SBI Q4 Net dips 99% to Rs 20.8cr;rights issue round the corner

Kolkata, May 17 (PTI) Hit by higher provisioning for
bad loans and increased tax outgo, the net profit of the
country's largest lender State Bank of India (SBI) tanked by
about 99 per cent to Rs 20.8 crore for the fourth quarter
ended March, 2011.
SBI's profit plunged for the March quarter of the last
fiscal from Rs 1,866.60 crore during January-March 2010, while
other major lenders ICICI Bank, Punjab National Bank and Bank
of Baroda have posted positive results.
"Net profit has been impacted due to higher
provisioning against bad debts, one-time provision of Rs 500
crore for its teaser home loan scheme and increase in tax
outgo," SBI Chairman Pratip Chaudhuri told reporters here.
Besides, he said, the bank also set aside funds to
meet liabilities on account of pension and gratuity of its
employees and Rs 550 crore for counter-cyclical buffer as per
the Reserve Bank's norms.
During the fourth quarter, the total income rose by 18
per cent to Rs 26,536.8 crore from the same period a year-ago.
For the entire fiscal ended March 2011, the net profit
slipped by 10 per cent at Rs 8,264.5 crore as compared to Rs
9,166.05 crore in the previous fiscal.
The total income, however, rose to Rs 97,218.9 crore
in the fiscal against 85,962.07 crore for FY 2010.
The sharp decline in the Q4 profit saw SBI shares
nosediving by 7.78 per cent to Rs 2,413.60 on close at the
Bombay Stock Exchange. The market capitalisation of SBI also
witnessed an erosion of Rs 12,965 crore after the poor fourth
quarter earnings.
Despite a dismal performance, the bank maintained a
dividend at 300 per cent for 2010-11. The bank will pay a
dividend of Rs 30 per share on face value of Rs 10 after
shareholders approval.
On the much-awaited Rs 20,000-crore rights issue,
Chaudhuri said he was hopeful of getting the green signal from
the government during the course of 2011-12.
"The government is committed to well capitalise SBI.
So, in that context we are quite hopeful that the rights issue
contribution will come through during this year," he said.
"Rights issue is round the corner and it is pretty
pragmatic expectation," he said.
Chaudhuri was replying to a question whether the
Centre was reluctant to give the green signal to rights issue
in view of tight financial position.
"The Government", he said, "is committed to well
capitalising SBI. So in that context, we are quite hopeful
that the rights issue contribution will come through during
this year," he said after announcing annual results for
2010-11.

To maintain its holding in SBI at 59 per cent, the
government has to shell out a substantial sum as its
contribution to the rights issue.
In 2008, the government subscribed to the rights issue
by shelling out close to Rs 10,000 crore to retain 59 per cent
of its holding. The rights issue was fully subscribed fetching
the bank around Rs 16,736 crore.
On consolidated basis, profit of SBI Group declined by
8.94 per cent to Rs 10684.9 crore for the year ended March 31,
2011 compared to Rs 11733.8 crore a year ago.
As against the sharp dip in quarterly profit of SBI,
the largest private sector lender ICICI Bank posted a robust
44 per cent rise in its bottom line to Rs 1,452 crore in the
fourth quarter. The second largest public sector lender Punjab
National Bank reported a quarterly net profit of Rs Rs 1,201
crore.
Talking about loan loss provisions made during FY2011,
Chaudhuri said the total provision against bad loans was Rs
8,792 crore. Slippages were mostly from the agriculture and
corporate sector.
The total business during the entire fiscal grew to Rs
2,60,139 crore y-o-y, with advances at Rs 1,30,322 crore and
deposits at Rs 1,29,817 crore.
Net Interest Margin (NIM) of SBI, however, improved to
3.32 per cent at the end of March 2011 as against to 2.66 per
cent in FY10.
CASA ratio of the bank has also improved from 46.67
per cent as on March 2010 to 48.66 per cent as on March 2011.
Going forward, the NIM should improve, the bank chief
said, adding rising rate scenario is favourable to NIM.
The bank has reached a provision coverage ratio (PCR)
of 64.9 per cent at the end of March 2011.
Capital Adequacy Ratio (CAR) for FY2011 stood at 11.98
per cent at the end of March 2011 against 13.98 per cent in
FY2010 on account of provision made towards pension fund
on account of wage revision - Rs 7,927 crore till FY'10 was
taken through the capital account.
With this kind of CAR, the bank would be able to
sustain 20 per cent loan growth, he said.
While the bank has been laying special focus on retail
portfolio in the last two or three years and had been
successful in doing so, there was slight shift in strategy
now, he said.
"We want to shift our focus slightly to the
corporates," he said, adding that the bank would make optimal
use of capital and will be more selective in granting loans.
About overseas business, Chaudhuri said that it has
grown 12 per cent last fiscal.
On possible acquisitions overseas, he said that SBI
would not pay a huge premium for that.
"We will like to grow organically by opening up of
branches abroad, and Australia is the first priority," said
Chaudhuri, adding that the regulation system in Australia was
good and it was an advanced economy.