SBI's profits may take further hit in March qtr: Bhattacharya

Faced with huge NPAs, SBI Chairman Arundhati Bhattacharya today said bad loans are expected to surge in the coming quarter, which may hit its profitability.
"We had already said at our press conference during the quarterly (third) results press conference. I will say the same thing, that our profits were impacted due to rise in non-performing assets (NPAs)," Bhattacharya told reporters on the sidelines of the opening of the bank's Japan desk from here.
"In the next quarter too, NPAs will rise further that will affect our profits."
SBI's gross NPAs, or bad loans, soared to Rs 72,791.73 crore at the end of the December quarter as against Rs 61,991.45 crore a year earlier.

The mounting pressure due to bad loans hit profitability of SBI as its consolidated profit plunged 67 per cent to Rs 1,259.49 crore for the quarter on account of higher provisioning for bad loans.
Reeling under stressed assets, state-owned banks' third quarter performance can at best be described as dismal, with Bank of Baroda reporting a loss of over Rs 3,342 crore, the highest from any bank so far.

A total of 27 public sector banks have written off a staggering Rs 1.14 lakh crore for bad loans in 2012-15, with the last fiscal alone witnessing a steep 53 per cent rise in write-offs as part of the balance-sheet clean-up.

The intention of the opening up of the Japan desk, Bhattacharya said, is to facilitate Japanese investors who are keen to put money in India.
"We will inform them about their regulatory requirements, their tax requirement etc. Our Japan desk will try and provide the kind of information which Japanese investors and entrepreneurs should know in order to come to this country," she said.
The SBI chairman also said there are many Japanese who want to set up joint ventures and often face difficulty in choosing a right partner to suit their requirements.
On the other side of the spectrum, there are many Indians who want to bring some capital from Japan as well as source technical expertise from there, she said.

"So in that manner, the Indians too are not aware whom to approach. So we will try to bridge that link through our Japan desk," she reasoned.
Going forward, SBI will open another Japan desk from Chennai. There has been an increase in the Japanese community in Chennai, she said.
Bhattacharya further said, "We are still looking at
resolution picking up pace. Resolution has started but they have not picked up pace to that extent and specially in respect of the larger accounts, we really need to see much more movement. But that will happen over a period of time."

Hours before her, RBI Governor Raghuram Rajan had hoped bankers will not be exuberant in addressing infra financing challenges, stress on promoters getting more equity and have flexibility in the loans.
Bhattacharya said the bank expects a continuous improvement in its stressed assets and maintained the guidance of restricting slippages to Rs 40,000 crore and Rs 31,000 crore in watch-list accounts.
"We are making efforts at recovering most of the large accounts, it doesn't matter the sector. Once you have classified, we need resolution very quickly. We'll have a space of 12-18 months. We're hopeful that we'll be able to manage it in most of the accounts where the asset is good," she elaborated.

With Rajan speaking about a review in the S4A scheme -- Scheme for Sustainable Structuring of Stressed Assets, Bhattacharya said the bank has had a dialogue with the RBI on the potential impediments for a smoother working of the scheme.
Specifically, SBI wants the level of sustainable debt to be taken below the 50 per cent, need to go beyond the current cash-flows system and also have a relook on interest rates, which are higher when the accounts become NPA.
"The central bank is open to the question of rates, not so open on cash flows though," she said.
The SBI chief also said she does not know what the RBI is looking at when it comes to reviewing of the marginal cost of funds based lending rate (MCLR) for fastening transmission of policy rates.