The State Bank of India's associates reported a 34% rise in
net profit in the quarter ended March compared with the previous fiscal ,
even as the country's largest lender's net plummeted due to higher
provisioning for bad loans and pension & gratuity liabilities.
Consolidated net profit of the five associate banks of SBI stood at Rs 1,264.70 crore in the fourth quarter, compared with Rs 939.46 crore a year ago.
"Associates were not under-providing , while the parent may have been
under-providing for bad loans," said Hemindra Hazari, head of research
at Nirmal Bang Institutional Research. SBI on Tuesday shocked markets
with a 99% decline in fourth quarter net profit to Rs 21 crore. Newly
appointed chairman Pratip Chaudhuri assured investors that this was a
one-time quarter with one-off provisioning that will not appear in
subsequent quarters. For the full fiscal ended March 2011, consolidated
net profit of SBI group - including associates , subsidiaries and SBI -
stood at Rs 10,685 crore, down from Rs 11,734 crore a year ago.
However, the group's operating profit for the fiscal was up 34% to Rs
33,240 crore. Associate banks reported a 22% growth in net profit for
the full fiscal at Rs 3,598 crore while SBI's profit for the fiscal fell
10% to Rs 8,265 crore. SBI merged two of its associates - State Bank of
Saurashtra and State Bank of Indore - with itself over the past three
years.
Indicating that consolidation of associate banks with SBI will
continue, Mr Chaudhuri had said in April: "This path of M&A would
continue. We have experience and enough learning, and seen that merger
does deliver value and synergy of scale." The subsidiaries of SBI also
outperformed the parent. SBI Card
and Payment Services, which provides credit cards in partnership with
GE Capital, made a turnaround after three years of losses. It reported
net profit of Rs 7.10 crore against a net loss of Rs 150 crore a year
ago.
SBI Capital Markets , the investment banking arm of SBI, reported a
156% rise in net profit at Rs 385 crore. SBI Life, the life insurance
venture with BNP Paribas , reported a 33% increase in net profit at Rs
366 crore.