Aug. 12: India’s largest bank, the State Bank of India, declared a net profit of Rs 2,914 crore for the quarter ended June, up 25 per cent over the last year’s numbers. The better than expected numbers of the bank saw the stock price shoot up 6.9 per cent to Rs 2,784 — an all time high.
The spike in SBI’s stock prices helped the BSE Sensex recover losses in the early part of the day. The bank will also soon take a call on hiking deposit and lending rates for existing borrowers, said chairman Mr O.P. Bhatt on Thursday.
“The deposit rates have almost bottomed out for the industry,” he added. Any such hike would at least be one quarter of a percentage he said, but refused to set a time frame for such an increase.
The single biggest factor contributing to the improved profits was the higher NIM — net interest margin — the difference between the interest charged by the bank on loans and the rate paid on deposits. The NIM for the bank increased to 3.18 per cent from 2.3 per cent last year. The bank expects this number to remain at above 3 per cent levels, as it has managed to reduce the cost of deposits. Bad loans continue to remain a concern for the bank however.
During Q1, loans worth Rs 4,081 crore became non-performing assets.