Stress to taper-off near-term; retail credit in focus: SBBJ

Jyoti Ghosh, managing director at State Bank of Bikaner & Jaipur (SBBJ) expects stress from iron and steel sector weakness to taper off in the coming quarters. The bank is now focussing mainly on retail credit, he said, in an interview to CNBC-TV18 after the bank declared its fourth quarter results on Friday.

The bank reported a little over 30 percent year-on-year (YoY) decline in January-March quarter net profit at Rs 193 crore. Gross non-performing asset (GNPA) was 4.82 percent, while net NPA was 2.75 percent. Net interest income was up 10 basis points YoY at 3.47 percent.

Ghosh said as part of the asset quality review the bank focussed even on smaller accounts and managed to recover Rs 384 crore from about 91,000 accounts in FY16.

The bank has been able to keep capital adequacy above 11 percent in FY16, he said, adding, no fresh share issue or long term borrowing is currently being considered.Below is the verbatim transcript of Jyoti Ghosh's interview with Ekta Batra and Nigel D'Souza on CNBC-TV18.Nigel: Firstly, could you take us through the entire numbers, how did your quarter 4 pan out?A: Quarter 4 was a stress on every public sector bank and we were also quite stressed, but then we have declared a net profit of Rs 193 crore for the quarter. There is definitely a write down of about Rs 90 crore in the previous year’s last quarter, but that was more or less figured by the food credit provisioning at 7.5 percent and the discom, so without these two we would have declared around Rs 100 crore more. Ekta: Can you just tell us what the impact of the asset quality review possibly was this quarter?A: Asset quality at this point of time, slippages quite dynamic, we are trying our level best and peer level we have managed quite well. Generally, what happens we only look at the larger credit asset quality movement, but then the smalls etc, also kick in a lot of asset quality problems. Those we are absolutely in control of just for the information of CNBC-TV18, last year we addressed 91,000 small accounts and recovered Rs 384 crore, so that was a very good thing what SBBJ did.Nigel: Well, do you think there could be more pain for the bank in the next few quarters?A: Going forward asset quality, I expect iron and steel the stress to be slowly going down, because of certain measures the government has taken and I believe that certain other measures are also going to be kicking in quite soon.Ekta: But where net interest margins this quarter?A: Net interest margin (NIM) this is at 3.47 and we are actually up march over march by 10 basis point.Nigel: All right, then what has been the credit growth?A: Credit growth we are concentrating mainly on retail credit and some very good assets in large commercial advances we are looking at, but credit growth we were having around 6-5 percent credit growth in the last financial year, we consciously de-grew our commercial & industrial (C&I) portfolio of large credits, because of stress manifesting itself in most of the industries.Ekta: Are you planning to raise any capital?A: Not at the moment. Last year, this last balance sheet FY March 16, we have kept our capital adequacy above 11 percent without any acquisition of shares, funds etc., from the market and at present we have plans, but then it will all kick in as and when the risk weighted assets go up. So at present, we have not scheduled any share issuance or long term funds from LIC or anybody.