SBI net down 18% to Rs 348 cr

SBI chairman GG Vaidya attributed the fall in net profit to jump in provisioning requirements towards non-performing assets (Rs 284 crore against Rs 208 crore), employees’ salary revision (Rs 73 crore), exchange loss in the Rs 1,700-crore Resurgent India Bonds corpus (Rs 85 crore) and erosion in the net asset value of Magnum Triple-plus scheme (Rs 31 crore).

Total provisions for the first quarter of 1999-2000 at Rs 549.41 crore was 15 per cent than the provisions made in the firstquarter of the last fiscal (Rs 477.60 crore.)

"We have taken abundant precautions. There is no underestimation in provisionings… But for the higher provisionings, the bank would have showed a rise in its net profit by Rs 150 crore. I am confident of posting Rs 1,700 crore net profit in the current year. With the revival of economy, the credit offtake will be sharper this year and NPAs will go down," Vaidya said.

Banking analysts said that policy of higher provisioning was a prudent step as it will help the bank in making an equitable distribution in provisioning over all the four quarters. The bank had made a Rs 900 crore worth of provisioning in the fourth quarter of 1998-99 while the combined provisionings of the first three quarters were to the tune of about Rs 500 crore.

Net interest spread continued to be under pressure for the largest commercial bank in the country. It fell in the first quarter of 1999-2000 to 3.15 per cent from 3.57 per cent in the first quarter of 1998-99. Interest spreadsfor fiscal 1999 was pegged at 3.3 per cent.

"We will compensate the fall in interest spread by increasing our non-interest income. The outlook for the next three quarters look good and we are sure that credit will pick up as there are signs of recovery in the economy," Vaidya said.

Interest income for Q1 2000 was at Rs 5,082.23 crore as compared to Rs 4,221.14 crore in Q1 1999 showing a 20 per cent rise. But interest expenses went up by 28 per cent– from Rs 2,828.50 crore in Q1 1999 to Rs 3,638.96 crore in Q1 2000. Consequently, the net interest income showed a marginal jump of 3.64 per cent to Rs 1,443.27 (Rs 1,392.64).

Vaidya said in the first quarter the bank has registered a dip in credit portfolio to the tune of Rs 221 crore compared to Rs 1241 crore negative growth in the first quarter of last fiscal. On a year-on-year basis, SBI’s advances were up by 14.26 per cent to Rs 77,422 crore.

Average deposits (excluding RIBs) were up by 13.50 per cent in the first quarter of fiscal 2000 to Rs 1,45,515crore compared to Rs 1,28,208 crore in the first quarter of last fiscal. The cost of deposits registered an increase of 7 basis points to 7.98 per cent from 7.91 per cent during the same period.