Worst numbers posted by SBI this quarter

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Mumbai, May 18: State Bank of India, India's largest bank posted the worst numbers this quarter which led to sharpest fall in its shares. SBI reported a net profit of Rs. 21 crore, for the last quarter ended March 31, 2011 against a net profit of Rs. 2,828 crore as reported in the previous quarter which shows a dip of 99.26% quarter-on-quarter (q-o-q) basis.

In the Financial year 2010-11 (FY11), the bank reported annual profit of Rs. 8,265 crore against 9,166 crore and 9,121 crore for FY10 & FY09 respectively, this reflects a huge fall in Net Profit.

Total Income reported by bank in FY11 was Rs. 97218.96 crore, whereas it was Rs. 85962.07 crore in FY10.

According to bank's standalone results, Net Profit is lower by 9.84% in FY11 over FY10.

What reduced the profit drastically?

The drop was due to higher provisioning on account of pension liability, gratuity, tax, loan loss and standard asset provision on special home loan schemes.

The bank made gratuity provisions of Rs. 1,565 crores in FY11 against Rs. 46 crores in FY10. Pension provisions contributed Rs. 2,473 crores against Rs. 1,998 crores in FY10 and Rs. 500 crores were contributed towards standard assets provision for special home loan schemes.

SBI has made a huge loan loss provision of Rs. 3,264 crore in the March quarter, compared with Rs. 2,187 crore in the December quarter.

The higher interest rates paid on term deposits are one of the main factor causing dip in profits. Interest paid on deposits was up by 15.98% due to increase in interest rates on term deposits. Fee income growth during the March quarter was also low 7% y-o-y basis.

Tax provisions made during the year were also high as compared to the previous year as many of the provisions made were not tax-deductible. Tax paid during FY11 was 6689.71 crore against Rs. 4760.03 crore in FY10.

All these factors brought sharp fall in Net Profit for the bank which in turn led to the steepest drop in almost two years.

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