State Bank net rises 14% to Rs 2,828 crore in Dec quarter

India’s largest lender, the State Bank of India or SBI reported a 14 % growth in net profit for the third quarter, beating analysts estimates but signalled that margins could be under pressure in the next quarter. The bank which posted a net profit of `2,828 crore in the quarter to December 2010 has also said that it has not made any provisions for special home loans, defined as teaser loans by the RBI while computing this.

SBI chairman OP Bhatt has said that the bank’s special loans cannot be classified as a teaser loan scheme. The state run bank has provided more against bad loans, a record high it says but some analysts were unhappy with the quality of earnings reported.

He told reporters on Saturday that the bank would try to maintain its net interest margins or NIM which is the difference between the average cost of funds and the yield on loans or advances given the challenges of loan growth. “Credit growth is not robust. We may not be able to sustain 20% credit growth target and it could be 18% for full year,” he said. Bhatt may be right considering that the bank would have to loans aggregating `55,000 crore loan this quarter to top the target for advances. In fact, he said that the bank may lower the loan growth target for next fiscal.

The bank which controls a quarter of both loans and deposits in the banking sector reported this quarter that its bank loan book rose 22% to `7,39,971 crore on a year on year basis. Loan growth in the first nine months of the year was up 15%. Net interest or core income rose 43% to `9,050 crore mainly due to a spurt in loans. The growth in loans aggregated `46,747 crore in the third quarter alone. Bhatt however said that the challenge would be in sustaining this. “How much of it is sustainable is to be seen,” he said.

Provisions for bad loans in the third quarter rose from `514 crore to `1,632 crore over the year ago period. The higher provisions helped the bank to improve its provision coverage ratio to 64%. Bhatt said that the bank had sought time till March 2012 to meet a provision coverage of 70%, mandated by the RBI.

Source : indiatimes

Tags: State Bank, SBI, State Bank of india, SBI chairman OP Bhatt, SBI net Prices, RBI

8:54 AM - By Usha Sharma 0