Pratip Chaudhuri in New Delhi on Saturday. (Fotocorp)
New Delhi, Aug. 13: The State Bank of India (SBI) today posted a 45.6 per cent decline in standalone net profit for the first quarter ended June 30, 2011, at Rs 1,584 crore on account of higher provisioning for bad loans and depreciation on investments.
Net profit stood at Rs 2,914.2 crore in the year-ago period. Loan-loss provisions were up 61 per cent to Rs 2,782 crore from Rs 1,733 crore a year earlier.
Total income, however, increased 25 per cent to Rs 27,732 crore from Rs 22,142 crore in the same period last year.
Public sector banks face higher provisioning costs under new rules that require them to be more stringent in recognising non-performing assets (NPAs).
The bank, however, expects robust loan and deposit growth in the current financial year, despite the hike in lending rates.
We expect a deposit growth of 20-21 per cent and a credit growth of 16-18 per cent in fiscal 2012, SBI chairman Pratip Chaudhuri said.
The countrys largest lender by assets is also on track to achieve its targeted 3.5 per cent net interest margin for this fiscal, Chaudhuri told reporters.
Net interest margin is the performance parameter that examines how successful a firms investment decisions are compared to its debt situations.
The lender said the recent hike in the base rate was expected to improve the margins further.
We expect net interest margins (NIMs) of around 3.6 per cent for 2011-12, said Chaudhuri.
The state-run banks net interest margin was 3.07 per cent as of March 2011 compared with 2.96 per cent a year earlier.
On Thursday, the SBI increased lending rates by 50 basis points, a move that would make home, auto and other loans more expensive, but provide better returns to savers.
The decision follows the rate hike announced by the Reserve Bank of India in its policy review last month.
The SBI is also not in favour of a follow-on public offer or a qualified institutional placement to raise tier-I capital as the government has assured capital infusion through a rights issue.
The government is committed to a well capitalised SBI. It will put in substantial money for a rights issue. We expect the government to infuse Rs 5,000-9,000 crore worth of capital into SBI, said the chairman.
The banks tier-I capital has dipped to 7.77 per cent after it provided an amount of Rs 7,930 crore from its reserves to fund pension liabilities during the March quarter.