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Home » Finance Current Affairs » SBI looks at 35% growth in Q2 profit

SBI looks at 35% growth in Q2 profit

Current Affairs

Mumbai: India's largest state-owned bank, State Bank of India (SBI), is expected to witness an increase in net profit of about 30-35% year-on-year in its July to September quarter. At the end of the first fiscal quarter, its net profit grew 42.03% at Rs 2,330 crore, compared to Rs 1,641 crore during the corresponding quarter a year ago.

Chairman OP Bhatt said treasury income for the bank could not be hurt this quarter given a sharp spike in bond yields. Bhatt noted that they have yet not incurred any kind of "mark-to-market" losses in the treasury for the July to September quarter. "It all depends on how the 10-year government security yields rise," said Bhatt.

He was speaking on the sidelines of a banking seminar organised by Indian Banks' Association (IBA) and Federation of Indian Chambers of Commerce and Industry (Ficci). The SBI chairman also noted that since July, the bank has witnessed a growth in credit by Rs 5,000 crore a month.

"We need to consolidate, raise capital and need to have two-three more banks bigger than the size of SBI or half a dozen banks of the size of SBI, to support large corporations within the country," said Bhatt. He added that anything that appeared to be risky during the financial crisis should be regulated now, quoting examples of non-banking financial companies, banks and mutual funds.

"Systemic regulation of important entities, including non-financial entities like aviation and telecom, should also be done," said Bhatt. Talking about the ability to serve large Indian corporations, Bhatt strongly noted that Indian banks are not in a position to serve large companies, as their capital is too small. "In my point of view, even SBI is not large enough to finance big firms. Our capital is too small to enable us to do that," said Bhatt.

He also noted that its credit growth in April to June was flat on account of a high base, as the bank had seen huge retail growth in the first quarter of 2008-09. "On a positive note, there was also huge repayment from oil and food companies in the first quarter of 2009-10," he added.

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