State Bank of India (SBIN) Q4 97/98 earnings summary

Executive summary

• FY1997-98 net profit was Rs.1,861.20 crore, up 40% as reported; prior-year published profit was later restated from Rs.1,329.30 crore to Rs.1,349.25 crore after regrouping dividend tax.

• Deposits rose 18.4% to Rs.1,31,091 crore and advances rose 19.3% to Rs.74,237 crore; total assets increased 14.8% to Rs.1,79,673 crore.

• More than 1,200 branches were fully computerized, supporting wider frontline service and new technology-led products.

Financial highlights

• Total income rose 6.3% to Rs.18,699 crore; total expenditure increased 3.5% to Rs.16,838 crore.

• Net interest income was Rs.5,406 crore, up Rs.46.46 crore; other income rose 6.7% to Rs.2,820 crore.

• Interest income grew 6.2% versus 9.2% growth in interest expense; net interest margin declined to 3.57% from 4.01%.

• Operating expenses rose 2.5% to Rs.4,721 crore; overhead expenses fell 9.3%, while staff expenses increased 7.1%.

• Provisions and contingencies were Rs.1,644 crore; NPA provisions rose to Rs.1,151 crore from Rs.833 crore, partly reflecting ~Rs.300 crore of additional requirements after exiting the DI&CGC guarantee scheme.

Outlook and guidance

• Fee-based income was targeted to contribute at least 25% of overall earnings in a few years, alongside volume growth and cost rationalization.

• Growth priorities included expanding the asset base, broadening services and improving delivery quality and cost competitiveness amid intensifying competition for quality assets.

• SBI Card was planned for launch in 1998-99; internet banking was expected through automated Personal Banking Branches.

• Near-term scale expansion was expected to rely on technology, outsourcing and subsidiary networks; mergers and acquisitions faced legal, social and work-culture constraints.