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State Bank disappoints all

Mumbai, Oct. 28: Putting up a dismal show, the State Bank of India (SBI), the country's largest commercial bank, today reported a 2.54 per cent drop in net profit at Rs 1,184.49 crore against Rs 1,215.36 crore in the same period last year. This performance comes at a time when most of the banks have posted numbers that were in line with expectations.

The drop in profit was on account of higher provision for taxes and non-performing assets (NPAs).

While provision for NPAs rose to Rs 116.11 crore (Rs 10.74 crore) during the period, provision for taxes jumped to Rs 606.74 crore. For the half year, net profit dipped to Rs 1,983.06 crore (Rs 2,438.19 crore), while provision for taxes was placed at Rs 1,362.65 crore (Rs 400.09 crore).

According to SBI, net profit would have been higher for the first half but for two factors: one-time interest on income tax refund and higher tax provision.

In its core operations, SBI posted a modest performance. Even as net interest income (NII) was up 8 per cent during the quarter, for the first half, NII stood at Rs 7,782.74 crore against Rs 7,861.18 crore in the same period last year.

During the period, operating expenses of the bank rose 6.78 per cent as staff cost increased by 5.56 per cent. The staff cost would have been much lower but for the on-going payments to staff opting for early exit.

SBIís domestic deposit growth was at Rs 15,224 crore during the second quarter despite lesser reliance on bulk corporate deposits. The bankís deposits grew by Rs 38,173 crore to Rs 39,2615 crore at the end of September this year from Rs 35,4442 crore in September 2005 recording a growth of 10.77 per cent. The cost of deposits declined from 4.64 per cent in September 2005 to 4.51 per cent in September 2006.

On the other hand, domestic advances (excluding food) grew by Rs 17,293 crore during the second quarter.

Gross advances grew to Rs 28,8840 crore at the end of September 2006 from Rs 23,8351 crore in September 2005 and domestic advances grew to Rs 24,9703 crore from Rs 20,0991 crore.

According to SBI, the average yield on advances improved to 8.55 per cent in September 2006 from 7.81 per cent in September 2005.

As on September 30, housing advances grew by Rs 6,230 crore and the total outstanding was Rs 34,571 crore. Housing loans disbursed during the first half were around Rs 4800 crore.

The growth in retail advances this September is 26.05 per cent over September 2005. Retail advances now constitute around 26 per cent of the bank's gross domestic advances as at the end of September 2006 as against 24.73 per cent as on September 2005.

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