Worst is over on asset quality: SBI

Country's largest lender SBI today said its worst asset-quality woes are behind it, expressing confidence that the situation will only improve going forward.
"Overall, for the first time in the past eight quarters, we have seen much lesser slippage in the mid- corporate area. The stress picture is much better and with some amount of confidence I can say the recovery is having a beneficial impact in the books," SBI Chairperson Arundhati Bhattacharya said while announcing the June quarter results, wherein the bank reported lower provisioning on improvement in asset quality.
The bank's gross Non Performing Assets came down by 61 bps to 4.29 per cent in the first quarter of the current fiscal, from 4.90 per cent a year ago. Net NPAs slipped by 42 basis points to 2.24 per cent. Fresh slippages came down to Rs 7,318 crore, from Rs 9,932 crore in the same quarter last year.

In absolute terms, net NPAs came down to Rs 28,669 crore in the reporting quarter, from Rs 31,884 crore a year ago. Gross NPAs declined to Rs 56,421 crore from Rs 60,434 crore.
Total bad loan ratio (NPAs and recast loans), however, increased to 6.44 per cent from 6.01 per cent.
Explaining the reasons for her optimism, the SBI chief said, "on a year-on year basis the slippages have come down. Also, we need to understand what is the quality of fresh slippages.

"For the first time, we are seeing the mid-corporate slippages (which has been the biggest problem area till the March quarter) has come very much under control. Main slippages that have occurred during the quarter are mainly in the retail segment."

She said NPAs from large corporates have come down to Rs 1,026 crore from Rs 1,441 crore in June 2014, while those from mid-corporates improved to Rs 21,468 crore from Rs 24,632 crore a year ago.
"The only area where it has gone up is SMEs, where it has gone up from Rs 15,373 crore to Rs 17,260 crore in the reporting quarter," Bhattacharya said.
Stating that going forward even agri-NPAs will improve, she said the stress in the segment has already come down in the June quarter to Rs 10,856 crore from Rs 11,884 crore, while retail bad loans have dropped from Rs 3,499 crore to Rs 3,272 crore. In international business it has come down to Rs 2,540 crore from Rs 3,605 crore.