For SBI, biz abroad turns more fertile

Banking giant’s margins from international operations rose to 19% in FY15 from 11% of the total profits in FY12

Hyderabad: State Bank of India (SBI) is not only the India’s largest lender, but also considered as the uncrowned bellwether for the banking industry and economic activity in the country.

But interestingly, overseas business has turned more fertile for this banking behemoth which plays such a significant role in our economy.

A closer look at its financial results reveals that margins of the public sector bank from its international operations have steadily been rising for the past few years.

Profits from the International Banking Group (IBG), the overseas business division of SBI, accounted for 11 per cent of the total profits in financial year 2011-12.

The contribution increased to 12 per cent in the following year before zooming to 16 per cent in 2013-14, and to 19 per cent last fiscal.

The bank’s overall net profit stood at Rs 13,102 crore for FY15, an upswing of 20 per cent from Rs 10,891 crore a year ago. It reported a record net profit of Rs 14,105 crore in FY13.

Encouraged by the positive results from the overseas division, the banking major has set a target to enhance revenue contribution from international operations to 25 per cent in next two to three years from over 18 per cent now.

That way, the bank will not only able to diversify its risk potentials, but can increase its profits and also emerge as global banking giant in the years to come.

SBI Chairperson Arundhati Bhattacharya while hinting at the bank’s three-year plan to expand global operations said earlier that the bank would increase its focus on lending to local business entities in overseas markets because that would help the bank in the risk diversification.

For the financial year 2014-15, the bank’s loan disbursements in the overseas markets increased from $36 billion (Rs 2.37 lakh crore) to $38 billion (Rs 2.5 lakh crore at current exchange rates).The net assets rose to $48 billion from $45 billion a year ago. However, the bank had witnessed slight fall in deposits to $14 billion from $15 billion in 2013-14 fiscal.

In addition, the Global Markets Group which handles SBI’s overseas treasury operations reported a 21 per cent upswing in net interest income and 85 per cent jump in profit on sale of investments on a portfolio of close to Rs 4.9 lakh crore last fiscal, according to the SBI’s annual report for 2014-15.

To expand the international operations further, bank is looking to have tie-ups with big local banks in various countries so that it can finance good quality local projects there.“We will continue to focus on India-centric business as it’s our forte and a key part of our global operations.

Tapping the financing opportunities offered by local companies in those countries will help expand our operations further,” an official maintained.

At present, SBI has 191 foreign offices spread across 36 countries. The network includes 69 branches, seven subsidiaries and JVs, 110 offices of subsidiaries.

By:P Madhusudhan Reddy