Analyst Meet / AGM - Analyst Meet

12-Feb-2016, 06:45
State Bank of India conducted an analyst meet on 11 February to discuss the financial performance for the quarter ended December 2015 and prospects of the bank. Arundhati Bhattacharya, Chairman of the bank addressed the meet:

Highlights:

Business

• Business of the bank increased at improved pace of 12% to Rs 31 lakh crore at end December 2015.

• Domestic CASA ratio improved 46 bps qoq to 42.7% at end December 2015.

• Bank has added 83 branches in the quarter under review, taking the total branch count up to 16498 at end December 2015.

• The bank has exhibited increase in power exposure in Q3FY2016 on account of loans to NTPC and Power Grid.

• Bank expects to achieve loan growth of 13% for FY2016, while expects high loan growth of 14-15% for FY2017.

Margins

• The Net Interest Margin (NIM) of the bank declined below 3% margin Q3FY2016, driven by the impact of 70 bps reduction in base Rate, interest income reversals of Rs 450 crore and higher growth in investment book than loan growth.

• Bank do not expect major impact from marginal cost of funds based base rate calculation effective from 01 April 2016.

Capital Raising

• Bank has tied up Tier II bond raising of Rs 6000 crore in Q4FY2016. Bank also has approvals in place for Tier I capital raising of Rs 15000 crore. Meanwhile, bank expects post tax revenues of Rs 1000 crore from divestment of non-core assets. The bank is also focusing on unlocking the values from non-bank subsidiaries, which may contribute proceeds of Rs 1200 crore in FY2017.

• The bank has real estate assets of over Rs 20000 crore, while bank is awaiting the regulatory change allowing to consider these asset as a part of capital.

• The bank also has deferred tax assets (DTA) of Rs 1000 crore, which are unlikely to be used, so awaiting the regulatory change to allow considering DTAs as part of capital.

• Bank has repatriated of profits from foreign offices amounting to Rs 221 crore in Q3FY2016 in addition to Rs 485 crore in Q2FY2016. Bank expects further gains of Rs 700-800 crore.

Asset Quality

• Fresh slippages of advances surged to Rs 20692 crore in Q3FY2016.The surge in fresh slippages of advances was mainly caused by RBI's advice to the banks to revise asset classification/ provisions in respect of certain weak loan accounts under Asset Quality Review (AQR) of the banking system.

• The AQR related slippages for Q3FY2016 were at Rs 15000 crore, which is half of the overall AQR related accounts. The balance half of the AQR accounts will be considered in Q4FY2016.

• Of the AQR slippages of Q3FY2016, about 70% of slippages came from three accounts in the sectors such as steel and textile.

• The slippages of restructured advances stood at Rs 2700 crore, while the slippages from 5/25 restructuring scheme were Rs 6000 crore, while the accounts from Strategic Debt Restructuring (SDR) schemes also slipped to the tune of Rs 4300 crore in Q3FY2016.

• The slippages excluding AQR have declined to Rs 5900 crore in Q3FY2016.

• The asset sales to Asset Reconstruction Companies (ARCs) stood at Rs 800 crore for 9MFY2016, of which about Rs 380 crore took place in Q3FY2016. The securities receipts on banks book stood at Rs 5600 crore at end December 2015.

• The outstanding balance under 5/25 refinancing scheme stood at 16950 crore for 13 accounts. The accounts amounting to Rs 4000 crore are in pipeline for 5/25 refinancing.

• The SDR balance stands at Rs 16500 for 17 accounts, while these is no account in pipeline for SDR.

• The bank has exposure to only 7 of top 10 highly levered corporate groups, at 4.8% of balance sheet. Also, about three of these seven accounts are very well performing accounts. Another four accounts featured in SMA 2 category has exposure of 2.8%.

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