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Analyst Meet / AGM - Analyst Meet

Targets Rs 12000 crore expansion in loan book in FY2017, translating into loan growth of 18%

State Bank of Travancore

26-Apr-2016, 09:43
State Bank of Travancore conducted an analyst meet on 26 April 2016 to discuss its financial results for the quarter and year ended March 2016. Jeevandas Narayan, MD of the bank along with his colleagues addressed the meet

Highlights:

* Bank has posted highest ever 31% growth in the operating profit to Rs 1800 crore in FY2016. Bank has maintained margins and posted strong 28% growth in its fee income, contributing to overall healthy growth in total revenue. Further, bank has recorded substantial 697 basis point improvement in cost to Income ratio in FY16 over FY15, contributing to strong growth in operating profit.

* However, the bottom lines of the bank where impacted in Q4FY2016 by prudential provisions of Rs 150 crore over and above regulatory requirement towards weak accounts. However, this prudential provisions are expected to take care of any uncertain asset quality pain ahead.

* The business of the bank increased 4% to Rs1. 67 lakh crore at end March 2016 over March 2015, driven by strong 11% growth in deposits to Rs 1.01 lakh crore. However, the advance book of the bank declined 4% Rs Rs 65466 crore at end March 2016 over March 2015.

* For FY17, the bank is targeting Rs 12000 crores of loan book expansion, which translates into loan growth of 18%. About Rs 9000 crore of expansion in loan book is expected to be contributed by retail loans and rest by corporate book. Bank is also planning to expand its deposit base by Rs 18000 crore.

* As per the bank, the capital position is sufficient to take care of its loan growth in FY17.

* As per the bank asset quality pain will continue for some more time, while bank expects Soft landing on asset quality front, with RBI giving March 2017 as a deadline for cleaning up the balance sheet of banks.

* The fresh slippages of advances increased substantially to Rs 1800 crore in Q4FY2016, while bank has also recorded recoveries and upgradations of Rs 1200 crore.

* Among the major accounts contributing to fresh slippages included Electrosteel at Rs 325 crore, Abhijeet Ferrotech at Rs 91 crore, Shiv Vani Oil at Rs 104 crore, Bhadresh Trades Rs 206 crore.

* Bank has sold Rs 150 of assets to asset reconstruction companies in Q4 and Rs 1000 crore in FY2016. The securities receipts book of the bank stood at Rs 750 crore at end March 2016.

* On account of higher fresh slippages, bank has recorded arise in GNPA ratio to 4.78%. But, bank has continued to maintain NNPA ratio nearly stable at 2.77%. Bank was also improved PCR ratio to 62% at end March 2016.

* The restructured advance book of the bank has declined to Rs 3500 crore at end March 2016 from Rs 4200 crore at end March 2015.

* The restructured advances and net NPA of the bank stood at below 10% of total advances at March 2016.

* The weak accounts to be classifed as NPA under the Reserve Bank of India asset quality review (AQR) of the banking system were at Rs 410 crore and Bank had classified about 75% of this weak accounts as NPAs in Q3 itself. Bank has fully taken care of AQR related accounts in Q4FY2016.

* Bank proposes to reduce the GNPA ratio to 3.6-3.7% by March 2017.

* On a liabilities front, the bank has exhibited strong improvement in CASA deposits ratio to 32% at end March 2016 compared with 26% about 3 years ago.

* Bank has been consistently reduced bulk deposit. The share of bulk deposits has declined to below 10% of total deposits at end March 2016. In fact the above card rates or high cost bulk deposit accounts for only 0.48% of the total deposits. Banks is expecting further scope for improving CASA deposit ratio to 35%.

* Bank has reduced cost of deposits to below 7% in FY17. Bank has maintained NIMs at 2. 57%, while Bank do not see scope for improving NIMs due to declining lending rate scenario.

* Bank has added 20 branches in 105 ATMs in FY2016, The staff count of the bank stood at 14892 at end March 2016.

* Bank handles about 10% of total remittances into India. Bank has handled about Rs 40000 crore of remittances in 2015 and Rs 8700 crore in Q1 of 2016.

* As per the bank, it had raised about US$ 40 million of NRI deposit under RBI schemes, while only US$ 3 million of NRI deposits are due to mature in end 2016.

* Bank does not have any exposure to UDAY scheme. Bank has exposure to SEBs of Tamilnadu and Kerala and both of the state have not participated in UDAY scheme.