Analyst Meet / AGM - Analyst Meet

22-May-2015, 07:38
State Bank of India conducted an analyst meet on 22 May 2015 to discuss the financial performance for the quarter ended March 2015 and prospects of the bank. Arundhati Bhattacharya, Chairman of the bank addressed the meet:

Highlights:

• Bank has further improved the NIMs to 3.54% at end FY2015 from 3.5% in 9MFY2015 and 3.49% in FY2014. The decline in fresh slippages mainly contributed to a NIM improvement in Q4FY2015. However, the bank expects some pressure on NIMs from base rate reduction.

• In FY2015, bank focused on consolidation of existing lines of business as well as exploring of new opportunities.

• Bank has embarked on digital journey opening seven digital branches at major metro cities, which is first such initiative in the Asia Pacific region. Bank plans to open around 200 digital branches in FY2016.

• Bank has also focused on restructuring of organization, while it has requested permission from the government to induct two MD positions, against existing four MD positions. The pending fourth MD position is to be appointed to head the compliance and risk management department. Meanwhile, the new MD position will be created for Chief Financial Officer and International Banking Group.

• The loan growth of the bank was moderate at 7.3%, while including the asset sales to ARCs and investments into CPs and CDs the loan growth was higher and in line with the industry level of 10.5% at end March 2015.

• Bank has targeted the loan growth of 13-14% for FY2016.

• Fresh restructuring of advances surged to Rs 11885 crore in Q4FY2015, as the regulatory permission for restructuring ends by March 2015 and looking at still challenging economic environment the demand for restructuring was higher in Q4FY2015.

• As per the bank, the fresh restructuring proposals cleared and pending to be implemented in Q1FY2016 stand at Rs 2625 crore related to corporate debt restructuring (CDR) cell.

• Under 5/25 model of loans restructuring, bank has restructuring proposals worth Rs 6500 crore from half dozen of cases.

• The outstanding standard restructured advances of the bank stood at Rs 55843 crore, while that of associate banks stood at Rs 31043 crore at end March 2015.

• The bank sees the asset quality stress lessening, and expects the declining Gross NPA trends to continue in FY2016.

• Bank sold assets with the gross book value of Rs 4510 crore to asset reconstruction companies (ARCs) in Q4FY2015 and around Rs 12500 crore in FY2015. The outstanding securities receipts on the books of the bank stood at Rs 4733 crore at end March 2015.

• The bank decided for large asset sales to Asset Reconstruction Companies (ARCs) in Q4FY2015, looking at the long haul that such asset required and as ARCs have skill sets to manage such assets.

• The sundry interest income of the bank was boosted by surge in interest income on Income Tax (IT) refunds to Rs 1000 crore in Q4FY2015 from Rs 270 crore in Q4FY2014.

• Forex income of the bank decline in Q4FY2015 due to decline in crude oil prices fall leading to dip in volume and high base effect. However, the bank has maintained the market share in forex income and expects a better time ahead.

• The dividend income of the bank was boosted by healthy performance of the associate banks and subsidiaries.

• Bank has fully met the employee wage revision provisions, while bank expects the pension provision requirement to be elevated in FY2016.

• The employee count of the bank declined by nine thousands in FY2015. In FY2016, about five thousands staff is expected join, while retirements are expected to be higher at seven to eight thousands.

• The bank proposes to contain the operating expenses growth at 10% in FY2016.

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