State Bank of India (SBIN) Q4 98/99 earnings summary

Executive summary

• FY1998-99 net profit fell 44.8% to Rs.1,027.8 crore, while total income rose 19.7% to Rs.22,392 crore; higher expenses and provisions weighed on earnings.

• Profitability was affected by one-time Resurgent India Bonds issue costs, wage-revision provisions, higher NPA provisioning and a much smaller investment-depreciation write-back than in FY1997-98.

• Deposits, total assets and investments expanded, and the USD 4.23bn Resurgent India Bonds issue provided substantial funding for infrastructure lending.

Financial highlights

• Total income was Rs.22,392 crore, up 19.7% YoY; total expenditure was Rs.21,364 crore, up 26.9%.

• Net profit was Rs.1,027.8 crore versus Rs.1,861.2 crore; operating profit before provisions and contingencies was Rs.3,451.16 crore versus Rs.3,504.96 crore.

• Global gross interest income increased to Rs.19,107.54 crore from Rs.15,878.89 crore; net interest income grew 12.2%, while non-interest income rose 16.5% to Rs.3,284.69 crore.

• Operating expenses increased 24.9%; included Rs.319.19 crore of RIB issue expenditure and Rs.315.31 crore for wage arrears. NPA provisions rose to Rs.1,422.68 crore from Rs.1,151.42 crore.

• Dividend declared at 40%, subject to RBI approval, unchanged from the prior year.

Outlook and guidance

• Recovery in the real-sector environment showed initial signs of improvement; sustained growth was expected, supported by strong fundamentals.

• SBI Card rollout was targeted for nationwide completion by Dec. 1999, with 2 million cardholders and 30% market share targeted by 2001.

• 95% of computer systems were Y2K-compliant by Mar. 1999; remaining systems were expected to comply by end-June 1999, with total remediation costs estimated at Rs.50 crore.