SBI surprises with 100 pc jump in profit

It may also be recalled that the net profit of 1998-99 was affected to extent of Rs 207.47 crore by the charging off of the entire RIB issue expenses during that year. “The net profit for the latest year witnessed a strong growth of 40.95 per cent over 1998-99, even after both the items are excluded from the profits of the respective years,” the bank said.

The operating profit also recorded an increase of 21.77 per cent from Rs 3,451.16 crore to Rs 4,202.50 crore. However, the operating profit after accounts for the provision of Rs 315.31 crore and Rs 121.00 crore made during the years 1998-99 and 1999-2000 respectively towards wage revision, recorded a higher increase of 30.17 per cent from Rs 3136 crore during 1998-99 to Rs 4082 crore during 1999-2000. Net interest income was Rs 6,928.35 crore during the year compared to Rs 6,063.10 crore last year, up by 14.27 per cent. This has to be viewed in the backdrop of reduced interest rates during the year compared to 1998-99, due to which the net interest margin came down from 3.29 per cent to 3.16 per cent.

The growth in net interest income was due to the several factors such as: average level of advances in India grew by 16.43 per cent from Rs 70,088 crore in 1998-99 to Rs 81,601 crore during the year, while the average level of domestic deposits excluding Resurgent India Bonds rose by 15.14 per cent from Rs 1,35,050 crore in 1998-99 to Rs 1,55,493 crore, the cost of deposits witnessed a reduction from 8.05 per cent in 1998-99 to 7.86 per cent during the year.

The income from resources operations in India (excluding profit from trading in securities) has gone up substantially by 28.46 per cent over 1998-99. This was due to increases in both the volume of average resources deployed (by 24.69 per cent) as well as the average yield (from 9.86 per cent to 10.16 per cent).

According to SBI chairman GG Vaidya, provision towards non-performing assets has been lower at Rs 1,286.95 crore in 1999-2000 as against Rs 1,422.67 crore. “However, an additional provision of rs 32.59 crore on the standard assets in the global loan portfolio has been made in terms of RBI guidelines taking the total provision on standard assets to Rs 229.32 crore,” he said.

The SBI chief said net NPAs to the net loans of the bank stood at 6.41 per cent as against 7.18 per cent previously. The bank made a higher income tax provision of Rs 974 crore as against Rs 383 crore in the previous year.

Meanwhile, the global deposits of the bank rose by 18.4 per cent, or Rs 27,795 crore, to Rs 1,78,802 crore during the year. Out of this, domestic deposits amounted to Rs 1,69,620 crore, showing a rise of 19.6 per cent. On the other hand, the total loan portfolio of the bank increased by 19.1 per cent as against 10.1 per cent previously. Its net domestic credit at Rs 85,537 crore as on March 31, 2000 recorded a growth of 20 per cent as compared to 11.1 per cent in the previous year.

According to the bank, it has appointed KPMG Consulting to draw up its information technology plan which is expected to be ready within four months. It is also planning to set up 800-1000 automated teller machines all over the country. It has plans to enter the life insurance sector and pension management business by setting up a subsidiary with 74 per cent equity holding and offering the balance to a foreign insurance company.

The key financial indicators of the bank also improved indicating a turnaround in the banking sector’s performance. Its earning per share increased to Rs 38.98 from Rs 19.53 in the previous year. The bank’s return on equity rose from 9.88 per cent to 16.89 per cent.

SBI to set up IT subsidiary
MUMBAI: State Bank of India’s board has taken an in-principle decision to set up a wholly-owned information technology subsidiary, which would make forays into e-commerce, e-trading and e-broking and also provide software solutions for the banking industry.

"KMPG is working on three areas. Customers expectations from SBI on the technological front in the next five years, how this technology could be evolved and what the bank would do to meet the expectations. The final plan would be implemented within 18 months," he said.

To implement the proposed KPMG recommendations, SBI has planned short-, medium- and long-term schedules. "The short-term plan would be up to six months, the medium-term between seven and 12 months and the long-term 18 months," Vaidya added.

He declined to state the investment required for the upgrade, but said funds will not be a problem.

Vaidya said SBI will introduce internet banking by the end of this year and it would be available to all NRI, overseas, specialised, personal segments. This would cover about 40-50 per cent of SBI’s total business.

The bank would also increase its existing ATMs from 139 in 52 cities to around 450 by September and 800 by March next year. The credit card system would be integrated with the ATMs.

SBI is also concentrating on the networking of the banks. "By March 2001, 500 our branches would be networked, both at the back office and front office and by December 2001, we have targeted that 70 per cent of our business volume would be networked," Vaidya said.