Analyst Meet / AGM - Analyst Meet

23-May-2018, 05:19
State Bank of India conducted an analyst meet on 22 May 2018 to discuss the financial performance for the quarter ended March 2018 and prospects of the bank. Rajnish Kumar, Chairman of the bank addressed the call:

Highlights:

• The financial year 2017-2018 was challenging year for the banking sector. The bank also witnessed merger of six banks in FY2018.

• The performance of the bank was impacted due to surge in fresh slippages of loans to Rs 95000 crore and jump in provisions to Rs 75000 crore.

• The bank is raised capital of Rs 24000 crore in FY2018 of which Rs 15000 came through QIP and Rs 8800 came from government capital infusion.

• The bank is well capitalized with capital adequacy ratio of 12.6% end March 2018. Credit Risk Weighted Assets to gross Advances declined by 780 bps to 71.17% as on 31 March 2018 from 78.94% as on 01 April 2017. The bank would continue to focus on superior management of credit risk in FY2019.

• The interest income reversal impacted the net interest income growth in FY2018, while the bank does not expect any major interest income reversal for FY2019. The reduction in MCLR rate also impacted the interest income of the bank. However, the bank has posted healthy 13% growth in core fee income, while recoveries in written off account also improved 21% in Q4FY2018.

• The bank has raised the share of retail loans to 57% of domestic loans, while that of corporate loan has declined to 43% end March 2018. The bank proposes to further raise the share of retail loans to 60% by March 2019.

• All subsidiaries of the banks are performing well and they are the leader in their respective areas.

• The employee base of the bank has declined by 16000 employees in FY2018.

• The bank has recorded fresh slippages of loan worth Rs 29037 crore in Q4FY2018, of which Rs 17435 crore came from watchlist account.

• The bank watch list of stressed account stands at Rs 25802, which includes SMA - 2, Stressed SMA - 1 and other stressed accounts, for FY2019. The bank expects maximum slippages up to 60% to NPA category in watch list accounts in FY2019.

• Within the watch list accounts, about Rs 10575 crore comes from power sector, Rs 4390 crore from roads, Rs 3454 crore from iron & steel and Rs 2664 crore from textiles.

• The provision on watchlist account stands at 18% end March 2018.

• Under NCLT first list, the bank has exposure to Rs 49116 crore of loans and bank has made 56% provision. Under NCLT second list, the bank has exposure to Rs 28510 crore of loans and bank has made 75% provisions. Overall, the bank has made 63% provision for NCLT exposure.

• The bank is holding overall excess provision for NCLT related exposure, while expect to write back excess provisions in FY2019.

• NCLT exposure under non-RBI direct loans stands at Rs 5000-6000 crore.

• The NPA for the power sector comes at 19% and power sector watchlist accounts stands at 6.5% end March 2018.

• In the international book, GNPA ratio stands at 2.38% and net NPA at 1.1 to 1.2%.

• The bank is targeting loan growth of 12%, net interest margin of 3%, credit cost of less than 1.1% for FY2020.

• The bank expects loan growth at 10% for FY2019, of which retail loan book is expected to grow at higher pace of 15%, while corporate loan book is expected to increase 5%. Among the key segments of retail segment, home loan is expected to increase 20%, auto loan 16 to 17% and personal unsecured loans at 25 to 30%.

• The credit cost and fresh slippages ratio is expected to be below 2% in FY2019. The is targeting NPA reduction of Rs 50000 crore in FY2019.

• The bank aims to improve RoA to 0.9-1.0% by FY2020.

• As per the bank, it is ready to grow its infrastructure loan book in FY2019. The bank will do project finance, if the risk reward ratios are favorable.

• As per the bank share of alternate channels in overall transactions of the bank stands at 80%, while the bank aims to raise the share of alternate channels to 85% in overall transaction in FY2019.

• Countercyclical provisioning buffer stands at Rs 1250 crore.

• The bank expects to raise PCR ratio 60% by March 2019 from 50.4% end March 2018.

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