The Hindu Business Line : SBI net grows 70% in Q3 on higher income

Mumbai, Jan 24 State Bank of India’s net profit for the third quarter of the fiscal rose 70 per cent on the back of an increase in both interest and non-interest income.

The country’s largest bank reported a net profit of Rs 1,809 crore for the quarter ended December 31, 2007, against Rs 1,065 crore in the same year-ago quarter.

Yield on advances increased to 9.93 per cent (8.61 per cent) while the cost of deposits also increased to 5.55 per cent (4.71 per cent), mainly due to higher term deposits mobilisations and higher interest rates.

The net interest margin was at 3.01 per cent.

Provisions for NPAs were lower at Rs 444 crore (Rs 698 crore).

The share of low cost deposits (current account and savings deposits) was at 41 per cent, said a statement from the company.

Retail advances now constitute 24 per cent of total advances. Within retail loans, housing loans form 51.77 per cent of retail advances. Housing advances, grew by Rs 6,811 crore, a growth of 16 per cent.

Agricultural advances grew by 28 per cent, to Rs 41,365 crore. SME advances grew 33 per cent to touch Rs 69,134 crore.

The net profit of the foreign offices grew 45 per cent. Deposits grew by 50 per cent and advances by 51 per cent.

According to a banking analyst, SBI was expected to post around Rs 1,350 crore in net profit. “SBI’s numbers are not bad. They are better than the preceding quarter’s. One reason is the lower provisioning. But as they have their rights issue coming up, they were expected to show good results,” he said.

The new subsidiary, SBI Pension Funds Private Ltd, which was set up in December 2007, will undertake management of pension funds under the New Pension System, said the bank.

SBI has also started Financial Planning and Advisory services at 40 branches to attract and retain young and `mass affluent’ customers.

In a notice to the BSE, today, SBI announced that it is picking up 91 per cent stake in Global Trade Finance for Rs 520 crore.

SBI is buying this stake from Exim Bank of India (40 per cent), IFC, Washington (12.5 per cent), and First International Merchant Bank, Malta, (38.5 per cent).

Global Trade Finance is a factoring company, which offers export-financing tools for exporters, especially SMEs. SBI’s subsidiary, SBI Factors, is also into the same business.