SBI near 70-80% of pre-Covid business levels: Newly-appointed chairman Dinesh Kumar Khara

Newly-appointed State Bank of India (SBI) chairman Dinesh Kumar Khara said on Wednesday the lender’s business has recovered to around 70-80% of pre-Covid levels. Khara said his focus would be on credit quality, preservation of net interest margins (NIMs) and employee safety in view of the pandemic.

“We have had different experiences in various sub-segments and we do have some concerns. But I think overall we are somewhere at around 70-80% of the pre-Covid level (of business),” Khara said. The chairman observed that based on the requests for restructuring received through SBI’s portal and from companies, the recast exercise is expected to be a “manageable” one for the bank.

Credit at the lender is growing in the range of 6-7% and the retail segment is holding up well, Khara said, pointing to the fact that much of corporate demand for debt is moving to the markets. “When it comes to corporate credit growth, we have to be mindful of the fact that not many corporates are going to the credit market. They are going to the debt capital market. So if we add up our growth in the non-SLR portfolio, the growth would be about 10%,” he said, adding that SBI will need to readjust to the new realities and the requirements of corporates.

SBI is closely monitoring the cash flows of its corporate accounts. Based on that broad indicator, there is little to worry about where the health of these accounts is concerned. “If that is the guide of the health and quality of the assets, perhaps I would not say that everything is hunky dory, but of course whatever we have seen in terms of stress is not something which will be a cause of worry for us,” Khara said. The bank has already provided for all its legacy accounts and its corporate provision coverage ratio (PCR) is around 85% and overall PCR is 83%. As for new cases, there is no visibility on which accounts may require references to the insolvency courts. “The restructuring norms which have been announced are quite liberal and whatever impairment comes as an impact of the Covid times, we will be in a position to handle through the restructuring window and even the earlier measures,” Khara said, adding that the embargo on insolvency references is hardly an area of concern.

The lender will train its focus on the quality of the advances book, and on protection of NIMs, Khara said. “All required decisions will be taken in due course, be it about employees, credit quality or wage growth…Our annual hiring will continue to be what it used to be,” he added. SBI is also planning to upskill its employees, particularly those who come from an engineering or technology background. The bank intends to offer them some kind of bridge courses within the setup and sharpen their analytics skills. It expects that to put it in a position to make the best use of its database, which is presently static.

Khara stated that SBI is very seriously evaluating all available options for the creation of a new umbrella entity. “As per the structure, they have not permitted anybody to hold more than 40%. So we will have to get guided (by that) and naturally it will have more than one participant or more than one group of people,” he said.

Khara said that the bank’s recent initiatives to move to a leaner corporate structure, with more specialised verticals, is aimed at better delivery of services to the customer, which is a focus area. “Looking at the opportunities available across various customer segments is really the focus. It will help the cost-to-income ratio because more than the cost, if we can shore up our income by ensuring a better and focused delivery. That will be a more important lever for us to improve the cost-to-income ratios.”