SBI Q1 net up 42%, NPAs also rise

Written by fe Bureau | Kolkata | Updated: Jul 31 2009, 06:45am hrs
The countrys largest bank, State Bank of India (SBI), set a blistering pace for 2009-10, clocking a 42% increase in profits for the first quarter. Net profit was at Rs 2,330 crore, up from Rs 1,641 crore in Q1 last year.

Analysts said there was a growth in treasury and retail banking operations, but also pointed out that net non-performing assetsor bad loanshad risen, too. For the quarter, NPAs stood at Rs 8,402.48 crore, from Rs 6,298.44 crore in the same period last year, a rise of 1.55%. Gross NPAs rose to 2.79% from 2.42% in the corresponding period a year earlier.

But bank chairman OP Bhatt said it would be wrong to say SBI was aggressively pushing auto and home loans. Lets not say we are aggressive. I would say we are focused, he said an in an interview to FE earlier this week. We saw an opportunity and decided to go for it.

This financial year, SBI has slashed lending rates to perk up demand for loans, which are expected to make up for the falling off of trading gains. The bank has cut deposit rates by up to 350 basis points since October, along with prime lending rates by 200 basis points. Even so, the quarterly results show the bank notched up only a marginal rise in loans from last quarter. Credit growth in the Indian banking sector as a whole, according to RBI data, is only 17.6% in Q1.

The better-than-expected results helped SBI shares rise around 4% on the BSE to close at Rs 1722.80 on Thursday.

The total income of the bank rose by 29.8% to Rs 21,041.51 crore, from Rs 16,203.07 crore last year, of which interest income derived from its investment in the bond market grew 26.6% to Rs 17,473 crore, from Rs 13,799 crore. The banks net interest incomethe difference between interest earned and paidwas up 4.32% at Rs 5,026 crore, compared with Rs 4,818 crore. Other income rose 49.29% to Rs 3,589 crore, from Rs 2,404 crore.

Deluged by deposits since last Octoberand with off-take still low because of the meltdownanalysts said SBI had seen the cost of deposits rise 38%.