State Bank Q1 profit up 25 pct; shares jump

MUMBAI Thu Aug 12, 2010 5:31pm IST

People walk in front of a signboard displayed at the head office of State Bank of India in Mumbai November 9, 2009. REUTERS/Arko Datta

People walk in front of a signboard displayed at the head office of State Bank of India in Mumbai November 9, 2009.

Credit: Reuters/Arko Datta

Related Topics

Stocks

   

MUMBAI (Reuters) - State Bank of India(SBI.BO) posted its fastest profit increase in a year on rising net interest income, highlighting the attraction of Indian banks from foreign investors and sending shares in the country's biggest lender to a record high.

SBI and rivals such as ICICI(ICBK.BO), India's No. 2 lender, are seeing an improvement in asset quality as consumer loan defaults slow in an economy forecast to grow about 8.5 percent this fiscal year.

Bank credit in India grew at an annual 19.7 percent in July, according to the central bank's data, in tune with a rise in business and consumer confidence, up from 9.7 percent in October and compared with 16.7 percent at end-March.

Analysts expect credit growth to gather pace in the second half of fiscal year 2011 as industries will need more funds to expand operations.

State-run SBI said on Thursday net profit rose 25 percent to 29.14 billion rupees ($621.3 million) in April-June from 23.30 billion rupees a year earlier, the biggest percentage gain since the first quarter last year.

A Reuters poll of analysts had forecast net profit to grow 5 percent to 24.49 billion rupees.

"Net interest income is looking very good. Going forward, I think this growth should continue as, in a rising interest rate environment, SBI is best positioned in the sector," Vaibhav Agrawal, an analyst at Angel Broking, said.

SBI's shares closed up 6.9 percent at 2,784 rupees after the results, outperforming the broader market that ended flat. The shares had earlier jumped as much as 7.5 percent to a record high of 2,797.80 rupees.

SBI's net interest income grew 45.4 percent to 73.04 billion rupees in the June quarter, from a year earlier, above forecasts of 65.95 billion rupees for the period.

Net non-performing assets at SBI were at 1.7 percent in April-June compared with 1.55 percent a year earlier.

Last month, ICICI Bank met estimates with a nearly 17 percent rise in net profit while HDFC Bank, the second largest private lender in India, posted its strongest profit growth in more than a year.

FOREIGN BANKS IN INDIA

Foreign banks are also eyeing India amid the expected credit growth and rapidly-growing economy.

Credit Suisse said on Thursday it had received a licence from the Reserve Bank of India (RBI) to set up a bank branch in Mumbai. Eighteen foreign banks have approached India's central bank for opening their maiden branches or representative office in India.

The RBI on Wednesday said it intends to grant a limited number of new bank licences, a move that was earlier flagged by the government to expand the geographic reach of the sector.

In a discussion paper on the subject of entry of new banks, the RBI has invited comments on the minimum capital requirements as well as promoters shareholding in new banks.

"The RBI is going to give licenses only to serious contenders and that's why the criteria for selection will be very stringent," Deven Choksey, chief executive of K.R. Choksey Shares and Securities, said.

Shares in SBI, valued at about $36 billion, have risen 22.7 percent so far this year, versus a 3.5 percent rise in the main index, and a 20 percent jump in the sector index.

(Writing by Pratish Narayanan; Editing by Anshuman Daga and Jui Chakravorty & Kazunori Takada)

(For more business news on Reuters India click in.reuters.com)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
SHRI1508 wrote:
Splendid performance by a giant in the Indian Banking Industry, which proved elephants too can dance.

Aug 12, 2010 10:05pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Jan Dhan Yojana

REUTERS SHOWCASE

Chance For Reform

Chance For Reform

India's coal crunch - a chance to revamp, reallocate and revive.  Full Article 

E-Commerce

E-Commerce

Ratan Tata invests in online retailer Snapdeal.  Full Article 

Top Priority

Top Priority

Finance minister says food inflation is top priority.  Full Article 

Deal Talk

Deal Talk

Who wants to buy Snapchat? Microsoft, Google, Apple, Alibaba.  Video 

Fresh Funding

Fresh Funding

Tiger Global leads $65 million funding in Indian messaging app Hike.  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

Safety Net

Safety Net

SEBI revamps trading safety-net rules.  Full Article 

Fraud Investigation

Fraud Investigation

IMF's Lagarde put under investigation in French fraud case.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage