Striking It Big
SBI has set its sights higher – and it shows in its first podium finish
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Size needn’t be a constraint to fast-paced growth, and State Bank of India is showing the way. With over 17,000 branches, it has expanded its balance 14.8 per cent to Rs 27.05 lakh crore in fiscal ’17. Bad loans were held firmly in check. Net non-performing loans dipped 10 basis points to 3.71 per cent in fiscal ’17 against 3.81 per cent in fiscal ’16. The bank’s operating profits zoomed 17.55 per cent to Rs 58,488 crore, while net profit increased to Rs 10,484 crore, up 5.3 per cent over fiscal ’16.
These figures helped SBI get to the podium as runner-up in two categories: the ‘Fastest-Growing Large Bank’ and the ‘Best Large Bank’ in the 10th BW Businessworld Best Bank Survey 2016-17. It’s worth recalling that as chairperson Arundhati Bhattacharya (retired in October ’17) has in the past been conferred the Life-Time Achievement Award for seeing the bank through a stringent asset-quality review and for transitioning it from a lumbering giant to a relatively nimbler bank. Rajnish Kumar has taken over as chairman and managing director now.
A shift in gears is visible as SBI continues to leverage its size to its advantage in rural and semi-urban areas. In fiscal ’17, gross advances increased 7.8 per cent to Rs 16.27 lakh crore. Home loans increased 17 per cent to Rs 2.22 lakh crore; auto loans, 21.3 per cent to Rs 38,549 crore. The overall growth in advances was good enough for the bank to up its market share by 65 basis points to 17.2 per cent.
Lately, the bank has been re-jigging its corporate loan book and pruning its exposure to distressed sectors of the economy. During fiscal ’17, telecom advances declined 12.23 per cent, roads and ports 15.53 percent, engineering 25 per cent and textiles 15.7 per cent.
While the asset quality review exercise resulted in increased non-performing assets at the gross level, higher provisioning has seen the net non-performing assets decline. Net NPA stood at 3.71 per cent in fiscal ’17 compared to 3.81 per cent in fiscal ’16. Provisioning increased 5.26 per cent to 65.95 per cent in FY17.
Another highlight is, its capital reserves increased by Rs 28,828 crore in fiscal’17 when most state-run banks were constrained by low capital. The bank raised fresh tier-1 capital to the tune of Rs 9,100 crore in FY17, the government infused Rs 5,681 crore; strategic sale of investments of Rs 2,662 crore and retained earnings of Rs 8,379 crore added to the capital structure. This will take care of the bank’s growth requirements for the next few years; while its size can be just the advantage the bank can leverage on. In many ways, it’s ready to roll!