‘SBI on course to becoming profitable’

Bank doing a lot of provisioning for bad loans upfront to quickly return to profit, says chairman

August 24, 2018 10:13 pm | Updated 10:49 pm IST - HYDERABAD

SBI Chairman Rajnish Kumar (right) at the bank’s office in Hyderabad on Friday,

SBI Chairman Rajnish Kumar (right) at the bank’s office in Hyderabad on Friday,

State Bank of India (SBI) chairman Rajnish Kumar on Friday said the bank has put its house in order and will like to pursue 10% growth in advances this fiscal, including through some good corporate lending opportunities.

“The field is wide open for State Bank, we have the capability to give small loans and large ticket size loans,” the head of the country’s largest lender told reporters after participating in SBI Hyderabad circle’s CSR programmes.

Corporate lending

Post the process improvement undertaken in the last quarter, particularly around stressed asset management, the bank, he said, was now in a position to revive corporate lending. “In doing so, we do not want to compromise on asset quality... mindful [of] having suffered so much in the past,” he said.

SBI, which had in the June quarter reported a net loss of ₹4,876 crore on the back of higher provisioning, was on course to definitely turning profitable this fiscal, he said. “Hopefully from September itself the bank should [return] to profitability,” Mr. Kumar said.

This, he explained, was on account of the bank doing a lot of provisioning for bad loans, upfront in March quarter as well as in June. “The intent is take the blows upfront and from September onwards, start returning to normal.” SBI had made a provisioning of ₹70,000 crore in 2017-18 and ₹55,000 crore in the preceding year.

Consumer loans

Stating that a 10% growth this fiscal, given SBI’s portfolio of ₹20 lakh crore, would translate into ₹2 lakh crore, Mr. Kumar said the lending pattern at present was driven by consumer loans while a good pickup was visible in SME loans. Cement, road, steel, automobile and auto components, oil and gas, renewable energy are some sectors expected to revive corporate lending, he said in response to a query.

Resolution of cases, either those before the NCLT or the stressed power assets, was bound to reflect on profit. On stressed power assets, he said work with the other lenders to complete the process of resolution for seven of the accounts, worth ₹17,000 crore for SBI, was likely to be completed next week.

“The intent of the lenders is very clear. The process is almost complete... it means there are buyers for these assets. Price discovery has happened... technical evaluation is complete and what remains is the documentation part of the lenders.”

In most cases, there is a buyer and these assets will be sold. The benchmark that has emerged is ₹3 crore per mega watt, he said.

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