SBI expects 22 percent credit, 15 percent deposit growth (Lead)

May 14th, 2010 - 9:40 pm ICT by IANS  

State Bank of India Kolkata, May 14 (IANS) The country’s largest lender, State Bank of India, expects credit growth of 21-22 percent and deposit growth of 15-16 percent in the current financial year, a top bank official said here Friday.

“Credit growth will be between 21-22 percent this year, and in deposit due to liquidity overhang we will grow down till June. Thereafter, we expect to grow by 15-16 percent,” SBI chairman O.P. Bhatt said at a press conference.

SBI posted 32 per cent decline in net profit at Rs.1,867 crore in the January-March quarter 2009-2010 against Rs.2,742 crore reported a year ago.

Bhatt said the reason behind the fall in profit despite better performance in fourth quarter is due to extra provisioning for wages of Rs.547 crore and non-performing asset (NPA) provisioning of Rs.1,600 crore.

However, total income of the bank increased 1.8 per cent to Rs.22,474 crore for the quarter under review from Rs.22,061 crore in the same period last fiscal.

The gross NPA of the bank stood at Rs 19,535 crore on year-on-year basis.

“Quarter after quarter incremental NPAs will go down. Fresh slippages for the year was Rs.11,843 crore,” said Bhatt.

He said NPAs in the retail business, agriculture advances are negligible whereas it has shot up in the small and medium enterprises (SME) sector and mid-corporate levels.

The bank is planning to raise Rs.15,000-20,000 crore in the current fiscal through a rights issue. “We are going to talk to the government about this,” he said.

The government holds 59.4 percent in the public sector bank. It last raised Rs.16,736 crore in 2008 through a rights issue, the government had contributed Rs.10,000 crore.

Bhatt also said the bank has tied up US-based Elavon Incorporation and Visa International as its joint venture partners for merchant acquisition business.

The name of the company would be SBI Payment Services, in which SBI would have 65 percent stake.

The bank is planning to launch a retail bond in the first half of the current fiscal. The initial issue would be around Rs.200 crore, Bhatt said, adding it will be a 15-year issue.

The SBI chief said there would be slight upward bias in interest rates due to surplus liquidity. “I see slight upward bias in interest rates as there is surplus liquidity across the system.”

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