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SBI consolidated profit dips by 22 per cent in Sept qtr.

STATE BANK of India ( SBI) failed to meet the market expectations as it posted almost flat growth in its net profit at ` 2,501.3 crore for the quarter ended September, 2010. On a consolidated basis the net profit fell by 22.2 per cent to ` 2,437.12 crore.

" Net profit for the September, 2010 quarter at ` 2,501 crore surpassed the net profit of ` 2,490 crore in the previous year, despite increase in provisions of ` 1,511 crore ( up 64.42 per cent)," the bank said.

" Loan loss provision of ` 2,162 crore made during the quarter includes ` 449 crore made in excess of IRAC norms to enable the bank to reach a provision cover ratio of 62.78 per cent.

Excluding this amount, the net profit at ` 2,860 crore is up by 14.86 per cent year on year ( YoY or compared to the same period the previous year)," it added.

IRAC norms ( or the Prudential Norms on Income Recognition, Asset Classification and Provisioning, and Capital Adequacy) mandate banks to take their NPA cover ratio to 70 per cent. SBI's cover was at 42 per cent when the norms were announced last fiscal.

" The stock will open lower tomorrow. Falling asset quality and the need to hike its NPA cover are proving to be drags.

And there is no respite seen in the next couple of quarters on the NPA front," said an analyst of a leading broking house, who wished not to be named.

" However, there is no major setback in the bank's core performance, with margins and CASA ( deposits in savings and current accounts) improving," he added.

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Publication:Mail Today (New Delhi, India)
Article Type:Financial report
Date:Nov 9, 2010
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