Better asset quality and a 100 bps dip in credit cost helped the largest lender State Bank Friday report a net income of Rs 838 crore for the March quarter as against a net loss of Rs 7,718 crore a year ago, and also guide towards sunnier days.
For the full year to March, SBI, which controls a fourth of the nation's banking system, booked a net income of Rs 862 crore as against a net loss of Rs 6,547 crore. The management attributed the lower profit to the 100 percent provisions made for some key stressed accounts which are near the full resolution.
"The bank has delivered an excellent performance on all parameters. The turnaround has happened. The improvement in asset quality is visible. Both the gross bad loans and net dud assets ratios are substantially down," chairman Rajnish Kumar told reporters.
The credit cost improved by a full 100 bps to 2.66 percent from 3.62 percent a year-ago and for fresh slippages the credit cost was 0.52 percent, he said.
Guiding towards sunnier days, Kumar said, "we have not left anything for the future. The remaining legacy credit cost will be done by March 2020 and from next April there will be no legacy cost as far our corporate book is concerned," Kumar beamed.
He said the bank is expecting better performance in the first quarter of the current financial year and has sect a credit growth targeting of 10-12 percent for FY20.
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The bottomline was also boosted by a 20 bps jump in the domestic net interest margin that rose to 3.02 percent in the reporting quarter from 2.82 percent, Kumar said.
Gross non-performing asset improved to 7.53 percent at 1,72,750 crore in the March quarter, Rs from 10.91 percent or Rs 2,23427 crore a year ago, while net NPAs came down to 3.01 percent or Rs 65,895 crore from 5.73 percent or Rs 1,10,855 crore, while fresh slippages stood at Rs 7,505 crore, while for the full year it was Rs 32,738 crore.
Kumar said during the year, cash recovery was at an all time high of Rs 37,000 crore, of which Rs 13,836 crore came in from the IBC process.
The provision coverage ratio jumped to 78.73 percent from 66.17 as it has made as much as 99 percent provision for the Reserve Bank's first list of large accounts sent to bankruptcy courts.
Kumar said though resolution for the three major accounts from the first RBI list--Essar Steel, Bhushan Power & Steel and Alok Industries--are in very advanced stage, the bank still made 100 percent provisions for them and expects to recover around Rs 16,000 crore from these accounts once the judicial process is over.
The bank has an exposure of Rs 3,487 crore to IL&FS, of which Rs 1,125 crore have become NPAs, he said, adding the bank has made 50 percent provision for the exposure.
On the spooked NBFC sector, Kumar said the stress shadow banking sector is not over yet and it would be very unfortunate if any default happens and warned that "we have to be very mindful and watchful of the NBFC sector."