SBI aims to net Rs 1,500 crore profit from domestic treasury operations this fiscal and is set to post "substantial improvement" in gains during the first quarter, a top official has said.
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"Last fiscal, profit from domestic treasury operations was at Rs 810 crore. We want to double it. Last fiscal, profit from equities and mutual fund segments was Rs 597 crore, which we aim to take it to at least Rs 700 crore this fiscal," SBI deputy managing director and group executive for global markets, P Pradeep Kumar told PTI.
"Overall, we plan to contribute Rs 1,500 crore to the total profit this fiscal, which is a shade less than double compared to last fiscal," he added.
The SBI treasury, which is the second largest in the country after LIC's, chipped in Rs 810 crore to the total profit last fiscal. It was garnered from the sale of investments in domestic segment, besides Rs 288 crore from overseas treasury operations, totaling a full Rs 1,098 crore.
Of the Rs 810 crore posted from domestic treasury operations, Rs 597 crore came in from equities and other segments like mutual fund investments, and Rs 213 crore from sale of bonds, comprising both government securities and corporate bonds among others, said Kumar, who is tipped to be managing director of the bank.
"FY'12 was a bad year. Last fiscal was the year of consolidation. Hopefully, this fiscal we want to at least double our profits on sale of investments...," he said.
Referring to the impact of the sharp fall in the yields of the 10-year benchmark government securities (G-Secs) in first two months of this fiscal, Kumar said it will have positive impact on the balance sheet of the bank.
He added: "We have taken advantage of the lower interest rate (in G-Secs). What we did, in the Jan-March quarter was that we didn't sell much... We took a conscious call to hold on as we felt that interest rate would go down further...
"This has paid us rich dividend and profits from sale of G-Secs and other bonds is likely to be more than last fiscal's annual figure (Rs 213 crore) in the first quarter."
Yield on the 10-year benchmark G-Secs has fallen around 60 basis points (0.60 percent) in the recent months and is currently hovering around 7.3-7.4 percent.
Kumar also said the State Bank of India, which had posted a loss of Rs 64 crore from its equities trading last fiscal, is also slowly exiting the portfolios and hoped to perform better in this segment in future.
He further said the bank's mutual fund investments are likely to give better results this fiscal.
On the high SLR holding in its total bond portfolio, Kumar said the bank has around 27 percent Statutory Liquidity Ratio holding against mandated 23 percent.
"Reduction of SLR holdings will depend on the loan demand in the future," Kumar said.
He also said the bank would like to increase investments in corporate bonds going ahead. "Last fiscal, we have slowly increased the corpus of our corporate bond exposure, which was around Rs 6,000 crore, up 50 percent over the previous fiscal.
"We find that there are many good rated corporates and we want to tap that market and increase our investments into this space going forward," Kumar added.