NEW DELHI: Public sector lender State Bank of India (SBI) expects Rs.20,000 crore of loans to turn bad over the next half of the financial year as borrowers are still struggling to get on their feet amid the pandemic. This would result in Rs. 60,000 crore of stressed loans at the end of the current financial year, said chairman Dinesh Khara during a post-earnings call on Wednesday.
While this figure may look massive at first glance, it comes to just about 2.5 per cent of its loan book, which stood at Rs.23.83 crore of advances at the end of September 2020, and is only half as bad as what the Reserve Bank of India’s (RBI) financial stability report estimated. So far this year, the bank has reported slippages of Rs. 6,393 crore. Its pro forma slippages in the second quarter amounted to Rs.14,386 crore. This figure would have been reported as slippages without the Supreme Court dispensation to not declare any accounts as non-performing assets (NPA) after August.
On restructuring, Khara said, the bank received applications worth Rs. 6,495 crore in October and provisions on such loans stand at Rs. 650 crore.
“Over the next few months till December, we expect about Rs. 13,000 crore of additional restructuring that would largely come from corporate and a little bit from SMEs,” the SBI chief said. In terms of slippages, however, Khara added that the bank might see some kind of stress in small and medium enterprises and in the agriculture sector going forward.
The September quarter was also marked by steady core operating metrics. The largest lender in India, in terms of assets, registered a significant 52 per cent year-on-year growth in net profit to Rs. 4,574 crore, compared to Rs. 3,012 crore in the year-ago period driven by lower provisions and higher net interest income (NII).
NII— the difference between interest earned and interest expended — climbed 14.6 per cent to `28,181.5 crore in Q2 FY21 with net interest margin at 3.34 per cent for the quarter.
Total provisioning for this quarter stood at Rs. 10,118 crore, which includes Covid-19 provisioning of just Rs. 239 crore. Overall Covid provision stands at Rs. 3,247 crore, which is lower than other large banks. The bank’s bad loan ratio fell slightly to 5.28 per cent, from 5.44 per cent at the end of June and fresh slippages dropped to Rs 2,756 crore compared to Rs 3,637 crore in the previous quarter.
SBI increased its loan growth estimate for the full year to more than 8-9% from an earlier estimate of 6-7%, Khara said. In home loans, disbursements are up by 12 per cent on a YoY basis, while for auto loans growth in disbursements stood at 27 per cent For personal loans, disbursements grew 61 per cent year-on-year. “Retail will continue to be a major driver for growth,” the chairman said, adding that he doesn’t see any “major challenge on loan delinquencies” for retail loans given that most of SBI’s customers work for government or quasi-government companies.