The chairman of State Bank of India (SBI), Dinesh Kumar Khara, on Friday said that the bank would remain focused on recovering stressed assets even in FY22. In his address to shareholders at bank’s annual general meeting (AGM), Khara said that rollout of pre-packages, resumption of courts and formation of National Asset Reconstruction Company (NARCL) would help in recovery efforts.
FE had earlier reported that SBI is likely to send bad loans worth Rs 20,000 crore at NARCL. Despite Covid-19, the total recovery from advances under collection accounts (AUCA) rose 10% at Rs 10,297 crore in FY21, compared to Rs 9,250 crore in FY20. Khara also said that bank will continue to accelerate its digital agenda and the scope and reach of YONO will be expanded further.
“The bank adjusted to the challenges posed by the Covid-19 pandemic and is better positioned to tackle any subsequent wave. I am cautiously optimistic that the performance trajectory of FY21 will continue in FY22 as well,” Khara said at 66th AGM of the bank. The bank had reported highest ever net profit of Rs 20,410 crore in FY21, against net profit of Rs 14,488 crore in the previous year. The return on assets (RoA) for the lender improved by 10 basis points (bps) to 0.48% in FY21, compared to 0.38% in FY20. Similarly, return on equity (RoE) improved by 220 bps to 9.94%.
Last month, CLSA in its report had estimated SBI’s RoE to increase to 15% by FY23. “SBI’s multiples have increased to 0.8x March23 book from and 0.3x March 2023 book, but with +15% RoE expectation, we still see a deep value.” CLSA said.
Khara also highlighted that bank is comfortably placed in terms of growth capital. “The opportunities for lending in promising sectors will be explored to diversify the portfolio and contain risk,” he further added.
The capital adequacy position of the bank improved from 13.06% in March 2020 to 13.74% in March, 2021. The tier I capital has increased by 44 bps to 11.44%.