PLR hike to maintain profitability: OP Bhatt

New Delhi, Dec 29 | Updated: Dec 30 2006, 05:30am hrs
State Bank of India (SBI), the countrys largest commercial bank, on Friday said that the recent hike in lending rates would help it maintain profitability.

The hike in prime lending rate (PLR) will help us to maintain profitability. We expect net interest margin (NIM) to remain at three percent by the end of this fiscal, SBI chairman OP Bhatt told reporters here. The Mumbai-based bank has increased PLR by half a percent to 11.5% on December 26. The decision is expected to make all loans linked to PLR, whether corporate or retail, expensive.

SBIs net profit dipped by 2.53% to Rs 1,184.49 crore for the quarter ended on September 30, as compared to Rs 1,215.36 crore for the same quarter last year.

The PLR hike is third in the year for SBI. The bank had earlier hiked the rate by 0.5% in April from 10.25% to 10.75% and again in August to 11%.

Bhatt also said that SBI has planned to raise Rs 2,000 crore via tier ii bonds by March-end. He reiterated that SBI would come out with its follow-on public offer next year.

If SBI Amendment Bill was passed by Parliament, it will provide leeway to the bank to raise further equity, he said. Presently, RBI holds a little over 59% in SBI.

PTI