The Hindu : SBI profit zooms to Rs. 3,105 cr.

Online edition of India's National Newspaper
Friday, Jun 20, 2003

Business

Business

SBI profit zooms to Rs. 3,105 cr.

By Our Staff Correspondent

KOLKATA JUNE 19. A substantial amount of Rs. 834 crores received following a recent Supreme Court order on account of certain securities transactions took place in the run up to the Harshad Mehta engineered scam in 1992 and an incremental profit of Rs. 1,374 crores from treasury operations have swelled the operating profit of State Bank of India by 29 per cent to Rs. 7,775 crores in 2002-03 from Rs. 6,044 crores in 2001-02. The net profit has gone up by 28 per cent to Rs. 3,105 crores from Rs. 2,431 crores.

Dividend raised

The bank has declared a higher dividend of 85 per cent for the year against 60 per cent paid in the previous year. To safeguard the bank's long term interests, an additional provisioning of Rs. 500 crores, higher than the Reserve Bank stipulation, was made on non-performing assets (NPAs) and Rs. 1,600 crores was allocated to investment fluctuation reserves.

Admitting that corporate lending rates are under increasing pressure and are now ruling well below the bank's prime lending rate (BPLR), the SBI Chairman, A. K. Purwar, said the net interest margin touched 2 per cent during the year against 2.91 per cent previously. "Total earnings from corporate banking is growing only by virtue of higher business volumes".

Ruling out any drastic revision in BPLR, which is strictly followed in the case of highly profitable retail lending, Mr. Purwar said certain finetuning of interest rates would be carried out this fiscal.

The pressure on margins might increase further during the current year, he hinted.

Responding to queries on downsizing of manpower, the chairman said since as many as 34,000 of the existing 2.08 lakh employees would be retiring in the next three years, there was little or no chance of offering any more VRS in the foreseeable future. SBI had reduced the manpower by 20,000 through VRS during 2001-02.

Stating that the bank was now focussed to increase the use of technology, Mr. Purwar claimed that all the SBI branches would be computerised in two years. The bank had already computerised 3,701 branches contributing 82 per cent of the total business. While the number of ATMs will be increased further beyond the existing 1,305 (1,533 of the SBI group) the project for networking of ATMs and core banking was carried out in full swing. "We are on the verge of starting integrated banking".

Overseas operations

As part of a grand plan to expand its overseas business, SBI has decided to increase its overseas branches to 67 from 50 in two years. The number of countries covered will be increased from 30 to 36. Almost all the new offices will be opened in the West Asian and African countries.

Merger of SBI Gilts

The bank is planning a merger of SBI Gilts with Discount and Finance House of India (DFHI).

The latter was incorporated as an SBI subsidiary in 2003. "Since the operations of SBI Gilts and DFHI are similar, the bank is planning a merger to take synergic advantage of the experience and expertise of both institutions".

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