SBI to invest Rs 15,000 crore, eyes new businesses
The State Bank of India (SBI) will invest Rs 14,000-15,000 crore during the current financial year to keep its growth rate robust.
It has also identified several new areas which it will move into during the year - pension funds, financial planning and wealth management, merchant acquisition, private equity venture capital and general insurance.
Announcing the bank's annual results, SBI chairman OP Bhatt said it had posted a marginal increase of 3 per cent in net profits during 2006-07 to touch Rs 4,541.31 crore, up from Rs 4,406.67 crore during the previous financial year. Additional provisions for taxes and loan losses has pulled down the bank’s profitability.
Bhatt added that the bank was exploring several options to raise the Rs 15,000 crore, but it was likely to be a healthy mix of debt and equity. The bank is already in talks with half a dozen investment banks along with its own associate banks to formulate a strategy. Bhatt did not rule out the possibility of a public offer but said that if at all it happens, it will not be lower than Rs 5,000 crore. A decision is likely by the end of this year.
Bhatt said that bank plans to enter into the areas of private equity venture capital for which it is already in talks with a few “experienced players” to work out the modalities of raising Rs 5,000 crore ($1 billion) as the corpus for the venture capital.
On the general insurance sector, Bhatt said that the bank would approach the regulator after identifying the overseas partner, which would be the minority partner with a 26 per cent stake as per the existing norms. SBI will hold the remaining 74 per cent in the proposed joint venture. Bhatt added that SBI was on the lookout for a mid or large sized bank both in the domestic and overseas markets. “But it should be a $200-500 million one,” he said.
On the issue of merger of its seven associate banks with SBI, Bhatt said that the merger of the seven banks with SBI would catapult the entity into having the largest business volume as compared to all other nationalised banks put together.
SBI’s total business during the year crossed Rs 5 lakh crore mark with deposits at Rs 4 lakh crore and advances at Rs 3 lakh crore. Gross and net NPA had decreased from 3.61 per cent to 2.92 per cent and 1.88 per cent to 1.56 per cent, respectively.
Operating profit was Rs 10,000 crore, reflecting a growth of 21.23 per cent. Net interest margin increased to 3.31 per cent from 2.92 per cent.
During the fourth quarter ended March 31, 2007, SBI posted a 75 per cent increase in net profit to Rs 1,493.19 crore, compared to Rs 853.29 crore for the same period last year. Total income rose 29.05 per cent to Rs 14,435.76 crore for the quarter, from Rs 11,186.10 crore for the corresponding period a year ago, The central board of the bank has declared a dividend of Rs 14 per share for the year ended March 31, 2007.
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