Riding on the back of higher interest income and lower provisioning, State Bank of India posted a record jump in its fourth quarter net profits. The bank has recommended a dividend of Rs 35 a share of Rs 10 each.

The profit after tax jumped 192 times to Rs 4,050 crore for the quarter ended March 31. SBI posted a profit of Rs 21 crore during the corresponding period in 2010-11.

Profits took a beating in the previous year on account of higher provisioning towards bad loans, pension and gratuity.

Sequentially, profits rose 24 per cent from Rs 3,263 crore during the third quarter ended December, 2011.

“We have consolidated our gains on the interest side. Revenue growth has outstripped growth in expenses,” the SBI Chairman, Mr Pratip Chaudhuri, said. “Our net profit is on the rising trend,” he added.

Total provisioning decreased 8 per cent to Rs 5,547 crore. Provisioning towards bad loans dropped 13 per cent to Rs 2,837 crore.

Other income during the year was hit on account of loss on sale of investments amounting to Rs 920 crore, as against a profit of Rs 921 crore in 2010-11.

“The equity markets were bad last year and some of our investment decisions were also not too right,” he explained.

Net interest margin improved to 3.85 per cent (3.32 per cent) higher than the guidance of 3.5 per cent for the year. Mr Chaudhuri is hopeful to retain the margins during the current fiscal.

Slippages/Asset Quality

Slippages during the year increased to Rs 26,936 crore (Rs 18,145 crore).

Slippages were higher in the mid-corporate, SME and agriculture sectors. “We cannot be immune to what is happening in the economy. There are asset quality concerns in the mid-corporate segment,” he said.

The percentage of gross non-performing assets (NPAs) to advances increased to 4.44 per cent (3.28 per cent), while net NPAs increased to 1.82 per cent (1.63 per cent).

However, sequentially, gross and net NPAs have come down.

SBI restructured accounts amounting to Rs 8,571 crore during the year.

The total amount outstanding on restructured accounts stood at Rs 37,168 crore.

“Of the total restructured accounts, 15-18 per cent falls into the NPA category and only 4-5 per cent of them turn into eventual loss on account of non-repayment. So it (restructured accounts) is not a concern,” he said.

Outlook

SBI aims to grow its advances by 16-18 per cent and deposits by 20 per cent this fiscal.

The capital adequacy ratio of the bank stood at 13.86 per cent (11.98 per cent) as on March 31, 2012. “Government holding is at 62 per cent so there is room for QIP. However, we will not use this route right now as we are comfortable on capital position,” he said.

>shobha@thehindu.co.in