 "Arundhati Bhattacharya")
The State Bank of India (SBI) expects improved asset quality in the current quarter. The bank also expects an improvement in the outlook for stressed sectors, such as steel and power, over six months.
“We cannot say if the worst is over, but the stress in asset quality is levelling out,” said Rajnish Kumar, managing director (compliance and risk), State Bank of India, on the sidelines of a banking seminar organised by the Confederation of Indian Industries (CII) in Kolkata on Friday.
SBI’s gross non-performing asset (NPA) ratio was 4.29 per cent at the end of the quarter ended June, compared to 4.9 per cent in the year-ago quarter. Sequentially, its gross NPA increased from 4.25 per cent at the end of March to 4.29 per cent at the end of June.
“The demand in the power sector is expected to go up. Here, pricing is an issue, but prices are going up. In the steel sector, the imposition of the 20 per cent safeguard duty will help,” said Kumar.
The government had recently announced a 20 per cent safeguard duty on imported steel to boost the domestic steel sector, struggling with competition from cheap imports from China.
“Over six months, companies’ cash flows should improve. The margins of the private sector should improve only if the private sector gets deleveraged,” Kumar added. Deleveraging is the process or practice of reducing a firm’s debt by rapidly selling the firm’s assets.
