SBI may clock profit over Rs 10,000 crore in current fiscal

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Country's largest lender State Bank of India's profit in the current fiscal is likely to exceed Rs 10,000 crore on the back of increased business and sustained effort to contain bad assets.

"The bank is making all-round effort to achieve Rs 10,000 crore profit during the year," senior officials of the bank said.

State Bank of India (SBI) had posted a net profit of Rs 8,265 crore in 2010-11, 9.84 per cent lower than that in 2009-10, mainly due to higher pension, gratuity, loan loss provisions, higher investment and standard assets provision on special home loan scheme.

For the first quarter of the current financial year, SBI recorded a net profit of Rs 1,584 crore, down almost 46 per cent from the year-ago period.

Hit by higher provisioning for bad loans and increased tax outgo, the net profit of the SBI's profit tanked by about 99 per cent to Rs 20.8 crore for the fourth quarter ended March, 2011.

However, SBI hopes to clock a net profit of Rs 2,500 crore in the second quarter of 2011-12.

"We expect to turn in another Rs 7,200 crore of operating profit. If you leave out the one-off provisions, which had happened due to raising of prudential norms and also the investment provision, we expect a normal provisioning of Rs 2,500-3,000 crore," SBI chairman Pratip Chaudhuri had said after announcing the first quarter numbers.

"So we would possibly look at a net profit of Rs 2,500 crore. This is broad indication, but we would get a number after we see August investments," he had said.

During the first quarter, there was an unexpected event in the form of depreciation in bonds, which led to a loss due of Rs 1,048 crore. In addition, SBI suffered a Rs 300 crore loss on its equity investments, he had said.

The bank also expects Net Interest Margins (NIM) to be robust at over 3.5 per cent during 2011-12 on the back of a rising lending rate.

"NIM would continue upward of 3.5 per cent for the current fiscal," Chaudhuri had said.