The Hindu Business Line : SBI Deposits up 11 pc; advances 26 pc

SBI has reported 11.17 per cent rise in deposits to Rs 4,04,352 crore as on Dec. 31, 2006 from Rs 3,63,731 crore as on Dec 31, 2005. "The growth appears to be low due to the bank's conscious strategy of not relying upon corporate bulk deposits," said a statement by the bank.

The bank has recently launched a new deposit scheme offering higher interest rates to attract retail deposit.

"Deposit growth has not been in line with the loan growth and this will lead to an asset-liability mismatch. The bank's credit-deposit ratio is at 78 per cent, which is very high and looks unsustainable," said a banking analyst. "The bank has to mobilise high cost deposits and attract bulk deposits which may pressurise margins," said the analyst.

The cost of deposits, excluding India Millennium Deposits (IMD), marginally increased to 4.57 per cent (4.52 per cent) despite successive increases in deposits interest rates in 2006. However, including IMDs, it has declined to 4.57 per cent (4.79 per cent).

Cost of deposits was contained by the bank as its CASA (current account and savings account) ratio improved by 244 basis points to 43.29 per cent helped by the large ATM network and focus on salary or new accounts.

Gross advances grew 26.86 per cent to Rs 3,15,376 crore (Rs 2,48,598 crore).

The average yield on advances improved substantially to 8.61 per cent (7.87 per cent). As on Dec. 31, 2006, advances in the personal and housing finance segments have grown by 23.58 per cent and 20.18 per cent respectively. Retail advances have risen by 23.58 per cent and constitute 25.76 per cent of bank's gross domestic advances (excluding food).

The non-interest income (excluding treasury income and one time item) grew by 22.17 per cent to Rs 4,103 crore, while total non-interest income increased by 6.28 per cent to Rs 5,007 crore.

The addition of Rs 6,943 crore to its capital during the nine months by way of upper Tier-II subordinated debt, helped the bank in maintaining its capital adequacy ratio at 11.86 per cent.

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SBI Deposits up 11 pc; advances 26 pc