Showing better asset quality, the gross non-performing assets (NPAs) ratio came down to 8.71% from 10.35%, while the net NPA ratio also improved to 3.95% from 5.61%. Total provisions fell 39% to Rs 8,670 crore in the quarter from Rs 14,171 crore in the same period last year. Accordingly, loan loss provisions came down to Rs 13,971 crore, down 21.3% from Rs 17,760 crore.
Reflecting the overall improvement in credit off-take, net interest income grew at a healthy 21.4% to Rs 22,691 crore year-on-year, helping the bank report an improved domestic margin at 2.9% from 2.7%. Kumar said there are eight stressed accounts, including three from the power sector, that are in a very advanced stage of resolution. “If all these accounts get resolved in the next two months, then we are looking at a situation where our gross NPAs will slip below 7% and net NPA to under 3%.”
The bottom line was helped by lower fresh slippages too, which declined to Rs 4,523 crore in the quarter as against Rs 25,836 crore. The bank sold Rs 1,354 crore of bad loans to asset reconstruction companies during the quarter. The provision coverage ratio improved by 871 basis points (100bps = 1 percentage point) to 74.6% from 65.9% a year ago, the chairman said.
Kumar said an effort is on to resolve cash-strapped Jet Airways to which it has over Rs 1,500-crore exposure as the lead banker. “We are working on a resolution plan. Under the Project Sashakt, Jet Airways would be the first case to be taken under resolution,” he said. The bankers are working on a resolution through converting their Rs 8,200-crore loans into equity, which will see the lenders owning around 30% of the airline.
In a big relief to the crippled mortgage lender DHFL, which has been accused by the news portal Cobrapost of siphoning off around Rs 31,000 crore of public funds, Kumar said there is no worry for the bank.
The bank has an exposure of over Rs 11,000 crore to the third-largest, pure-play mortgage lender, according to the Cobrapost report.
“When IL&FS defaulted, all NBFCs, particularly DHFL, came under pressure and we reviewed everything in terms of liquidity and cash available with them to service their debt. As of now, we don’t have much concern, but we are keeping a close watch on the DHFL account,” Kumar said. On the crippled IL&FS group, which owes the system over Rs 94,000 crore, he said SBI has an exposure of Rs 900 crore at the holding company level, as well as Rs 2,200 crore at some of the special purpose vehicles.