Reply #24: India’s State Bank Aims for Top 50 After 99% Profit Plunge [View All]

http://www.businessweek.com/news/2011-05-25/india-s-state-bank-aims-for-top-50-after-99-profit-plunge.html

May 25 (Bloomberg) -- State Bank of India Chairman Pratip Chaudhuri said its 99 percent drop in earnings represented “a quarter we’d like to forget” as the lender embarks on an expansion plan aimed at making it one of the world’s top 50 lenders by assets.

The bank expects a widening in net interest margins to help turn around its business, supported by the sale of 200 billion rupees ($4.4 billion) of shares to the government and other shareholders by Sept. 30, or end-2011 in a “worst-case” scenario, Chaudhuri, 57, said in an interview at the bank’s Mumbai headquarters yesterday.

State Bank, with more than 13,000 branches, is trying to revive earnings and replenish capital that has declined to just under 12 percent of assets, less than two-thirds the level of ICICI Bank Ltd., the second-biggest lender in the South Asian nation. Chaudhuri, who became chairman on April 7, said a focus on credit quality is critical to expanding the balance sheet of the bank, which he said isn’t ranked among the top 70 lenders by assets worldwide.

“Assuming the top 100 banks retain the current rates of growth, SBI should move into the top 50 banks in about six or seven years,” said R Srinivasan, an analyst at India Infoline Ltd., a Mumbai-based equities researcher. The milestone may come within five years if India’s economic growth accelerates to 9 percent or more, he said.