SBI may need $2-4 b capital next FY

State Bank of India (SBI), the country's biggest lender, said it might need up to $4 billion in capital in the next financial year, when it could still see earnings growth of at least 25 per cent. Banks across Asia are looking to shore up their balance sheets as they prepare for a tougher business environment amid a global economic downturn. "We may need more capital," O.P. Bhatt, SBI's chairman told reporters on the sidelines of a conference in Singapore organised by the Confederation of Indian Industry. "It would not be less than $2 billion -- $2 billion to $4 billion." The capital would be for the financial year starting April 2009. Bhatt said the bank looks at its capital requirements periodically and will look at the needs after the current financial year ends in March. He said the capital may be raised to boost its Tier 1 capital adequacy ratio, but whether it would be done through a rights issue or other means has not been finalised. SBI to raise tech upgradation spend Bhatt said the bank may also sell around $100 million worth of retail bonds to boost Tier-2 capital, which would make it the first bank in the South Asian nation to target retail investors for debt. Bhatt declined to predict quarterly results, but added the momentum for the country's banking industry for the quarter that ended in December was robust. Analysts polled by Reuters expect State Bank of India to report a 37 per cent rise in profit in its third quarter that ended in December, boosted by strong loan growth and earnings from trading in bonds that saw prices jump as interest rates fell. He saw "at least 25 per cent" earnings growth for SBI in the next financial year. He warned that non-performing loans in India's banking industry will rise from a low of 1 per cent as the economy slows, but added bad debt will not rise sharply. "I don't think it will treble," he said. Analysts have said rising bad debts, or non-performing loans (NPLs), will be the risk for Indian banks in coming quarters as a slowing Indian economy hurts jobs and incomes.