Public sector lender State Bank of India (SBI) on Friday reported a 66% y-o-y fall in net profit in Q4 and fresh slippages of Rs 25,381 crore.
Public sector lender State Bank of India (SBI) on Friday reported a 66% y-o-y fall in net profit in Q4 and fresh slippages of Rs 25,381 crore. Speaking to reporters, Arundhati Bhattacharya, chairman, said she expects SBI’s loan book to grow by 13-17% in FY17. Excerpts:
Where did slippages in Q4 originate?
During the fourth quarter of the last fiscal, Rs 20,000 crore slippages came from large and mid corporates. Of that, about Rs 4,700 crore came from power sector, Rs 2,300 crore came from iron and steel, Rs 3,500 came from
engineering and about Rs 2,300 from oil and gas. During the quarter cash recovery stood at Rs 1,627 crore, while upgrades to standard category was at Rs 97 crore and write offs at Rs 3,408 crore.
How do you plan to recover bad loans and do you plan to sell loans to asset reconstruction companies (ARCs) ?
A lot of efforts is being done internally for recovery. We will use all the tools for it. We have stressed asset management group (SAMG) and they are working very hard. This quarter, sale of bad loans to asset reconstruction companies (ARCs) were insignificant, but going ahead we are hopeful of doing greater transactions with them. And we are very close to form an external committee to monitor SDR (strategic debt restructuring) scheme. SDR route is not working, but we are trying to address this issue.
What will be impact of merger of SBI and its associate banks?
Yes, there will be challenges. But we see that there will be benefits from it. I can assure you that the merger will not have any big impact either on capital or on the non-performing assets (NPAs) of the bank. We are well positioned for the merger to take place. The cost of merger on pension account would be around R3,000 crore. But net-net we think the cost of merger will not be overwhelming.
What is your guidance on credit growth in FY17 and do you foresee uptick in the economy?
We expect loan growth to come in at around 13-17% in FY17. We are seeing a lot of traction in many more segments.
We need to see demands getting improved. we are beginning to see it. The economy will revive and credit growth will follow. Credit growth will not precede the economic growth.