State Bank of India's associate bank, State Bank of Travancore has posted increase in net profit by 8.5 per cent to Rs 166 crore in the fourth quarter of financial year 2012-13 against Rs 153 crore in the corresponding quarter of the previous fiscal.
The profit growth was muted due to higher cost of deposits and provisions towards wage increase, as said by a top bank official.
However, the bank's net profit for the full year increased by 20.50 per cent to Rs 615 crore as compared to Rs 510 crore in the previous year.
According to Mr. P. Nanda Kumaran, Managing Director of State Bank of Travancore, non-resident Indian (NRI) deposits constitute a significant portion (20 per cent) of total deposits. Interest rates on these deposits were rigid over the last couple of years, resulting in pressure on the overall cost of deposits.
"We are over the hump as far as high deposit rates go....We opened 250 branches at locations, which are considered catchment areas for deposits in the last two years. So, at the minimum we expect savings bank and current account deposits to increase to 30 per cent of total deposits against 26 per cent now," said Mr. Kumaran.
Year-on-year, deposits increased by 18 per cent to Rs 84,624 crore as at March-end 2013 against Rs. 71,470 crore as on March-end 2012 and advances were up 22 per cent to Rs 67,484 crore against Rs 55,346 crore for the year ago period.
The bank's net interest margin declined to 2.56 per cent for the reporting year against 2.76 per cent in the previous year.