Arundhati leads SBI to 10.25% Q1 profit rise

Arundhati Bhattacharya, Chairman, State Bank of India, on Tuesday reiterated the bank’s focus in improving its working and outlined six areas of functioning which included: Risk Awareness, NPA Management, Improving Asset Quality, Cost Rationalisation, unleashing Power of Digital, and Improving Customer Delivery.

Announcing the Bank’s Q1, FY2015-16 results here which highlighted Net Profit increasing by 10.25% 

to Rs 3,692 crores in Q1FY16 from Rs 3,349 crores in Q1FY15, she said the reason for Slippages increasing was that “All these things have a seasonality impact.” 

However, Slippages have come down substantially – especially in the mid-corporate sector, though they were traditionally a problem in the Retail area. Agricultural slippages had come down to Rs 10,856 crore from Rs 11,884 crores in this quarter’s comparison y-o-y, she said.

Describing the State Bank of India as being a proxy that is closely linked to the country’s economy, she said “When the economy goes into a tailspin, the first and last to be hit are the SMEs. Loans above Rs 20 crores bucket are showing visibly less strain. Banks cannot be delinked from credit <g data-gr-id="50">growth,</g> though yields have to come up. We refuse to be stampeded into growth and take a hit few years later. So we ensure that Asset quality is good. The weakness of commodity prices is why credit is not growing and there is a lot of weakness in commodity input and energy prices.”

To questions, Bhattacharya said the SBI’s Treasury Operations were doing very well and reported <g data-gr-id="47">trading</g> profit in <g data-gr-id="48">sale</g> of investments at Rs 872 crores over Rs 587 crores in the same period last year. However, she attributed ‘muted credit growth’ to not only oil companies, but also assets aggressively sold to ARCs for clearing the balance sheet, besides the project pipelines becoming ‘meagre” when completed projects were not replaced by new projects. 

“Cash recoveries had fallen due to ARC sales, but Recovery is one area we will do equally well if not better. We have migrated all stressed Assets into our Stressed Asset Management Group,” she said, adding that where recovery from big accounts is concerned, the Government hearings for these are much larger than in small accounts – though recovery from the big accounts was successful, besides ARCs sales also being helpful. 

“The Government is <g data-gr-id="54">aware about</g> concerns over problems in the power, steel and other sectors and is focusing on reducing stress in them. The power transmission sector needs to open up corridors to ensure efficient connectivity where power is required,” she said.

About SDRs, she said wherever the Bank noticed weaknesses in the working of companies, it would 

invoke SDR in this regard. “You will see more SDRs happening in the future,” she said, adding that where SMEs are concerned, the Bank has revamped its products and is getting back into the market. Among the bank’s NPAs, Rs 1300 crore slippages had been noted in the Agricultural portfolio and the bank is ‘refining’ its model of +Early Warning Mechanism,” the SBI Chairman said.

Commenting on China devaluing its currency, she <g data-gr-id="44">said</g> “India’s export sector is under a lot of <g data-gr-id="43">stress</g> but our currency held its ground. However, the rupee balance erodes their competitiveness to a great extent. So this is rebalancing going on across the world and we have to help these guys,” she said, while also noting that recruitment of staff from the SBI’s subsidiaries was is also helping the banks’ functioning.