However, operating profit at India's largest commercial bank increased by only 3.15 per cent (from Rs 3,397.63 crore in 1996-97 to Rs 3,504.96 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 described the result as "unsurpassable" for a year that was not a good one for the banking industry.

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 writeback of excessdepreciation in government securities. It has also made a 0.25 per cent provision (Rs 149 crore) against standard assets to strengthen its balance-sheet. This the first instance of any Indian bank making a provision for 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 writeback 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 future depreciation in its gilts portfolio in case interest rates rise.

"The performance is unprecedented, particularly since 1997-98 was not a good year for the banking industry," Verma said. "In fact, till the second quarter our deposit growth was negative. It was only in thelast quarter that we could make good much of the lost ground."

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. "Despite the pressure on spreads, we have been able to grow the balance-sheet size by about 15 per cent -- from Rs 1,56,000 crore to Rs 1,80,000 crore," Verma said.

With interest spreads narrowing, SBI will look for growth from higher turnover. "We will introduce new products in the market. We have identified the gold business, housing loans, credit card business and operations in the equity market besides cash management products as new income streams. 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 pointed out.

The bank's total income rose 6.3 per cent to Rs 18,699 crore in1997-98, 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 share of fee-based income of the total income increased to 34.28 per cent in March 1998 from 33.03 per cent in the previous year.

The annualised earning per share 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 from 0.88 per cent to 1.09 per cent.

Amidst wild speculation over the performance of SBI, punters continued to take fresh positions at the counter which saw the stock being traded in the band of Rs 206.50 and Rs 219.80 -- the intra-day's low and high respectively.

In the final count, however, the scrip recorded a net loss of 2.99 per cent on the BSE to close at Rs 207.20. On the NSE the scrip closed at Rs 210.15, registering a net decline of 1.59 per cent. In the GDR markets, the stock registered a gain of 1.89 per cent to close at $13.50.