It gives me great pleasure to place before you the highlights of your
Bank''s performance during the financial year 2011-12. Details of the
achievements and initiatives taken by your Bank are provided in the
enclosed Annual Report for the year.
The global growth environment has remained challenging due to the Euro
zone sovereign debt crisis, volatile oil prices and fragile growth in
most countries. Though India''s GDP growth in FY''12 was one of the best
in the world, there are concerns about the state of the economy.
Inflation has moderated but remains above tolerance levels and growth
has slowed perceptibly. The high twin deficits namely current account
deficit and fiscal deficit, combined with elevated inflation,
particularly food inflation, pose risks to growth. In this milieu,
India''s GDP has slowed to 6.5% in FY''12 after growing at 8.4% in FY''11.
Bank''s Financial Performance
Against the backdrop of a challenging environment, I am happy to
announce that Net Profit of your Bank increased by 41.66% from
Rs8,265 crores in FY''11 to Rs 11,707 crores in FY''12, one of the highest
net profits earned by any corporate in the country. Operating Profit
for your Bank crossed Rs30,000 crores mark, rising by 24.62% to Rs31,574
crores in FY''12 from Rs25,336 crores in FY''11, indicating that core
operations remain robust.
Your Bank consolidated gains on the income side by recording a robust
increase in Net Interest Income. In particular, Interest Income on
Advances rose by 35.18% from Rs59,976 crores in FY''11 to Rs81,078 crores
in FY''12. Interest income of your Bank increased by 30.87% in FY''12
against a growth of 14.65% in FY''11 while growth in interest expenses
stood at 29.39% in FY''12. Fee income also recorded a rise of 4.56% in
FY''12. Consequently, Net Interest Income increased by 33.10% to Rs43,291
crores in FY''12. However, reflecting market conditions, non-interest
income showed a decline of 9.31% due to the loss of Rs920 crores on
account of sale of domestic equity and bonds.
On the other hand, with lower reliance on bulk deposits, interest paid
on deposits showed a smaller increase of 28.70% from Rs43,235 crores in
FY''11 to Rs55,644 crores in FY''12. More importantly, the quarterly
movement in income parameters shows that the last year has witnessed a
constant and consistent up trend, leading to enduring results.
Due to a prudent and market driven approach, your Bank is able to lend
profitably and borrow at a reasonable cost which is clearly shown by
the strong Net Interest Margin (NIM) of 3.85% in FY''12, up from 3.32%
in FY''11. This performance is remarkable because your Bank has the
lowest Base Rate in the industry, so, clearly we have the trust of the
people as we strive to be ''The Banker to Every Indian''. I can proudly
say that not only have we outperformed our guidance but also your
Bank''s domestic NIM at 4.17% is remarkable as it ranks at the very top
among its peers.
You will be happy to see that revenue growth has significantly
outstripped growth in expenses. Staff expenses, which have largely been
contained after full provisions for current wages and superannuation
expenses rose by 11.59% from Rs15,213 crores in FY''11 to Rs16,974 crores
in FY''12. Due to consolidated improvement all round, total provisions
also increased by only 16.37% from Rs17,071 crores in FY''11 to Rs19,866
crores in FY''12.
Along with robust growth, your Bank has ensured that asset quality is
maintained. As of end-March''12, Gross NPAs of your Bank stood at 4.44%.
Net NPAs, that had risen to 2.22% in December''11 also fell below the
psychological threshold of 2% to 1.82%. What adds to our strength is
that your Bank''s Provision Coverage Ratio improved to 68.10% in
March''12 from 64.95% in March''11, reflecting our abundant prudence and
Further, out of total Restructured Standard Assets of Rs37,168 crores
outstanding on the books of your Bank as on 31st March 2012, only
Rs6,010 crores are in the NPA category, so the risk is well contained.
Our improved performance in respect of NPAs has been possible due to
our committed and focused efforts. You will be happy to see that we
have reduced our NPAs but increased provisioning as a prudent measure.
One reason for the low level NPAs is all-out efforts made by your Bank
to step up recovery. This has also been helped by the fact that your
Bank has revived the modular structure and posted DGMs at modules for
closer supervision and monitoring. Going forward, our endeavour is to
keep the NPA levels as low as possible.
I am happy to announce that the Capital Adequacy Ratio for your Bank
increased from 11.98% in March''11 to 13.86% in March''12. Specifically,
the Tier-1 Capital Adequacy Ratio, which is the bedrock of a bank''s
strength, rose from 7.77% to 9.79% during this period.
This turnaround has been helped firstly, by improved internal
generation and plough back of profits. A second reason is the Rs7,900
crores capital infusion by the Government at the end of March 2012.
Finally, the huge effort made by your Bank in terms of optimising
capital has paid off.
Let me point out here that while capital infusion happens only once in
3-4 years, as a good corporate citizen, your Bank discharges its duties
diligently and is among the highest tax payers in the country every
year. Including income tax and service tax, the total tax paid by your
Bank rose from Rs7,329 crores in FY''10 to Rs7,647 crores in FY''12.
Deposits and Advances
You will be glad to see that deposits of your Bank rose from Rs9,33,933
crores in March''11 to Rs10,43,647 crores in March''12, a growth of
11.75%. I would like to draw your attention to the fact that not only
have we grown our deposits, but the quality of your Bank''s deposit
growth is very good. In time deposits, we have stopped taking bulk
deposits and CDs and instead focused on increasing our stable term
deposits portfolio. In a scenario where other banks offer higher
interest on savings bank deposits, your Bank''s Savings Bank deposits
increased by 11.27% from Rs3,23,394 crores in March 2011 to Rs3,59,847
crores in March 2012.
This was made possible through our efforts to deliver value to all our
Savings Bank customers through multi-city cheques, doing away with
minimum balance requirement, large number of ATMs and providing
accident insurance for savings bank account holders.
Let me point out that overall CASA ratio declined from 49.82% in
March''11 to 46.64% in March''12, a decrease of 188 bps, but this is
still well above the CASA ratios other banks strive to achieve.
Gross Advances of your Bank recorded a YoY growth of 15.78% from
Rs7,71,802 crores in March''11 to Rs8,93,613 crores in March''12. Credit
deposit ratio (domestic) at 78.5% as at the end of March''12 was 220 bps
higher than 76.3% at the end of March''11.
Your Bank''s advances remain well distributed across all verticals.
Large Corporate advances have grown from Rs1,08,741 crores in March''11
to Rs1,25,023 crores in March''12, registering a growth of 15%.
Mid-Corporate Advances increased from Rs1,57,566 crores to Rs1,67,639
crores, growing by 6.4%. In fact, I am happy to place on record that
your Bank has crossed a milestone of Rs1 lakh crore in agricultural
Retail advances grew 10.9% from Rs1,64,576 crores in March''11 to
Rs1,82,427 crores in March''12. Your Bank continues to be the No.1 Home
Loan provider with a 26% market share. It also maintains its retail
market leadership in Car loan financing and enjoys a market share of
17.51% as on March 2012.
Your Bank is also conscious of its responsibility towards the MSME
segment which provides employment to large numbers and contributes
substantially to India''s GDP and exports. Advances under the SME
Business Unit grew 17.40% from Rs1,39,470 crores in March''11 to
Rs1,63,745 crores in March''12.
I am happy to announce that the Board of Directors of your Bank has
declared a dividend of Rs35 per share (350%) for the year ended 31st
- The new product, ''unFIXED Deposits'', introduced by your Bank for
deposits of 7-180 days, with option to break the deposit any time
without penalty, has been a great success. With interest rate of 8-9%,
this product is uniquely positioned to attract short term funds and
compete with liquid mutual funds, which offer returns ranging from 8.8%
- To promote trade finance, in March''11 your Bank launched a
web-based portal, e-Trade SBI, to provide access to trade finance
services with speed and efficiency. Presently, the e-trade platform has
been introduced in all 6 CAG Branches and 63 MCG Branches. As on 31st
March''12, 393 corporates have registered under e-Trade SBI.
- Your Bank is the market leader (market share around 25.55% as on
March''11) in SHG-Bank Credit Linkage programme having credit linked so
far 20.65 lakh SHGs and disbursed loans to the extent of Rs17,600 crores
(cumulative) up to March''12.
- To support the growing demand from the retail segment and tap the
huge potential available in the market, your Bank moved aggressively to
create a comprehensive electronic payment infrastructure to activate
our 108 million debit cards and has entered into Merchant Acquiring
Business (MAB). It has, so far approved deployment of more than 28,000
POS terminals. The number of transactions from these terminals rose
from 2.62 lakh in March''11 to 10.19 lakh in March''12.
Associates and Subsidiaries
Your Bank''s footprints cover every facet of financial services through
its Associates and Subsidiaries, and I am happy to point out that all
of your Bank''s Associates and Subsidiaries continued to show robust
growth. During the year, gross premium of SBI Life crossed the
Rs13,000-crore mark and the company recorded a profit of Rs556 crores in
FY''12, clocking an impressive YoY growth of 52% with the market share
of 19.9%. SBI Life received the NDTV Profit Business Leadership award
for organisational excellence for the second consecutive year. SBI
Capital Markets Ltd. ranked No. 1 Mandated Lead Arranger - Global
Project Finance Loans by Dealogic and posted a PAT of Rs251 crores
during FY''12. SBI cards and Payment Services reported after tax profit
of Rs38 crores, up by a record 434%.
Your Bank has retained its leadership as Mandated Lead Arranger and
Book Runner for syndicated loans in Asia Pacific (excluding Japan but
including Australia) in FY''12 also. Remarkably, even in a competitive
and challenging environment, your Bank successfully completed 14 high
value transactions during the year for financing ECB requirements as
well as acquisition related financing requirements of Indian corporates
aggregating USD 4,758 million.
You will be glad to see that the Operating Profit of Associate Banks
increased from Rs7,569 crores in FY''11 to Rs8,214 crores in FY''12. I am
happy to announce that all of our subsidiaries are profitable and well
It is heartening that all our efforts have received wide attention and
appreciation. SBI has been awarded the Best Trade Finance Bank in
India Award for 2012 by The Asian Banker.
The year 2011-12 saw the CSR activities of the Bank scaling new heights
of achievement and glory with your Bank winning the prestigious Golden
Peacock Award for Corporate Social Responsibility 2012, awarded in
Dubai by the Institute of Directors, New Delhi.
The global economy remains fragile, but we hope the situation will
improve. Though the Euro zone sovereign debt crisis continues to
dominate the financial landscape, we are optimistic the global
political leaders and regulators will be able to stem the downslide.
However, we need to be alert as in today''s integrated world, global
shocks can get transmitted to the Indian economy. Twin deficits
(current account deficit and fiscal deficit) along with low growth and
high inflation are the major challenges for Indian economy in the year
The Indian banking scenario is encouraging and positive. Your Bank is
expecting a loan growth of 16% and a deposit growth of 20%. In the
coming years, your Bank''s main thrust will be on retail, and, as shown
by our achievements, we are well positioned to meet the competition.
Overall, your Bank will remain vigilant to the new opportunities and
challenges as the current economic environment warrants greater
As we go forward, the Indian and global economic environment could
remain challenging for the next few years. Let me assure you that while
remaining vigilant to the new opportunities in this milieu, your Bank
will act with the necessary prudence as required.
With warm regards,