SBM aims at higher profit

By Our Corporate Reporter

CHENNAI, JUNE 28. State Bank of Mysore is aiming to achieve an operating profit of Rs. 300 crores by adopting cost cutting measures, introducing new income generating products and integrating branches through technological upgradation. Detailing the current year performance and future plans, Mr. M. Sitarama Murthy, Managing Director told presspersons that judging by the performance of the current three months achievement of this target was not difficult. The bank would decide about raising capital from the public after monitoring the performance of the six months ending September. The ultimate aim of the bank is to reduce the equity stake of the State Bank of India to 55 per cent, he said.

The capital adequacy ratio as on March 31 stood at 11.16 per cent against the benchmark of nine per cent. The bank's bonds issue of Rs. 60 crores in January 2001 undertaken to augment the Tier-II capital was oversubscribed within three days of opening. It is again planning to raise another Rs. 60 crores in the coming months. The book value as on March 31, 2001 stood at Rs. 810 against the Rs. 100 paid up, the bank may come out with premium when offering public offer of shares, the MD said.

The impact of slowdown on the manufacturing sector, particularly in the steel, textiles, export sectors and the change in the fortunes of NBFCs has not allowed much leeway to the bank, he felt.

Total business of the bank surpassed the Rs. 12,000 crore mark. Aggregate deposits reached the level of Rs. 7,334.69 crores, a growth of 14.69 per cent. The cost of deposits declined marginally to 8 per cent from 8.18 per cent.

Despite the poor credit off-take in general, advances of the bank grew by Rs. 570.33 crores (14.40 per cent) to 4,529.63 crores. The margins continued to fall with decline in interest rates. Investments in securities, debt and equity increased by Rs. 524.12 crores, taking the total investments to Rs. 3,550.32 crores.

The bank had realised an income of Rs. 26 crores through trading in securities. Much of the interest burden was on account of high cost deposits. It is expected to decline substantially in the current year, Mr. Murthy said.

Total income has improved by 12.67 per cent to Rs. 1086.42 crores. The operating profit registered a growth of 12.07 per cent at Rs. 182.30 crores against Rs. 162.66 crores. Taking into account the implementation of VRS, the operating profit stood at Rs. 137.94 crores. The net profit, without taking into account the extra-ordinary expenses on account of the voluntary retirement scheme, registered a growth of 16.21 per cent at Rs. 56.02 crores against Rs. 48.24 crores.

SBM plans to concentrate on young customers and the farming community by introducing smart card facility.

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