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SBI puts in improved performance, net up at Rs 4.27 billion

State Bank of India has posted a net profit of Rs 4.27 billion in the quarter ended June 30, 1998-99, as compared to net profit of Rs 3.21 billion in the same quarter previous year.

While the total deposits rose by 17.89 per cent to Rs 1.36 trillion as on last Friday of June this year, total advances of the bank were higher by 16.16 per cent to Rs 705.75 billion. The reduction in advances level as compared to the level as on March 31, 1998, was due mainly to repayment by oil majors which was usual phenomenon during the same period every year, said SBI chairman M S Verma.

Speaking to newspersons here today, Verma said that the bank's investments during the quarter were up by 18.68 per cent at Rs 616.89 billion.

Verma indicated that there would be substantial hike in investments in the third and fourth quarters of the year as major infrastructure projects would start moving. SBI has made financial closures for 18 power projects and sanctioned funds worth of Rs 110 billion.

However, implementation of these projects are yet to start due to some procedural hazards. All financial institutions including SBI would soon sit together to identify these problems for speedy implementation.

On availability of funds and interest rates movement, Verma said that there would not be any major changes in the interest rates scenario because of less pressure of foreign exchange requirement particularly after floating of SBI Resurgent India Bonds in August which is expected to fetch about $ 4 to $ 5 billion worth of foreign exchange for the country.

Majority of foreign exchange earned through these bonds would be parked outside the country for funding of imported goods that would be required for our infrastructure projects, he said.

Verma said that eventhough the average yield on advances declined to 11.94 per cent during the quarter compared to 12.83 per cent in the first quarter last year, the growth in volume of 14.99 per cent in the average advances level had ensured that the interest income on advances registered an increase of 6.99 per cent.

Growth of average deposits by 18.38 per cent resulted in an increase in interest paid on deposits by 14.97 per cent in spite of a reduction in the cost of deposit to 7.91 per cent during the quarter as compared to 8.15 per cent in the same quarter last year.

Similarly, net interest income registered an increase of 20.82 per cent in spite of the increase in interest paid on deposits, owing to the growth in interest on resources operations and advances.

Verma also informed that a higher deployment of resources in treasury operations at Rs 706.92 billion (Rs 635.29 billion) coupled with a higher average yield at 9.79 per cent (9.48 per cent) during the quarter had contributed to a growth of 14.96 per cent in the interest income on resources operations in India.

While operating profit of foreign offices showed a growth of 2.26 per cent mainly due to increase in their fee-based income, operating profits from Indian operations shot up by 36.47 per cent to Rs 9.04 billion.

UNI