Higher pension, gratuity, loan loss provisions make a dent
State Bank of India recorded a sharp drop in its fourth quarter net profit which dipped to Rs.21 crore in the fourth quarter ended March 31, 2011, from Rs.1,867 crore in the year-ago period, closing the financial year 2010-11 with a net profit of Rs.8,265 crore which was 9.84 per cent lower after a year of flat growth in 2009-10.
SBI Chairman Pratip Chaudhuri said here at a press conference that higher pension, gratuity, loan loss provisions and standard asset provision on special home loan schemes (teaser loans) as well as taxation provisions had dented net profit. The bank has provided an additional Rs.500 crore as standard assets provision for these loans whose portfolio stood at around Rs.30,000 crore. The operating profit was 38 per cent higher at Rs.25,336 crore against Rs.18,321 crores for the year and rose during the quarter too.
On meeting its funds requirement through the proposed rights issue, Mr. Chaudhuri said that talks were being held with the government on this and he was hopeful that the government would subscribe to the issue.
On whether any alternative funding was being thought of by SBI in case the issue was delayed, he said that while the bank was stretched for funds, it could wait. However, there were indications that the issue might be round the corner. “Tier-I capital has to come from the rights issue,” the chairman said.
SBI Managing Director and Chief Financial Officer Diwakar Gupta said that higher provisioning had to be done to fulfil a regulatory instruction and there was no deterioration in asset quality. He also said that most of the provisioning was one-off cases. Out of the total standard restructured assets of Rs.18,395 crore restructured under the RBI scheme, Rs.249 crore had slipped into the NPA category during the quarter, taking the total slippages to Rs.3,134 crore. Mr. Chaudhuri felt that although further provisioning of around Rs.1,100 crore was likely in this quarter and the next, a good monsoon and buoyant demand might ease the situation.
SBI business grew by Rs.2,60,139 crore during the year under review with a flat growth in market share for total deposits but a 20 per cent growth in gross advances.
On acquisitions, the chairman said that no huge premiums would be paid to acquire a bank, but SBI was keen to increase its presence organically in countries like Australia.