State bank of India expects to report lower non-performing assets in January-March as compared to third quarter, backed by better recoveries in retail NPAs and is very positive about its agriculture portfolio.
State Bank of India expects to report lower non-performing assets in January-March as compared to third quarter, backed by better recoveries in retail NPAs and is very positive about its agriculture portfolio, Chairman Pratip Chaudhuri told CNBC-TV18 today.
The bank which has been on a crusade to recover its dues from United Breweries (UB) group owned Kingfisher Airlines through out last week refrained to say anything further on the matter, but said that their war against NPAs have started showing results.
Last week SBI, which heads consortium of other lenders was allowed by Supreme Court to sell shares of United Spirits pledged as a security against Kingfisher Airlines loans.
Chaudhari said that although large corporate loan book was strong, there was a stress in mid and small sized companies. He however is very optimistic about agriculture portfolio buoyed by better sugar and cotton crops.
The largest public sector bank also witnessed significant growth in loan book during the last quarter. "Our loan growth this year has been 21 percent which I myself am pleasantly surprised because it was running at something like 16 percent year on year till Q4 started. We would not be surprised if there is a 30 percent year on year growth on the books this year," Chaudhari said. He however clarified that corporate loan demand was still slack and hence the bank was concentrating more on individual home loans.
Below is the verbatim transcript of the interview.
Q: You have made the headlines over the last one week with your bold stance on trying to recover dues from the United Breweries (UB) Group. Can you just give us a sense of what your approach has been so far and whether you are steadfastly carrying on the path that you have set on?
A: Yes, generally I had made a statement that we have declared war on non-performing asset (NPA) and particularly we have had great success in recovering the retail NPAs. So we expect the core banking data that has been thrown up and unless there are very significant changes in the audit process we expect our March NPA numbers to be lower than December numbers.
Q: Is there an internal target that SBI is working with by the end of the calendar year as well in terms of how much you would like to scale NPAs down to?
A: The higher the better and we are judging everybody according to the reduction they are able to achieve in the NPA.
Q: The other worry every since the recent numbers that we got in from the Purchasing Managers' Index (PMI) figures is what exactly is happening at the industry level whether for some of these medium level corporates there is still quite a bit of stress. Could you just update us on what you see as the landscape in terms of whether there is more stress coming through either from this medium level corporate side or from the agriculture loans that seems to be accelerating?
A: First the good part. The large corporate book has held very well and in the mid corporate and SME there is stress. However now they have come to terms with the new realities and are in a better position to fight that. So there is a change in mindset, people are willing to let in new investors, they are willing to share control and they are also more amenable to advice like selling of their non-core assets so all that is working for the better.
SBI stock price
On November 27, 2015, at 15:34 hrs State Bank of India was quoting at Rs 249.35, up Rs 6.60, or 2.72 percent. The 52-week high of the share was Rs 335.90 and the 52-week low was Rs 220.60.
The company's trailing 12-month (TTM) EPS was at Rs 18.32 per share as per the quarter ended September 2015. The stock's price-to-earnings (P/E) ratio was 13.61. The latest book value of the company is Rs 165.49 per share. At current value, the price-to-book value of the company is 1.51.
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