CALCUTTA, June 18: The State Bank of India on Thursday reported a net profit of Rs 1861.20 crore for 1997-98, up 40 per cent from the previous year's Rs 1329.30 crore, buoyed by a Rs 964-crore write back of excess depreciation, Rs 800 crore growth in income from treasury operations and 2.5 per cent dip in operating expenses.However, operating profit increased by only 3.15 per cent (from Rs 3397.63 crore in 1996-97 to Rs 3504.96 crore in 1997-98) against the 12.1 per cent growth in the previous fiscal.
The SBI board has proposed a dividend of 40 per cent, or Rs 4 per Rs 10 share, unchanged from the previous year's level.
Addressing a press conference after the board meeting, SBI chairman Maya Shankar Verma said the bank has marked to market 100 per cent of its entire investment portfolio, up from 71 per cent in the previous year, using the write back of excess depreciation in government securities. It has also made a 0.25 per cent provision (Rs 149 crore) against standard assets to strengthen itsbalance sheet. This the first instance of any Indian bank making provision for its standard assets.
Another highlight of the SBI performance is a reduction in its net non-performing assets to 6.07 per cent in March 1998 from 7.3 per cent in the previous year. The bank's capital adequacy ratio went up from 12.7 per cent to 14.58 per cent during the year.
Using the write back of excess depreciation on gilts, SBI also made a special provision of Rs 100 crore towards the anticipated increase in its wage bill. Besides, it has created a special capital reserve of Rs 119 crore to take care of possible fluctuations in gilts' yield to maturity (YTM) in future.
Consequently, the bank's net interest income rose by a paltry 0.86 per cent to Rs 5,405 crore. The net interest spread narrowed from 4.01 per cent to 3.57 per cent and the average yield on advances also came down drastically from 13.43 per cent to 11.88 per cent. Verma said that with interest spreads narrowing, SBI will look for growth from higherturnover. "We will also enter the insurance business. The triangle of credit card, insurance and deposit products will give us an edge over others," the SBI chairman added.
The bank's total income rose 6.3 per cent to Rs 18,699 crore in 1997-98, from Rs 17,593 crore in the previous year. While the return from net interest income rose marginally by Rs 46.46 crore, other income grew by Rs 177.10 crore. The annualised EPS went up from Rs 26.66 to Rs 35.60, return on equity from 16.67 per cent to 19.37 per cent and return on average assets to 1.09 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
