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Analyst Meet / AGM - Analyst Meet

Expects credit cost to remain elevated in FY2018

State Bank of India

22-May-2017, 05:21
State Bank of India conducted an analyst meet on 19 May 2017 to discuss the financial performance for the quarter ended March 2017 and prospects of the bank. Arundhati Bhattacharya, Chairman of the bank addressed the meet:
Highlights:

The bank has completed the process of merger of Associate Banks and Bhartiya Mahila Bank (BMB), emerging as a world's top 50 bank in terms of assets base and Tier I capital. The bank is also fifth most online visited bank globally.
The bank has witnessed fresh slippages of advances worth Rs 10368 crore, while recoveries, upgradations and write-offs together were at Rs 6197 crore in Q4FY2017.
The standard restructured advance book of the bank rose on sequential basis to Rs 36634 crore at end March 2017 from Rs 34628 crore end December 2016. As per the bank, an increase in the restructured loan book was contributed by food credit, despite slippages of restructured loans to NPA category.
As per the bank, it has a huge stock of written off accounts, being chased for recovery with strong focus by the bank's top executives of Stressed Asset Management Group. The bank has identified about 75000 cases for resolution under written off accounts, which are expected to show recovery in FY2018.
As per the bank, the top 50 NPA accounts constitute 47.9% of total NPAs, while the provisions on these account stands at 41%.
The bank has guided at watchlist account size for merged bank at Rs 32427 crore FY2018 compared with standalone watchlist of Rs 34776 crore in FY2017. As per the bank, of the watchlist accounts for FY2018, about Rs 22000 crore relates to standalone bank and Rs 11000 crore is attributed to the associate banks. The watchlist account size as a percentage of loans has declined to 1.6% in FY2018 from 2.3% in FY2017.
As per the bank, the power and telecom sectors mainly contributed to the watchlist of FY2018. The power projects going to be completed in FY2017 but do not have signed PPAs, have contributed to the power sector watch list. Within the power sector watchlist, about 40% of power exposure is towards PSUs and 40% relates to investment grade companies.
The bank has restructured loans under S4A scheme amounting to Rs 5935 crore in FY17 and under SDR scheme amounting to Rs 4281 crore end March 2017.
The outstanding exposure under 5/25 refinancing scheme stands at Rs 23100 crore end March 2017.
The bank has recovered about Rs 5610 crore through DRT /sale to ARC in FY17.
The outstanding securities receipts on banks book stood at Rs 5568 crore end March 2017.
The bank expects credit cost to remain elevated in FY2018, and will moderate significantly from FY2019 onwards.

The bank is the sponsor bank for 18 RRBs with 35% stake.

Merged bank financials

The Gross GNPA ratio of the merged bank stands at 9.11%, Net NPA ratio at 5.19%, Provision Coverage Ratio at 61.5%, slippage ratio at 5.8%, and credit cost at 2.9% for FY2017.
The capital adequacy ratio was comfortable at 12.35%, with CET1 ratio of 9.4% as on 01 April 2017.
The merged bank has the network of 24017 branches with the staff strength of 278872 employees as on 01 April 2017. The bank has combined customer base of 42 crore.
The government shareholding in merged bank stands at 60.75%.
The cost-to-income for merged bank stands at 49.5%.
The cost of deposits stands at 5.91%, yield on advances at 9.31%, and domestic NIM at 2.90%.