SBI has been the most aggressive bank in the advances space for the Year 2009. First it changed the housing loan scene overnight by announcing the 8% fixed cum floating interest rate scheme. Then it became the dominant player in the automobile loans domain too. SBI was one of the preferred banks for the loans to book Tata Nano. Operation profit of the bank stood at Rs. 17,915.23 crore. It registered a growth of 36.68% compared to the previous year while interest income recorded a growth of 22.63%. This was due to growth in interest income on advances (i.e., the amount which bank lends to institutions, companies and individuals as loan) and also due to higher volumes.
State Bank of India (SBI) is one of the largest financial services groups operating in the banking industry in India with total assets of Rs 7,21,526 crore with the bank clocking net profits of Rs. 9,121.23 crore. The bank is engaged in providing trading services, international banking and traditional banking and treasury operations. The Reserve Bank of India holds more than half of SBI’s equity capital. SBI has a network of over 10,000 branches with around 2 lakh employees. In addition, the seven associate banks of SBI have more than 4900 branches. SBI along with its subsidiaries is engaged in providing a wide range of financial services including life insurance, merchant banking, mutual funds, credit card and factoring, security trading and primary dealership in the money market.
Profit before and after tax
The Profit before tax for the quarter ending September 09 was Rs. 4862.64 crore compared to Rs.4287.76 crore for quarter ending September 08. Profit after tax for quarter ending September 09 was Rs. 3133.16 crore compared to Rs. 2458.04 crore for quarter ending September 08. The bank has reported a growth of 28% in net profits.
Income from operation
Operation profit of the bank stood at Rs. 17,915.23 crore. It registered a growth of 36.68% compared to the previous year while interest income recorded a growth of 22.63%. This was due to growth in interest income on advances (i.e., the amount which bank lends to institutions, companies and individuals as loan) and also due to higher volumes.
SBI has been the most aggressive bank in the advances space for the Year 2009. First it changed the housing loan scene overnight by announcing the 8% fixed cum floating interest rate scheme. Then it became the dominant player in the automobile loans domain too. SBI was one of the preferred banks for the loans to book Tata Nano.
Income from treasury operations
Income from treasury operations in India increased by 28.60%, it’s mainly due to higher average resources deployed. Though not a major profit source earlier, treasury operations have now a days become a dominant source for profit for the bank. Today this source alone gives more than 1/3 of the total profits for the bank.
Non-Interest Income
Non-interest income stood at Rs.12,690 crore in 2009. During the year, The bank received an income of Rs. 409 crore by way of dividends from associate banks/subsidiaries and joint ventures in India and abroad.
Expenses
There was an increase of 25% in the staff cost attributable to higher pension provisioning and increased staff strength. Staff cost included an amount of Rs.1,414 crore towards wage revision provision.
Overhead expenses have also registered an increase of 22% mainly due to increase in expenses on rent, taxes and lighting as a result of opening of new branches, advertising & publicity, printing & stationary, postage and telephones and miscellaneous expenditure.
Other overhead expenses that increased include provision for depreciation on investments, provisions for tax, provisions for fringe benefit tax, net of write-back (due to nonperforming assets).
Reserves and Surplus
The bank has over Rs. 6,425.24 crore as reserves and surplus. State bank of India transferred that amount into various tools offered by Reserve bank of India. An amount Rs. 5291.79 crore was transferred to Statutory Reserves, Rs. 826.56 crore was transferred to capital reserve fund and remaining Rs. 306.89 crore was transferred to other reserve funds.
Dividend
The bank has increased dividend of Rs.29 per share from Rs. 21.50 per share in the last year. It is good news for the share holders to hold shares in the State Bank of India. At the same, bank has received an income of Rs. 409 crore by way of dividends from associate banks/subsidiaries and joint ventures in India and abroad. In both inflow and outflow of dividend, the beneficiary is both the shareholder and the State Bank of India.
Summary
The State Bank of India was financially sound in the current year 2009. All their sources of income have performed better than the previous year. Their subsidiaries have also performed well. The increase in expenses has been quite high particularly in the recurring expenses (read as salary and pension provisions). This may be a cause of worry for the management of the bank in the long run. Having turned aggressive in lending in high growth areas like housing and automobiles, SBI is giving a lot of competition to private banks. This is a positive shift for the PSU behemoth.
Get the best deals on loan offers
Some useful personal finance calculators