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Mumbai, Jan. 28: State Bank of India (SBI) today reported a marginal rise in net profit at Rs 1115.19 crore for the third quarter ended December 31, 2005 compared with Rs 1099.35 crore in the year-ago period.
Though the bank put up a strong performance in core banking operations during the reporting quarter with income rising to Rs 4667.94 crore from Rs 3442.42 crore in the previous corresponding quarter, its income from investments and other fee-based activities declined to Rs 3289.09 crore (Rs 3645.24 crore) and Rs 1840.47 (Rs 2238 crore), respectively.
The sharp decline in other income coupled with a steep rise in employee costs and operating expenses ate into the quarterly earnings of the countryís largest public sector bank and its net profit grew only by 1.4 per cent on a year-on-year basis. SBIís operating expenses during the three months climbed to Rs 5338.27 crore from Rs 4368.99 crore in the year-ago period.
However, for the nine months ended December 2005, the bankís net interest income increased 21 per cent to Rs 12,081.07 crore from Rs 9993.97 crore as on December 2004.
The net interest margin also improved to 3.50 per cent from 3.28 per cent in the previous year.
According to SBI, its other income declined due to a fall in profit on sale of investments ' from Rs 1565.51 crore to Rs 507.23-crore.
The bankís staff cost, it added, also went up by 23 per cent mainly due to wage revision and higher contribution to pension fund. Other operating expenses also showed a growth of around 12 per cent.
However, SBI registered a significant growth in advances. As on December 31, 2005, its advances stood at Rs 2,48,598 crore, up from Rs 1,95,731 crore in the previous year. The average yield on advances also improved, though marginally, to 7.87 per cent from 7.75 per cent.
The growth in advances entailed an increased interest income for the bank. Its interest income on domestic advances went up by 32.61 per cent during the April-December period over the corresponding period previous year.
Deposits, on the other hand, grew at a slow pace to Rs 3,63,731 crore during the nine months from Rs 3,50,630 crore a year ago. The lower growth was on account of payment of India Millenium Deposits (IMDs) amounting to Rs 25,641 crore, the bank said.
SBIís retail loans have grown by Rs 9,842 crore, taking the total outstanding advances in this segment to Rs 56,293 crore as on December 31.
The bank continues to do well in housing finance, which witnessed a growth of Rs 5,370 crore in advances. The total outstandings stood at Rs 30,350 crore.
While retail advances constitute 25.78 per cent of SBIís domestic gross advances as on December 2005 against 25.17 per cent a year ago, housing loans constitute 53.91 per cent of the bankís retail advances.