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SBI’s stand alone Results – 9MFY 2017 – How to reverse the trend?

Thomas Franco
   Wednesday 15 February, 2017  

Our Bank is facing many challenges now.  Every employee and everyone who cares for the Bank (30 crore is our customer base) have to seriously look at what is happening in SBI as one fifth of the Banking business of the country is handled by SBI.

Let us start with the glimpses of the third Quarter results.

Net profit increased by 134.01% from Rs.1115 cr to Rs.2610 Cr.  This includes profit from sale of 3.90% stake in SBI Life for Rs.1755 Cr.  If SBI life is yielding good income for which every employee is forced to sell SBI Life policies, should we keep selling the shares to increase our profit? Is it not amounting to selling the family silver? This is part of the idea of the Central Government to reduce shares in Public Sector.

Interest income on Advances increased only by 3.36%.  This is mainly due to reduction in base rate / MCLR rate.  The Govt. which talks of autonomy should not keep forcing Banks to reduce interest rate.  There is tremendous need for credit.  In rural and semi urban areas our Bank has an advantage.  The interest rate and service changes will be accepted by the customers as they are borrowing at double or triple the rate from money lenders / NBFCs / Financiers.  So why keep reducing rates?

The interest income for the Quarter is Rs.29831 Cr whereas interest expenses on deposits is Rs.27046 Cr. The interest income on advances for 3 quarters is Rs.89643 Cr (3.73 % growth) and interest expenses is Rs.78335 Cr (6.20% growth). So the spread is too low.  By lending more in the rural and semi urban areas to the Agriculture and allied activities and small industries and small business we can earn much more. 

Total deposits has grown by 22.1% to Rs.2040778 Cr of which CASA deposits is Rs.7,08,536 Cr (34.74% Growth).  This deposit is likely go down once the withdrawal limit is gone.  Moreover with the payment Banks coming into operation and giving 7.75% interest our deposits are likely to move out.  So the urgent need is to provide better services by adding more staff and also by providing loans and other services to the customers.

It is interesting to note that the advances increased by 4.81% only and is Rs.1497164 Cr, out of which Rs.3,08,283 Cr is to large corporates (20%), Rs.2,04,200 Cr (13%) to Mid Corporates, Rs.362219 Cr (24%) is to Retail Advances. SME advances have decreased to Rs.161829 Cr (11%) and Agriculture advances is Rs.125068 Cr (8%) and International advances is Rs.285536 Cr (19%).  This once again indicates that we are not doing adequate to take care of the SME Sector and Agriculture Sector which provides maximum employment.  It is high time we look at this issue sympathetically and critically as scope for us is more as of now and soon we will loose our space to small Banks, MFIs and NBFCs.

The NPA has increased to Rs.108172 Cr which brings an alarm bell.  There is need for implementation of the recommendations of the Parliament Standing Committee on Finance.  We have to fight for this continuously to save the Banking Sector.

At the Grass root level each officer can bring changes by providing credit to the needy within the norms.  Are we ready to take the Challenge?

* Thomas Franco (ngcfranco@gmail.com)




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