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Analyst Meet / AGM - Analyst Meet

Expects fresh slippages of Rs 5000 crore in FY2017

Syndicate Bank

20-May-2016, 10:38
Syndicate Bank conducted the analyst meet on 19 May 2016 to discuss the financial performance of bank for the quarter ended March 2016. Arun Shrivastava, MD&CEO of the bank addressed the meet:
Highlights:

The bank has recorded 7% growth in CASA deposits, simultaneously bank has reduced the share of bulk deposits from 13% at end March 2014 to 10% at end March 2015 and further down to 9% at end March 2016.
On advances front, the bank has increased the share of Retail, Agriculture and MSME (RAM) advances from 44% at end March 2015 to 50% at end March 2016. Bank proposes to further improve the share of RAM advances by 1 - 2% in FY2017.
The fresh restructuring of advances stood at Rs 228 crore mostly for the RAM sector in the quarter ended March 2016. Bank has converted Rs 2200 crores of discom sector restructured loans into State Development Loans (SDL) under UDAY package for the states of Rajasthan, Uttar Pradesh, and Haryana. The standard restructured advance book of the bank stood at Rs 4969 crore at end March 2016.
The fresh slippages of advances surged to Rs 5926 crore in the quarter ended March 2016, of which Rs 3800 crore of slippages came from 3 accounts in the Steel sector, Rs 750 crore from EPC sector, Rs 150 crore from Gems and Jewellery and Rs 750 crore from RAM sector. The higher slippages were also on account of downgrading of weak accounts in the Asset Quality Review (AQR) list of other banks too.
As per the bank, there was no 5/25 refinancing in the quarter ended March 2016. The outstanding balance under the 5/25 scheme stands at Rs 2340 crore toward 8 accounts. Of these, 4 accounts related to the steel sector with outstanding balance of Rs 1450 crores, all of which are in the NPA category. The infrastructure sector has exposure of Rs 240 crore and power sector at Rs 600 crore under 5/25 refinancing scheme.
The outstanding balance and Strategic Debt Restructuring (SDR) scheme stands at Rs 2523 crore for 9 accounts, of which 3 related to the steel sector with the balance of Rs 525 crore, Rs 200 crore to power sector, Rs 525 Crore to textile sector and Rs 1000 crore to EPC sector.
The stressed assets of the bank i.e. GNPA + restructured advances + SMA-2 category advances stood at Rs 23000 crore at end March 2016.
Bank expect the fresh slippages of advances to be Rs 5000 crore in FY2017, while net increase in GNPA is expected to be around Rs 1700 crore post recoveries and upgradation. Bank is expecting recoveries of Rs 600 crore in FY2017.
The SMA -2 category advances of the banks stood at Rs 5000 crore at end April 2016, which has declined to Rs 4000 crore as on 15th May 2016.
The bank has witnessed sharp surge in provisions mainly on account of sharp surge in fresh slippages of advances, exposure to discom loans under UDAY scheme, fraud in the Food Corporation account and hefty provisions of Rs 883 crore toward fraud in its Jaipur branches.
As per the bank, it discovered a major fraud in its three branches in the Jaipur regions, which was spanning for more than four preceding years. The fraud took place through fraudulent documents like fare government cheques, LCs, LIC policies, while the trail was found to multiple locations and various banks.
As per the bank, the higher employee expenses were on account of addition of 3000 staff and wage revision taking full effect in FY2016.
On the international business front, the bank is reducing the share of interbank business and so expect the margins to improve ahead.
Bank has approved capital raising of Rs 3700 crore. Bank expects retained earnings of Rs 750 crore, government capital infusion of Rs 500 Crore and bond issuance of Rs 1000 crore in FY2017.
As per the bank loan growth will be in line with the comfortable capital position.