State Bank of India posted a 99 per cent drop in net profit at Rs 21 crore for the fourth quarter ended March 31, 2011 against Rs 1,867 crore during the corresponding period last year. Profits were dragged down by higher provisioning towards pension and gratuity, and loan loss and standard assets provisions on special home loan schemes.
Provisions were up 82 per cent at Rs 6,059 crore (Rs 3,327 crore) during the period under review.
Loan loss provisions were at Rs 3,264 crore while that for standard assets and investment depreciation was at Rs 631 crore and Rs 304 crore respectively. This apart, the bank made provision of Rs 500 crore in the last quarter on account of teaser home loans.
The bank's stock tumbled 8 per cent to close at Rs 2,413.60 on the BSE on Tuesday.
Tax outgo
The bank's tax expenses shot up to Rs 1,901 crore (Rs 977 crore) during the last quarter.
“The January-March tax outgo is up as the deferred liability has been brought forward. We did not want to do sugar-coating on deferred tax asset,” said Mr Pratip Chaudhuri, Chairman.
The bank witnessed fresh slippages of about Rs 6,000 crore from corporate accounts last year. “There have been slippages in agriculture and corporate portfolios. If there is a slowdown in the economy, then certain sectors are bound to get affected and there has been stress in the corporate portfolio. But we are trying to handhold them, provide necessary support and restructure wherever possible,” said Mr Diwakar Gupta, Managing Director and Chief Financial Officer. Slippages were about Rs 1,600 crore during the quarter under review. Engineering, textiles, gem and jewellery, real estate were some of the key sectors where there had been slippages, he said.
The net interest margin improved to 3.32 per cent (2.66 per cent).
SBI has created a counter-cyclical provisioning buffer of Rs 2,330 crore as of March 2011 against the total requirement of Rs 3,430 crore, shortfall of which would be met by September 2011.
The bank also plans to build a counter-cyclical buffer of Rs 1,100 crore over the next two quarters and set aside Rs 1,000 crore for sub-standard and doubtful loans, and Rs 500 crore for restructured assets.