SBI ready to meet credit growth spike, expects loan book to grow 9% in FY22

Being “cautiously optimistic” about its prospects, State Bank of India, the country’s largest lender, expects its loan book to grow 9 per cent in FY22 and is intensifying efforts in recovering stressed assets.

Notwithstanding the second wave of Covid-19, the Indian economy, through its resilience, is poised for a recovery in FY22.

“I am cautiously optimistic that the performance trajectory of FY21 will continue in FY22 as well,” said Chairman Dinesh Khara in his address to the shareholders at the virtual annual general meeting. The bank’s loan book had grown 4.8 per cent in FY21.

Khara said FY22 had begun with an unexpected second wave of Covid-19 infections. Although the containment strategy this time included avoiding a complete lockdown and managing the situation through micro-containment zones, the impact on the economy will nevertheless be felt.

The bank is well equipped (with capital adequacy) to take care of credit growth, he said.

As of now, capital adequacy stands at about 13.74 per cent, which is fairly comfortable, the chairman said in response to queries.

Last week, its board gave the nod to raise up to Rs 14,000 crore in capital through tier I bonds, which would help to replace maturing bonds and support business growth as well.

Referring to stress asset management, Khara said with the roll-out of pre-package insolvency for resolution, the resumption of courts, and the formation of National Asset Reconstruction Company, efforts would be in full force to keep the momentum in recovering stressed assets in the current financial year.

The outbreak of the pandemic and consequent lockdown in FY21 have altered the dynamics of stressed asset recovery, including disruption in normal proceedings at the National Company Law Tribunal. Despite this, the bank was able to reduce the level of gross non-performing assets (NPAs) by Rs 22,703 crore by March 2021.

The corporate segment saw the largest reduction in NPAs at Rs 18,530 crore. The gross NPA ratio of the bank declined to 4.98 per cent from 6.15 per cent in last year. The provision coverage ratio (PCR) has improved to 87.75 per cent in FY21 from 83.62 per cent in FY20.