State Bank of India (SBI), the country’s largest lender, has reported a 78.5 per cent rise in net profit for the first quarter of 2007-08, largely on account of write-back of provisions made for depreciation in investment portfolio earlier. The bank’s net profit was at Rs 1,425.81 crore for the quarter ended June 2007, up from Rs 798.57 crore a year earlier.

This is the second highest profit posted by the bank for a single quarter. The bank had reported its highest quarterly profit of Rs 1,493.19 crore in the preceding quarter.

“There were write-backs to the tune of Rs 376 crore on the provisions made for investments in the available for sale (AFS) category. During the last 90 days, the yields on 1-5 year securities have moved down. The average duration of the bank’s investments held in the AFS category has also come down from 1.8 years to 1.25 years,” said an SBI official.

The write-back of provisions helped SBI soften the impact of 191 per cent rise in provisions for non-performing assets (NPAs) to Rs 506.32 crore from Rs 173.82 crore a year earlier. Its net NPAs increased by Rs 672 crore to Rs 5,504.61 crore at the end of June 2007 from a year earlier.

The provision cover fell to 48.83 per cent from 50.29 per cent a year earlier, though up from 47.41 per cent at the end of March 2007. The net provisioning including write-backs, however, reduced by 36 per cent to Rs 159.37 crore at the end of June 2007, down from Rs 251.14 crore a year earlier.

The bank’s net interest income grew 15 per cent to Rs 4,497 crore from Rs 3,910 crore a year earlier. Its net interest margin was maintained at 3.31 per cent from the preceding quarter.

The bank’s cost of deposits at 5.35 per cent was 56 basis points up from the preceding quarter and 72 basis points from a year earlier, while the yield on advances at 9.8 per cent increased by 113 basis points over the previous quarter and 132 basis points from a year earlier.

The bank’s non-interest income grew 18.74 per cent to Rs 842.58 crore from Rs 709.59 crore a year earlier boosted by 16.28 per cent rise in fee income to Rs 885.86 crore. The bank’s deposits increased by 19.04 per cent to Rs 4,49,660 crore from Rs 3,77,742 crore a year earlier.

Low cost deposits (current account and savings account deposits) formed 41.06 per cent of total deposits, down from 42.67 per cent a year earlier. The bank’s advances increased by 28.89 per cent to Rs 3,44,087 crore from Rs 2,66,963 crore a year earlier.

“The bank added Rs 2,012 crore of advances in the quarter. While domestic advances fell by around Rs 2,000 crore, the international loan book grew by close to Rs 4,000 crore,” said the official.

Advances in personal segment grew 19.33 per cent to Rs 75,138 crore at the end of June 2007. Housing loans increased by 18.22 per cent to Rs 39,241 crore, constituting 52.22 per cent of the bank’s retail advances.

The ratio of gross non-performing assets (NPA) fell to 3.13 per cent in the June quarter from 3.64 per cent a year earlier. The net NPA ratio also declined from to 1.62 per cent from 1.84 per cent a year earlier.

The bank’s capital adequacy ratio (CAR) stood at 13.13 per cent at the end of June 2007 up from 11.97 per cent a year earlier. Tier I capital was at 8.32 per cent.