 "Post merger, SBI sees no negative surprises on NPAs")
State Bank of India (SBI) does not expect any negative surprises on the stressed asset front post-merger, which will be completed by May-end, its Chairman Arundhati Bhattacharya said.
The nation's largest lender has merged its five associates — State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore — and Bharatiya Mahila Bank (BMB) with itself, effective April 1.
Bhattacharya said consolidation of all the five associate banks will be completed in the first quarter of the current financial year itself — by May 27 to be precise — and then the process of rationalisation will begin.
"Increase in NPAs (non-performing assets) is not necessary (post-merger) as the associate banks had a number of accounts which were standard, but those were already NPAs with us. So, to that extent, those things have been put on the same platform," Bhattacharya told reporters in Mumbai on Monday.
She said the bank has undertaken an asset quality review (AQR) on its own in respect of all the common accounts as part of the merger process.
"All stressed assets to the extent possible, where we had common exposures, are aligned. We had taken more than Rs 8,600 crore of additional provisions. We believe that even though the numbers look bigger, we now have much better ability to resolve them because the day we resolve ours, those will also get resolved. So, there will be much more control on resolution, going forward," Bhattacharya said.
It can be noted that while SBI contained its bad loans in the December quarter, most of the five associates saw the same soaring.
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Gross non-performing assets (NPAs) of SBI rose to 7.23 per cent in the December quarter of 2016-17, from 5.10 per cent a year ago, its net NPAs rose to 4.24 per cent as against 2.89 per cent during the same period.
State Bank of Mysore saw its gross NPAs climbing to 14.46 per cent or Rs 7,750.17 crore in the December quarter and net NPAs at 9.22 per cent or Rs 4,649.15 crore. SBBJ's gross NPAs rose to 11.19 per cent or Rs 7,917.35 crore and net NPAs to 8.26 per cent or Rs 5,649.83 crore.
As for SBT, gross NPAs jumped to 12.22 per cent or Rs 8,170 crore and net NPAs at 8.03 per cent or Rs 5,122 crore. In the case of SBH, net NPA rose to 8.03 per cent, from 2.46 per cent a year earlier.
She said the focus in the first quarter will be more on consolidation and rationalisation will start from the second quarter onwards.
"Once audits are completed, from April 24 onwards, every weekend (data of) one bank to be merged will be taken and the data of that bank will be merged with SBI," she said.
"So, within May 27, the entire granular level data merger will be completed," she said further, adding that in the case of Bharatiya Mahila Bank (BMB) and treasury, the granular data merger has already been completed.
Bhattacharya said that after the merger, the number of branches of SBI has increased to 24,013 while staff strength will go up to 2,70,011, which includes 69,191 from the associates and BMB.
With this merger, SBI will join the league of top 50 banks globally in terms of assets worth Rs 37 trillion. The total customer base of the bank will touch 37 crore.
Managing director for national banking group, Rajnish Kumar said there is also a rationalisation at the level of DGMs and regional manager offices. This will bring in lot of efficiency at the administrative level and will be cost efficient, Kumar hoped.
The bank has identified nearly 1,800 branches in close proximity that will be relocated depending on the business potential, he said, adding that "the idea is now we have over 24,000 branches and maybe, in the next 2-3 years, this number will not go up, but relocation will happen over a period of time".