The State Bank of India (SBI) announced Monday a profit of 945 million rupees for the quarter ending in September. The lender reported a net interest margin of 2.88% in the second quarter of year 19, slightly lower than 2.95% in the first quarter of year 19. The quality of the bank's assets has an improvement over the quarter, with non-performing net assets (NPA) declining sequentially, from 5.29% to 4.84% for the quarter ended June. After the announcement of the results, Rajnish Kumar, president of the State Bank of India, told the press that the lender had finally obtained the "total control over the demon of the NPAs". excerpts:
The largest lender in the country posted a profit after three quarters. How do you see the trend evolve and can we expect it to continue?
Although the profit is modest, there is no recoil. I think we finally have complete control over the demon of NPA. From there, this number will only be bigger and better. In my opinion, an acceleration of account resolution will help improve the profitability of private lenders. In the future, the bank expects a relief from the first list of accounts referred to the NCLT. Of these twelve accounts, Essar Steel is close to resolution. We are expecting a resumption of Rs 6,000 crore on the Essar account.
NBFCs have recently faced a liquidity crisis and a reduction in their confidence. How do you intend to deal with it?
Things seem to be much better today than before (August and September, when the crisis started). Most NBFCs have been able to defer PCs (commercial paper) and hope to be able to repay them on time. SBI's exposure to non-bank financial corporations (NBFCs) amounts to 1.5 billion rupees. We purchased loans from the NBFC in the amount of Rs 5,250 crores in October and an additional amount of Rs 15,940 in outstanding loan purchases. I hope we can reach the goal of 45,000 crore Rs by March.
What is the amount of exposure to the IL & FS group?
Currently, IL & FS is not a problem for the bank as we have taken several steps to cover potential risks. The bank has a total exposure of Rs 4,000 crore to 13-14 special purpose vehicles (SPV), while Rs 250 crores to the holding. About 90 crore rupees represents the share in shares, in which SBI holds a 6.42% stake. The bank has established a provision of 66 crores of rupees for a postcode in the exhibition IL & FS.
How do you read credit growth in the future?
We reported double-digit loan growth in September. We expect the trend to continue.
Credit quality improved during the quarter…
The slip rate fell to 2%, the lowest in six quarters. Most business slippages come from the watchlist already identified. There has been an increase in skids in the retail and SME portfolio.