State Bank of India (SBI) on Monday reported a profit of Rs 945 crore for the three months to September.
State Bank of India (SBI) on Monday reported a profit of Rs 945 crore for the three months to September. The lender reported a net interest margin of 2.88% in Q2FY19, slightly lower than the 2.95% in Q1FY19. The bank’s asset quality showed an improvement during the quarter with net non-performing assets (NPAs) falling sequentially to 4.84% from 5.29% in the quarter ended June. After announcement of the results, Rajnish Kumar, chairman, State Bank of India, told reporters that the lender had finally got complete “control over the demon of NPAs”. Excerpts:
The country’s biggest lender has posted a profit after three quarters. How do you see the trend moving forward and can we expect this to continue?
Though the profit is modest, there is no looking back. I believe we finally have a complete control over the demon of NPA. From here on, this number will only be bigger and better. In my opinion, a pick-up in resolution of stressed accounts will help improve profitability for corporate lenders. Going ahead, the bank expects some relief from the first list of accounts referred to the NCLT. Among those twelve accounts, Essar Steel is close to resolution. We soon expect to see a Rs 6,000-crore write-back from the Essar account.
NBFCs have faced a liquidity crunch and a reduction confidence recently. How do you plan to deal with it?
Things seem to be much better today than before (August and September, when the crisis began). Most of the NBFCs have been able to roll over the CPs (commercial papers) and hope they can make their repayment on time. SBI’s exposure to the non-banking financial companies (NBFCs) stands at Rs 1.5 lakh crore. We have bought NBFC loans worth Rs 5,250 crore in October and another Rs 15,940 crore worth of loan purchases in the pipeline. I am hopeful that we will achieve the target of Rs 45,000 crore by March.
What is the amount of exposure to the IL&FS group?
Currently, IL&FS is not an issue for the bank as we have taken several measures to cover the potential risks. The bank has a total exposure of Rs 4,000 crore to 13-14 special purpose vehicles (SPVs) while Rs 250 crore to the holding group company. About Rs 90 crore is the equity share, where SBI holds a stake of 6.42%. The bank has made a provision of Rs 66 crore towards one NPA in the IL&FS exposure.
How do you read credit growth in the future?
We reported double-digit loan growth in the September quarter. We expect the trend to continue.
Credit quality improved during the quarter….
The slippage ratio has fallen to 2%, which is the lowest in six quarters. Most of the corporate slippages came from the already-identified watchlist. There was an increase in slippages in the retail and SME portfolio.