SBI Q4 net dips 32 per cent

SBI Q4 net dips 32 per cent

State Bank of India (SBI), on Friday, reported a 31.92 per cent drop in its net profit for the quarter ended March 31, 2010 (Q4) at Rs 1,867 crore as against Rs 2,742.31 crore in the same quarter last year.

Blaming the plunge to a sharp rise in bad loan provisions, SBI Chairman O P Bhatt said: “on the one hand there had been liquidity overhang, touching as high as Rs 40,000 crore, and on the other, treasury profits that had earlier seen the bank through, was sharply down.”

On top of it, the bank had to make an NPA provision for about Rs 1,600 crore while expenses on account of pension and wage revision amounted to Rs 547 crore. The total NPA growth during the quarter under review reached as high as Rs 674 crore. However, Q4 total income increased by 1.8 per cent to Rs 22,474.12 crore from Rs 22,060.61 crore in Q4 ’09.

Bhatt also pointed out that the bank has been talking to the Reserve Bank of India (RBI) on whether it can stagger its stipulated ratio a little further to ease the pressure.  Further, for the year ended March 31, 2010 (FY10), its net profit rose by meagre 0.4 per cent at Rs 9,166.05 crore as against Rs 9,121.2 crore, while total income rose to Rs 85,962.07 crore compared to Rs 76,479.2 crore in FY 2009. 

To a question on whether the bank would be able to stem the trend of NPA slippages with the fresh slippages in FY10 touching a level of Rs 11,843 crore, he stated the incremental NPAs have been going down in absolute terms and some of the present NPAs ‘have been ageing’, adding “while provisioning requirement may remain the same, the net increase in NPA will be less.” Besides, while pointing out that the bank has adequate capital, Bhatt said SBI has still  sought an opinion from the government on whether it will be keen to dilute its four per cent stake in the form of rights issue. The government shareholding in SBI presently stands at 59 per cent.

Marketing strategy

Stating that the bank is expecting to be on a higher growth trajectory in the 2010-11 fiscal, he noted that SBI has put in place a new marketing strategy to ensure that it retains its number one slot in the retail which it has currently been holding in home and auto loan portfolios.

“We’ve sanctioned projects worth Rs 20,000 crore in the pipeline, while projects worth another Rs 25,000 crore are under appraisal,” he said.

Meanwhile, the bank has declared a dividend of 300 per cent at the rate of Rs 30 per share of face value of Rs 10 for the financial year 2009-10.This includes 100 per cent (Rs 10 per share) interim dividend paid earlier.

Note:

* Bank’s Q4 net profit drops 32% to Rs 1,887 crore against Rs 2,742 crore in Q4 last year
* Higher provisions for bad loans & low treasury income hit profits
* Share crashes by 4% to Rs 2,222
* Total income at Rs 22,474 crore in Q4 was 1.8 per cent higher
* 300 per cent dividend on every share of Rs 10
* Projects worth Rs 20,000 crore sanctioned

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