BUSINESS

SBI eyes new areas of business

STRATEGIES FOR GROWTH: O. P. Bhatt, Chairman, State Bank of India (second from left), along with other senior officials of the bank, addressing a press conference in Kolkata on Saturday. PHOTO: ARUNANGSU ROY CHOWDHURY

STRATEGIES FOR GROWTH: O. P. Bhatt, Chairman, State Bank of India (second from left), along with other senior officials of the bank, addressing a press conference in Kolkata on Saturday. PHOTO: ARUNANGSU ROY CHOWDHURY   | Photo Credit: PHOTO: ARUNANGSU ROY CHOWDHURY

Special Correspondent

Announces Rs. 14 per share dividend

The bank plans to recruit 6,000 people this fiscalIn talks with investment banks to raise capital

KOLKATA: Even as it closed 2006-07 with a net profit of Rs. 4,541.30 crore, which was marginally higher than the Rs. 4,406.70 crore recorded in 2005-06, State Bank of India (SBI) is looking ahead with plans to increase its market share by one percentage point and launch a slew of new business initiatives, including private equity and merchant acquisition. The group has posted a net profit, after minority interest, of Rs. 6,364.38 crore for 2006-07 as compared to Rs. 5.529.92 crore in 2005-06.

Describing the results as extremely good, SBI Chairman, O. P. Bhatt, said here on Saturday that the net profit in 2006-07 was arrived at after additional provisioning for taxes and loan losses. The profit in 2005-06 had been bolstered by factors such as income tax refund.

The bank's operating profit grew by 21.3 per cent during the year, touching Rs. 10,000 crore with a balance sheet size of Rs. 5 lakh crore. A dividend of Rs. 14 per share has been declared.

In the fourth quarter of 2006-07, the net profit increased by 74.9 per cent on an operating income of Rs. 7,214 crore.

Mr. Bhatt said that during the current fiscal, the bank required a capital of Rs. 14,000-15,000 crore and it was now discussing with six or seven investment banks for raising capital which might be done in India or abroad. "We plan to raise the capital before the third quarter but we will wait for the amendment to the SBI Act and the SBI Associate Banks Act, before finalising our plans," he said.

He said SBI currently had a market share of 15 per cent and it was proposed to be increased by one percentage point annually. He described September 2006 as an inflection point when the bank's persistent declining market share was halted and a period of stabilisation was witnessed along with an increasing trend.

Mr. Bhatt said 6,000 people were proposed to be recruited by the bank this fiscal which included 3,500 people in the clerical grade after 20 years.

On interest rates, the chairman bank said, "interest rates appear to have peaked and they are not likely to increase much over the next six months but they are not expected to drop either."

On the new business areas proposed to be tapped, he said merchant acquisition and private equity were two of them. SBI would finalise its plans on private equity by June this year. He said the fund size would be about $1 billion and State Bank wanted experienced players as its partner.

The other areas identified were Infrastructure Fund, Pension Funds Management, General Insurance, Financial Planning and Wealth Management.

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