Chillin' out till it needs to be funded
State Bank of India and Punjab National Bank both effectively proved size does matter. Their growth absorbed a growth in deposit rates ( 38% for SBI) effectively absorbing the stimulus and passing on rates by RBI unlike their MNC and private bank counterparts that have ‘managed’ their deposit rate cost by instantly cutting rates early and then keeping credit down, almost artificially probably as they waited to be sold off for pennies by the head offices. I am almost sad and apologetic at sounding like a parochial small trader / farmer but the facts on ground are now out for everyone to see.
State Bank of India’s quarterly profits grew 42% and restructured loans upwards of Rs 11000 Crs in time. While ICICI plans a paltry Rs 1500 Cr restructuring while NPAs kept rising at the private sector banks and are expected to rise further into the 3%+ zone, PNB and SBI NPAs are controlled and have fallen consequent to the restructuring. SBI has also managed to attract huge deposits in this period reflecting higher confidence in the behemoth ( also true for PNB) while Income from advances has grown at a lower 23%. Net Interest Income had earlier grown in FY09 to Rs 17000 CR ( USD $3.4 billion) while it climbed 4% Q-o-Q to INR 5000 Crs ( $460 million – $480 million at current FX rate ) beating the Bloomberg survey by 20%