Analyst Meet / AGM - Analyst Meet

06-Nov-2018, 11:37
State Bank of India conducted an analyst meet on 05 November 2018 to discuss the financial performance for the quarter ended September 2018 and prospects of the bank. Rajnish Kumar, Chairman of the bank addressed the call:

Highlights:

• The bank has accelerated loan growth to 9% with strong 11% growth in domestic loan book. The overseas loan book of the bank was impacted to the extent of Rs 46803 crore on account of withdrawal of LOU/LOC and migration of business to UK subsidiary. The bank has exhibited well diversified and quality growth in its loan book. Loan growth estimate is maintained at 10 to 12% for FY2019.
• The bank has continued to maintain tight control on other operating expense, which have declined 3% in Q2FY2019 over Q2FY2018. The bank has to make final gratuity provisions of Rs 900 crore in Q3FY2019, after that overhead expenses growth will normalize.
• The margins of the bank are supported with higher credit growth and lower slippages, while the bank has improved domestic net interest margin to 2.76%in Q2FY2019 from 2.71% in Q1FY2019, adjusting for interest income booked on NCLT resolutions.
• The bank expects to improve margins further going forward with cost of deposits under control, while expects to improve domestic margin to 2.85% and expects international NIMs at 1.5%.
• With high visibility on NPA resolution in H2FY2019, the bank expects to further reduce GNPA ratio below 8% and NNPA ratio below 4% end March 2019.
• The bank has maintained it slippages and credit cost guidance of 2% each in FY2019. The bank expects credit cost run rate for Q3 and Q4FY2019 to be in the same range or lower than that of Q2FY2019.
• Regarding NBFCs, the bank indicated that situation of liquidity is under control. NBFCs are able to raise funds, while some NBFCs have ALM mismatch. The bank expects RBI to come with ALM guideline shortly for NBFCs. The bank expects some impact on margins of NBFCs.
• The bank has bought Rs 5200 crore of portfolio from NBFCs, while also indicated that Rs 15500 crore of portfolio buyout is in the pipeline.
• The bank has exposure of Rs 4000 crore to SPVs of IL&FS group, most of which is towards operational SPVs and the bank does not see any concern over this exposure. Further, the exposure to holding company is Rs 250 crore and investment exposure is Rs 90 crore.
• The bank has NPAs of Rs 32700 crore in power sector with 41% provision coverage, while the bank expects incremental provisions of 10-12% on power sector NPAs. The bank also expects resolution in some of the power sector NPAs.
• The fresh slippages of loans declined to Rs 10880 crore, of which Rs 3189 crore came from watchlist. The watchlist has declined to Rs 20359 crore end September 2018 from Rs 24630 crore end June 2018. The segment wise slippage came from SME at Rs 3834, agriculture Rs 2700 crore, retail Rs 982 crore and corporate Rs 3190 crore in Q2FY2019.
• The bank is sitting on Rs 6000 crore worth of a provision write back relating to resolution of one account in NCLT first list.
• The outstanding securities receipt book of the bank stood at Rs 10000 crore, while non fund based exposure to NPA accounts stands at Rs 13000 crore.
• The outstanding NCLT cases is Rs 1.1 lakh crore relating to 378 accounts, while about Rs 36000 crore of exposure relating to 78 accounts has not been admitted to NCLT of which Rs 10000 crore will be liquidated.
• SBI General Insurance market value valuation has been placed at Rs 12000 crore. Bank has earned Rs 473 crore of profit from stake sale in general insurance subsidiary.
• Bank also transferred its merchant acquiring business to its wholly owned subsidiary SBI Payment Services and earned Rs 1087 crore of profit. The business has been valued at Rs 6000 crore, while the bank has entered into joint venture agreement for stake sale of 26% to Hitachi.
• The capital adequacy is at comfort level and bank has approval for capital raising of Rs 20000 crore. The LCR was healthy at 144%.

Powered by Capital Market - Live News