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Our Bureau

Mumbai, Oct 27 Higher non-interest income helped State Bank of India, the country’s largest bank, to report a 36 per cent rise in second quarter net profit at Rs 1,611.4 crore against Rs 1,184.4 crore in the same quarter last year.

While net interest income declined marginally, other income increased by 42 per cent.

“Everywhere growth was slightly subdued for the entire banking industry in the first half. It will pick up in the second half,” said Mr O.P. Bhatt, Chairman, SBI.

SBI’s net interest income fell to Rs 3,763 crore from Rs 3,898.6 crore.

Other income was up 42 per cent at Rs 2,041.94 crore against the previous year Rs 1,438 crore.

Responding to analysts’ questions, Mr Bhatt said for most banks the growth in non-interest income was higher than that of interest income.

Cost of deposits has increased to 5.48 per cent from 4.51 per cent due to higher term deposits mobilisation and higher interest rates. “It may go up a little more, by about 15 basis points, because of the tendency of ‘seeping in’. But the yield on advances will also go up because we are shedding low yielding advances,” Mr Bhatt said.

The share of low-cost (Current Account, Savings Account) deposits fell to 39.45 per cent due to higher mobilisation of term deposits. Net NPAs declined marginally to 1.63 per cent from 1.67 per cent.

Net interest margin (NIM) dropped to 2.84 per cent from 3.02 per cent. “Our deposits have gone up more than advances and that is why NIM has gone down slightly,” Mr Bhatt said.

The bank’s Capital Adequacy Ratio was 12.85 per cent (12.63 per cent).

Mr Bhatt said that there could be some cut in deposit rates but the bank will wait for RBI’s monetary policy announcement.

The bank also has plenty of liquidity because it had opened a lot of accounts, especially term deposits due to the smart products and aggressive pricing. But Mr Bhatt expects credit to pick up in the second half. The bank has about Rs 1,000 crore of sanctions pending disbursals.

Shares of SBI closed at Rs 2,083.95 on the BSE against Rs 1,944.55, on Friday.

More Stories on : Financial Performance | Public Sector Banks | State Bank of India

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