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Analyst Meet / AGM - Analyst Meet

Targets loan growth of 14% for FY2016

State Bank of India

11-Aug-2015, 10:40
State Bank of India conducted an analyst meet on 11 August 2015 to discuss the financial performance for the quarter ended June 2015 and prospects of the bank. Arundhati Bhattacharya, Chairman of the bank addressed the meet:
Highlights:

Bank has been working and focusing on six key strategy areas such as 1. NPA control, 2. Cost rationalization, 3. Risk management, 4. Unleashing the power of digitalization, 5. Improving customer delivery and 5. Repositioning of Human Resource.
Bank expects to maintain the cost-to-income ratio steady in FY2016. Bank has completed all required provisions to meet the wage revision under 10^th bi-partite settlement.
NIM of the bank was impacted in Q1FY2016 due to tepid credit growth and delaying in repricing of deposits. As per the bank, as the loan growth picks up and repricing of deposits accelerates, the NIMs would improve.
Loan growth of the bank was impacted by decline in oil sector loans and subdued working capital demand.
Bank has targeted loan growth of 14% for FY2016. Segment wise, bank expects 10% growth for mid corporate segment, 18% for large corporate and 15% for foreign offices in FY2016.
Bank has conducted marginal asset sale of Rs 29 crore to Asset Reconstruction Companies (ARCs) in Q1FY2016.
In line with the cyclical trend, the fresh slippages of advances were sequentially higher at Rs 7300 crore in Q1FY2016. However, the fresh slippages have declined year-on-year from Rs 9932 crore in Q1FY2015 and Rs 13800 crore in Q1FY2014.
Fresh slippages were mainly contributed by agriculture and personal loan segment in Q1FY2016, which have started witnessing recoveries in Q2FY2016.
Segment wise fresh slippages stood at Rs 2318 crore for SME, Rs 1498 crore for Agriculture, Rs 1233 crore for retail-personal loans and so on in Q1FY2016.
Fresh restructuring of advances stood Rs 2638 crore for Q1FY2016 (Rs 2270 crore of standard advances and Rs 368 crore of NPA) in line with the guided level.
Bank has pipeline for refinancing under 5/25 restructuring scheme of Rs 12300 crore for nine accounts.
Bank has about 7.81 crore account opened under financial inclusion programme, which holds CASA deposits worth Rs 5125 crore. Bank expects these accounts to witness large increase in CASA deposits.
The bottomlines of the life insurance subsidiary were impacted by provision of Rs 40 crore toward entering Pradhan Mantri Jeevan Jyoti and Suraksha Insurance Schemes.
On capital adequacy front, bank sees no challenges factoring in loan growth of 15%. However, the bank will have to step up effort for capital raising for higher loan growth of 20-22%.
The available for sale (AFS) investment book of the bank stands at Rs 157393 crore with the duration of 2.30 years.