crore from Rs 336.91 crore in the previous year registering a growth of 32.31 per cent. Its total income for the year at Rs 3984.63 crore was seven per cent higher. “Our Y-o-Y income grew by 9.60 per cent as we reduced the interest expenses by 3.60 per cent by shedding high cost bulk deposits and borrowings and by increasing low cost current and savings deposits during the year,” he said. Its aggregate deposits at the end of 2009-10 was Rs 38,440 crore, while total advances reached Rs 29,874 crore.

The Bank’s management of non performing assets (NPA), however, took a beating as its gross NPA jumped significantly by 62 per cent to Rs 596.26 crore at the end of the year, while net NPA at Rs 299.79 crore was 131 per cent higher. Sticky corporate loan accounts and delinquencies  in many personal loan portfolios are the reasons, Mavinkurve explained.