SBBJ may see marginal drop in net interest margin in Q3

"We cut our base rate to 10.25 per cent during the quarter, ahead of many other banks, and there was no climb down in deposit rates which will affect our margins," State Bank of Bikaner and Jaipur Managing Director Shiva Kumar said.

He said the bank's net interest margin (NIM), the difference between the interest earned and expended, stood at 3.90 per cent in the September quarter and "could drop by 0.10 per cent in Q3".

NIM acts as the pulse that indicates the health of the bank as higher the margin, higher will be the bank's profit.

Kumar said he expects a 0.25 per cent cut in the repo rate by the Reserve Bank in its forthcoming policy announcement later this month and added that SBBJ would respond by cutting its deposit rate by 0.50 per cent to such a move from RBI.

The bank has observed a pick-up in advances in the third quarter, which took its advances growth to 16.5 per cent as on December 31, he said, adding that it will meet its targeted 17 per cent growth for the fiscal.

SBBJ is concentrating on retail advances, largely resilient to the economic troubles, to drive credit growth during the fiscal, he said.

The bank's total capital adequacy stood at 12.81 per cent as on September with the core tier-I at a comfortable 9 per cent

... contd.