State Bank of India (SBIN) Q4 05/06 earnings summary

Executive summary

• FY05/06 net profit rose 2.37% to Rs.4,406.67 crore; operating profit increased 2.81% to Rs.11,299.23 crore, as higher operating costs absorbed much of the income growth.

• Credit growth, asset-quality improvement, technology expansion and overseas growth were key operating themes; NIM edged up to 3.40%.

• A 140% dividend was declared, up from 125% for the prior year.

Financial highlights

• Total income rose 9.19% to Rs.43,184 crore; total expenditure increased 10.03% to Rs.38,777 crore.

• Net interest income increased 12.13% to Rs.15,635.64 crore; non-interest income rose 3.78% to Rs.7,388.69 crore.

• Operating expenses grew 16.39%; staff costs rose 17.60% to Rs.8,123.04 crore, mainly from salary revision and prior-year arrears.

• Total assets increased 7.39% to Rs.4,93,870 crore; advances rose 29.29% to Rs.2,61,642 crore, while investments fell 17.54% to Rs.1,62,534 crore.

• Reported EPS was Rs.83.73 versus Rs.81.79; net profit was Rs.4,406.67 crore versus Rs.4,304.52 crore.

Outlook and guidance

• FY06/07 outlook was positive: industrial activity was expected to remain strong and services growth momentum to continue, supported by GDP growth, foreign investment inflows and healthy forex reserves.

• Planned operating-model changes centered on expanding processing centres to improve service, reduce operating costs, shift back-office work from branches and strengthen sales efforts.