Plans to approach rating agency Moody's for a review

The net profit of State Bank of India zoomed to Rs.4,050.27 crore for the fourth quarter ended March 31, 2012, from a meagre Rs.20.88 crore in the year-ago period. Higher provisioning for bad loans and increased tax outgo hit the profit on the last occasion.

For the whole of 2011-12, the bank reported a 41.7 per cent growth in net profit at Rs.11,707.29 crore against Rs.8,264.52 crore in the previous year.

Chairman Pratip Chaudhuri described the results as ‘blockbuster' saying that the bank planned to approach rating agency Moody's for a review. Last October, the rating agency had downgraded the bank. He also said that within four months, SBI would recruit 9,500 people in the assistant grade.

Addressing a press conference here on Friday, he said that SBI's capital adequacy ratio had increased from 11.9 per cent in March 2011 to 13.9 per cent in March 2012. Net interest income had increased 33 per cent to touch Rs.32,526 crore.

Net interest margin (NIM) increased from 3.3 per cent to 3.9 per cent in the year under review.

The bank has proposed a dividend of Rs.35 per share for 2011-12. It paid a dividend of Rs.30 per share in 2010-11.

Referring to the fourth quarter results, Mr. Chaudhuri said: “This quarter has been exceptionally good, we beat street expectations. I am extremely pleased with the net profit.”

Referring to NIM, he said the bank had outperformed guidance, which was around 3.5.

Pointing out that retail deposits had driven growth, the chairman said that the bank had stopped accepting corporate deposits and bulk deposits and the CASA ratio (Current Account Savings Account ratio), at 47 per cent, had been driven by the growth in savings deposits.

He said a 20 per cent growth was necessary for deposits but admitted that this would be the biggest challenge as other instruments were available. Mr. Chaudhuri expected loan growth to be around 16 per cent. “It may not be robust”.

Referring to non-performing assets, Mr. Chaudhuri said total loan loss provision had increased, but the decline in the gross NPA in the fourth quarter had given the bank confidence, that it could handle additional provisioning. “We seem to be winning the war,” he said.

A provisioning of Rs.1,400 crore has been made on account of Kingfisher Airlines whose account has now become doubtful; while for Air India, the provisioning was Rs.1,200 crore.

SBI's headcount, now at 2.15 lakh, is set to increase with the recruitment of 9,500 persons in the assistant grade. A branch expansion was also being planned, he said.

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