SBI hopes to maintain treasury gains in second quarter

“We are hopeful that income from treasury will be maintained at the present (Q1) level,” Deputy Managing Director and Group Executive (Global Markets) of SBI, P.P. Pradeep Kumar told PTI here.

During the first quarter, the public sector lender has optimally managed its treasury operations to post mark-to-market gain.

SBI has a mark-to-market gain of Rs 521 crore during the last quarter, which was an important factor that helped it post its highest-ever net profit of Rs 3,752 crore.

Furthermore, the bank said that it was able to check losses in the equity portfolio by exiting from all loss-making entities.

Referring to high government borrowing plan coupled with possible hardening bond yield, Pradeep Kumar said any small change in yield is not going to impact the profitability of the treasury operations.

“I don’t think any small change will have major impact on the treasury gain,” he said.

SBI posted a 137 per cent rise in its net profit to Rs 3,752 crore in the first quarter ending June on the back of healthy net interest income.

Net profit of the public sector bank stood at Rs 1,583 crore in the same period previous fiscal.

Total income of the bank increased by 16.9 per cent to Rs 32,415 crore in the June quarter compared with Rs 27,732 crore reported in the same period last fiscal.

SBI reduces interest rate for deposits over 5 years from Aug 7

Mumbai, August 2: State Bank of India (SBI) on Thursday reduced interest rates for deposits with a term of more than five years to 8.5%, effective August 7. The bank currently offers 8.75% for deposits of up to Rs. 1 crore and 9% for deposits above Rs. 1 crore in this basket. “This is purely an asset-liability mismatch decision,” said SBI Deputy Managing Director and Chief Credit Risk Officer Atanu Sen. “Honestly speaking, we found that the portion of depositors in this basket is quite small. We have not touched other maturity baskets.”

 

SBI’s selective deposit rate cut comes a day after the country’s largest lender reduced its home and auto loan rates, citing extra liquidity support through the Reserve Bank of India’s decision to pare banks’ mandatory bond holding limit to 23% of total deposits from 24% earlier. The bond holding limit is called the Statutory Liquidity Ratio (SLR). SBI said the SLR cut gives it additional liquidity of about Rs. 10,000 crore and the management had decided to pass this on to customers and expand the balance sheet.

 

SBI reduced home loan rates from 10.75% to 10.25% for loans up to Rs. 30 lakh while loans above that will be offered at 10.40%. Auto loan rates were reduced from 11.25% to 10.75%.

 

While the reduced rates are for new customers, existing borrowers can switch to them by paying 1% of the outstanding loan amount to the bank as fees. It said this was not an early payment penalty. “Cost is a factor of time,” said P. Pradeep Kumar, deputy managing director and group executive for global markets at the bank. “We are offering the new rates now based on the existing cost. Even then, our rates are the most competitive in the industry.”

 

PTI reports: The bank said that sluggish growth in the property market prompted it to cut its annual home loan growth target. The bank, which cut its home loan rates on Wednesday, was earlier targeting a 25 per cent growth in its home loan book. Such loans are expected to grow by only 15-20 per cent, the bank said. “There has been a drop in home registrations and we want to be realistic and now expect that the home loan segment will grow by only 15-20 per cent,” Mr. Atanu Sen, Deputy Managing Director said, while addressing a press conference.