SBI sees no negative surprises on Non Performing Assets post merger

SBI does not expect any negative surprises on the stressed asset front post-merger, which will be completed by May-end, its Chairman Arundhati Bhattacharya said.

The nation's largest lender has merged its five associates-- State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore -- and Bharatiya Mahila Bank (BMB) with itself, effective April 1.

Bhattacharya said consolidation of all the five associate banks will be completed in the first quarter of the currentfiscal itself -- by May 27 to be precise -- and then the process of rationalisation will begin.

"Increase in NPAs is not necessary (post-merger) as the associate banks had a number of accounts which were standard, but those were already NPAs with us. So, to that extent, those things have been put on the same platform," Bhattacharya told reporters.

She said the bank has undertaken an asset quality review (AQR) on its own in respect of all the common accounts as part of the merger process. "All stressed assets to the extent possible, where we had common exposures, are aligned. We had taken more than Rs 8,600 crore of additional provisions.

We believe that eventhough the numbers look bigger, we now have much betterability to resolve them because the day we resolve ours, thosewill also get resolved. So, there  will be much more controlon resolution, going forward," Bhattacharya said. It can be noted that while SBI contained its bad loansin the December quarter, most of the five associates saw the same soaring.

Gross non-performing assets (NPAs) of SBI rose to 7.23 percent in the December quarter of 2016-17, from 5.10 per centa year ago, its net NPAs rose to 4.24 per cent as against 2.89per cent during the same period.

State Bank of Mysore saw its gross NPAs climbing to 14.46per cent or Rs 7,750.17 crore in the December quarter and net NPAs at 9.22 per cent or Rs 4,649.15 crore. SBBJ's gross NPAs rose to 11.19 per cent or Rs 7,917.35 crore and net NPAs to 8.26 per cent or Rs 5,649.83 crore.

As for SBT, gross NPAs jumped to 12.22 per cent or Rs8,170 crore and net NPAs at 8.03 per cent or Rs 5,122 crore. In the case of SBH, net NPA rose to 8.03 per cent, from 2.46per cent a year earlier.

She said the focus in the first quarter will be moreon consolidation and rationalisation will start from thesecond quarter onwards. "Once audits are completed, from April 24 onwards, every weekend (data of) one bank to be merged will be taken and the data of that bank will be merged with SBI," she said.

"So, within May 27, the entire granular level datamerger will be completed," she said further, adding that inthe case of Bharatiya Mahila Bank (BMB) and treasury, thegranular data merger has already been completed.

Bhattacharya said that after the merger, the number ofbranches of SBI has increased to 24,013 while staff strengthwill go up to 2,70,011, which includes 69,191 from theassociates and BMB. With this merger, SBI will join the league of top 50banks globally in terms of assets worth Rs 37 trillion.

The total customer base of the bank will touch 37 crore. Managing director for national banking group, RajnishKumar said there is also a rationalisation at the level ofDGMs and regional manager offices.

This will bring in lot ofefficiency at the administrative level and will be costefficient, Kumar hoped. The bank has identified nearly 1,800 branches in close proximity that will be relocated depending on the business potential, he said, adding that "the idea is now we have over 24,000 branches and maybe, in the next 2-3 years, this number will not go up, but relocation will happen over a period of time".