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SBI mulling merger of other associate banks

SBI mulling merger of other associate banks
PTI
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First Published: Sun, Sep 05 2010. 02 10 PM IST
Updated: Sun, Sep 05 2010. 02 10 PM IST
New Delhi: State Bank of India (SBI) is considering the merger of all five of its remaining associate banks with itself, having amalgamated with two of them in the last two years.
“It (merger of other associate banks) is in my mind, but we have to see,” SBI chairman O P Bhatt told PTI.
“We have to check out from the government and the banks concerned,” he said.
The merger of State Bank of Indore, the smallest associate bank, was completed last month. All 503 of State Bank of Indore’s branches, including 437 core banking branches and 66 outlets for NRI services, became a part of SBI from 26 August, 2010.
The merger would avoid competition between the two entities and would give State Bank of Indore easier access to funds at competitive rates, compared to what it would have managed on the basis of its own growing balance sheet.
This was the second merger of an associate bank with SBI after a similar exercise with State Bank of Saurashtra in August, 2008.
Following the merger, SBI is left with five associate banks — State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
Among these, the State Banks of Bikaner and Jaipur, Mysore and Travancore are listed companies.
For 2010-11, State Bank of India is aiming at a 20% growth in net profit.
“Quarter one was 25%. We can do 20% (this fiscal). That is what we would try to achieve... We will try to maintain this growth as far as possible,” Bhatt had said.
The country’s largest bank had reported an over 25% growth in net profit to Rs2,914.20 crore for the first quarter ended June, 2010, despite an increase in bad debts.
The rise in net profit was mainly due to a three-year high net interest income and a decline in the cost of deposits and savings.
Net interest income rose by 45.35% during Q1, compared to the same quarter a year ago. Growth in net income was 4.30% in June, 2009.
In addition, SBI’s operating profit zoomed 66.97% in the first quarter. It had declined 7.28% in the corresponding quarter of the previous year.
A fall in treasury income and a rise in provisions against bad debt, among others, pulled down SBI’s profit growth last year. The bank had recorded a meagre 0.4% rise in net profit to Rs9,166.05 crore in the last fiscal. The bank’s total income rose to Rs85,962.07 crore in FY10, compared to Rs76,479.2 crore in FY09.
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First Published: Sun, Sep 05 2010. 02 10 PM IST