Mumbai: Country's largest lender SBI Tuesday said its worst asset-quality woes are behind it, expressing confidence that the situation will only improve going forward.
"Overall, for the first time in the past eight quarters, we have seen much lesser slippage in the mid- corporate area. The stress picture is much better and with some amount of confidence I can say the recovery is having a beneficial impact in the books," SBI Chairperson Arundhati Bhattacharya said while announcing the June quarter results, wherein the bank reported lower provisioning on improvement in asset quality.
The bank's gross Non Performing Assets came down by 61 bps to 4.29 percent in the first quarter of the current fiscal, from 4.90 percent a year ago. Net NPAs slipped by 42 basis points to 2.24 percent. Fresh slippages came down to Rs 7,318 crore, from Rs 9,932 crore in the same quarter last year.
In absolute terms, net NPAs came down to Rs 28,669 crore in the reporting quarter, from Rs 31,884 crore a year ago. Gross NPAs declined to Rs 56,421 crore from Rs 60,434 crore.
Total bad loan ratio (NPAs and recast loans), however, increased to 6.44 percent from 6.01 percent.
Explaining the reasons for her optimism, the SBI chief said, "on a year-on year basis the slippages have come down. Also, we need to understand what is the quality of fresh slippages.
"For the first time, we are seeing the mid-corporate slippages (which has been the biggest problem area till the March quarter) has come very much under control. Main slippages that have occurred during the quarter are mainly in the retail segment."
She said NPAs from large corporates have come down to Rs 1,026 crore from Rs 1,441 crore in June 2014, while those from mid-corporates improved to Rs 21,468 crore from Rs 24,632 crore a year ago.
"The only area where it has gone up is SMEs, where it has gone up from Rs 15,373 crore to Rs 17,260 crore in the reporting quarter," Bhattacharya said.
Stating that going forward even agri-NPAs will improve, she said the stress in the segment has already come down in the June quarter to Rs 10,856 crore from Rs 11,884 crore, while retail bad loans have dropped from Rs 3,499 crore to Rs 3,272 crore. In international business it has come down to Rs 2,540 crore from Rs 3,605 crore.
"So, the total NPAs have come down to Rs 56,421 crore (4.29 percent in June 2013) from Rs 60,434 crore (4.90 percent in June 2014)," Bhattacharya said.
On the stress in SME loans, she said: "When the economy goes into a tailspin the first accounts that get hit are SMEs and the last ones to recover are also them."
Therefore, she said, it very clearly shows the trajectory that the economy is taking.
She added: "The fact that the economy is slowly recovering is clear from these numbers themselves because for the first time, after many quarters, we are beginning to see the lessening of stress in the mid-corporate sector.
"Our hopes are that two-three quarters down the line this portfolio will stabilise completely. Even in SMEs we are seeing above the Rs 20 crore buckets which show visibly less strain, and the maximum stress is still being seen on the Rs 1 crore and less bucket. These are the smallest of the small loans where we are seeing the maximum stress."
While loan loss provisions fell by 14 percent to Rs 3,359 crore from Rs 3,903 crore last year, total provisions rose marginally by 1.31 percent to Rs 5,510 crore in the first quarter, from Rs 5,439 crore in the year-ago period, she said.
Recovery in the period was of Rs 1,209 crore while upgrades and write-off stood at 1,494 core and 4,919 crore, respectively. Incremental restructuring in the quarter stood at Rs 2,638 crore.
On the rise in bad loans in the retail and agri areas, the SBI chief said these two segments are "very effort-elastic. Agriculture always has a problem in the first quarter as people wait for the sowing to come back and start renewing their KCCs (Kisan Credit Cards). The positive news is that there is a lot of pull back already on the agri front.
"On the personal loans front also there is a lot of pull back," Bhattacharya said, adding that traditionally the bank has had problems in the June quarter due to annual movements of SBI staff because of promotions, audits and transfers.
SBI Managing Director and Group Executive B Sriram said most of the stressed loans are from SMEs in the under-Rs 1 crore ticket sizes apart from agri and home loans.
