Bank may see some pain on asset quality: SBI chief

Volume of NPAs went up after RBI conducted asset quality review in 2015-16

Showing effects of legacy, the bank books may continue to experience asset quality pressures due to non-fund exposures to businesses, according to State Bank of India chairman Arundhati Bhattacharya.

While asset quality is lot better, their will be some pain as well, she said in reply to media queries on risks of stressed loans. The non-fund exposures comprise of grantees and letters of credit (L/C). Speaking after annual general meeting (AGM), she said the volume of non-performing assets (NPAs) went up after Reserve Bank of India conducted Asset Quality Review in 2015-16.

This lead to front loading of provisions, giving strength to balance sheet. SBI made provisions worth Rs 26, 984 crore in Fy16. Going forward bank will see positive impact from such exercise and provisions. Its gross NPAs went up from 4.25% at end of FY 15 to 6.5% in Fy16, SBI chief said In her address to shareholders.

Referring to merger of associate banks, Bhattacharya said bank is working simultaneously on integrating five banks. Though dates for merger of each bank could be different.The board of SBI and the government have approved proposal for negotiating the merger of five associate banks.

Such a merger will be win-win situation. It will make bank more efficient, give benefit of scale and improve SBI's dominance in the banking space, Bhattacharya said.The five associate banks of SBI have Indian market share around 5.30% in deposits and 5.33% in advances at end of March 2016. Their net profit was Rs 1, 368.7 crore at end of March 2016.

Confident about turnaround in economy, SBI chief said the current financial year 2016-17 is expected to be more promising due to clear and stable policy environment. There will be more green shoots. The prospects of good monsoon, plus implementation of seventh pay commission for government staff will boost consumer demand, she said.

SBI has rich talent to lead bank: Bhattacharya

State Bank of India chairman Arundhati Bhattacharya today said country's largest lender has good line up of competent bankers (managing directors) to lead organisation.She was responding to queries on possible succession after her present term ends in Spetember 2016. SBI chief did not elaborate if there was move to give her one year extension.