Tag: sbi

SBI Cards Q4 spends point to a worsening Covid impact, BFSI News, ET BFSI

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SBI Cards and Payment Services Ltd’s showing a slowdown in business in the fourth quarter, when the new Covid wave was not prominent in India.

The company reported a weak fourth quarter, with a sequential decline in receivables/spending.

The spends

While overall spends rose 11% year on year (YoY) they logged a 5% decline sequentially, within which retail spends were up 13% YoY (-4% QoQ), while corporate spends declined 10% QoQ (flat YoY).

Retail spends remained higher than pre-Covid levels, while corporate spends reached pre-COVID levels – on the back of new use cases making up for the loss in travel spends. Online retail spends form ~52% of the total retail spends.

This development comes when a major rival HDFC Bank is hamstrung as RBI has barred it from issuing new credit cards.

According to the management, spends across categories, barring travel and entertainment, have reached pre-Covid levels. Corporate spends have also reached pre-Covid levels, while corporate travel remains impacted. New use cases across corporates have been making up for the loss in travel spends.

However, the YoY growth is far lower than the pre-pandemic growth trend, which remains a worry.

Also, the gross non-performing assets (GNPA) ratio increased to 4.96% (versus proforma 4.51% in the December quarter), while the NNPA ratio declined to 1.15% (versus 1.58% in the third quarter of FY21).

Total receivables

Total receivables grew 4% YoY (2.5% QoQ decline) to Rs 25110 crore. The receivables mix indicated a marginal increase in the number of transactors and decline in revolvers – resulting in moderation in yields and an impact on the margins. Receivables per card continued to decline, reaching Rs 21,000 crore in the fourth quarter.

With the spends towards essentials are small in size than discretionary, the second wave of the pandemic poses significant risks to growth for SBI Card.

SBI Cards results

SBI Cards reported net profit growth of 110% YoY to Rs 175 crore, which was below analyst estimates. It was affected by a 21% YoY/8% sequential decline in interest income and modest fee income. Although, lower opex supported pre-provision operating profit (PPoP). For FY21, NII (net interest income)/PPOP was up 9.7%/9.6% YoY, while PAT declined ~21% YoY. NII declined 18.3% YoY, with margins down 130bp QoQ to 13.2%. Income from fees and services was stable QoQ at INR11.1b (+16% YoY) as overall spends declined ~5% QoQ. Thus, total income grew 2% YoY to INR22.2b, while opex declined 4.6% QoQ, resulting in stable PPoP (9% miss).

Cards in force grew 12% YoY to 11.8 million. New account sourcing for the fourth quarter stood at 93% of 4QFY20 levels. SBI contributed ~54% to new cards sourced, which accounts for ~44% of the overall card base.

For the financial year ended March 31, total income was at Rs 9,714 crore for FY21 vs Rs 9,752 crore for FY20. The profit after tax came at Rs 985 crore for FY21 versus Rs 1,245 crore in the previous fiscal.

The total balance sheet size as of March 31, 2021, was Rs 27,013 crore as against Rs 25,307 crore as on the same date of last year.



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SBI research dept cuts FY22 real GDP forecast to 10.4% from 11%

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State Bank of India’ Economic Research Department has revised its real GDP growth forecast downwards to 10.4 per cent from 11 per cent in FY22 in view of the Covid-19 pandemic related partial/ local/ weekend lockdown in almost all the states.

The ERD estimated the total monetary impact (total loss) of the current lockdown in various States at Rs 1.5 lakh crores. Of this, Maharashtra, Madhya Pradesh and Rajasthan account for 80 per cent.

“Maharashtra has put up a stringent lockdown. Being the economically biggest and most industrialised state in India, this lockdown will have a huge impact on growth.

“Currently, we estimate loss of around Rs 82,000 crore for Maharashtra (which accounts for 54 per cent of the total loss) which will definitely increase if restrictions are further tightened,” Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said.

 

Migration of labour

The ERD’s presentation titled ‘Thwarting the Second Wave: Rapid Vaccination should be the primary tool and not Lockdown,’ said migration of labour is continuing unabated.

According to data provided by Western Railways (Headquarters: Mumbai; for the period of April 1-12), almost 4.32 lakh people have returned to states such as Uttar Pradesh (UP), West Bengal (WB), Bihar, Assam and Odisha from Maharashtra.

“Of the 4.32 lakh, around 3.23 lakh reverse migrated to UP and Bihar alone. From Central Railways our estimate indicates that around 4.7 lakh reverse migrated to northern and eastern states from Maharashtra,” the presentation said.

 

SBI’s Business Activity Index is now at a five-month low (at 86.3 in the week ended April 19, 2021). All the indicators have shown a dip with maximum decline in Apple mobility, weekly food arrival at Mandis and RTO revenue collection, according to SBI’s ERD.

Referring to the April-May 2020 period witnessing huge monthly incremental increase in deposits (particularly time deposits) as people had fewer options to spend due to the nationwide lockdown, Ghosh observed that this time also large traction in time deposits can be expected as most of the states have imposed a partial lockdown.

 

All Scheduled Commercial Banks’ credit growth declined to a 59-year-low of 5.6 per cent in 2020-21, compared to 6.1 per cent growth in 2019-20, the presentation said. On the other hand, deposits have increased to 11.4 per cent in FY21, compared to 7.9 per cent growth in FY20.

Peak time

The ERD’s model suggests that the estimated peak time is 96 days from February 15, indicating the peak happening in the third week of May.

“It may be noted that we are incrementally adding around 15,000 cases over the peak of the previous day as of today, though such numbers are difficult to predict.

“Uttar Pradesh and Maharashtra achieved a peak before the national peak in the first wave. Now new cases in Maharashtra seem to be stabilising but the share of cases in total of various other states (Chhattisgarh, Madhya Pradesh, Gujarat) has increased in the current second wave and these are showing an increase in daily new cases,” Ghosh said.

So, if other states also implement strict actions and control the spread, then the national peak may come within the weeks after the Maharashtra peak, he added.

Vaccine update

The presentation said: “Spanish Flu in 1918 shows more deaths in later waves, thus vaccination is a must to avoid larger fatalities later.

“Injection to infection ratio shows that India made rapid improvement this year, but it is still below Israel, Chile and UK…Only 2.6 per cent of the population in the world is fully vaccinated, and in India only 1.2 per cent of population is fully vaccinated till now.”

The experience of other countries shows infections stabilise after 15 per cent of the population receives a second dose, it added.

Now that States are free to buy vaccines from manufacturers from May 1, ERD’s estimate for 13 States shows that the cost of vaccines at almost 15-20 per cent of States’ health expenditure budget (assuming half of the population in these states will get vaccinated by the Central Government), still it will be only 0.1 per cent of GDP.

This is significantly lower than the economic loss in GDP due to lockdown, which is already at 0.7 per cent of GDP, it added.

Vaccine Hesitancy Index

The ERD observed that the state-wise performance in case of vaccination is quite uneven.

“Our ‘Vaccine Hesitancy Index’ calculated as doses administered per 100 available shows that all N-E states and in states like Goa, Jharkhand, Assam, Delhi, Uttarakhand, Chhattisgarh there is a vaccine hesitancy,” Ghosh said.

Give ambulance status to oxygen tankers

The ERD said all states should allow ambulance status to oxygen tankers so that they move faster, which will certainly help and reduce the transit time.

“Government of India should analyse the oxygen data on a daily basis and direct supply. This is purely a supply chain optimisation problem,” Ghosh said.

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Banks to limit branch operations in Covid areas, BFSI News, ET BFSI

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Banks are planning to limit footfalls to prevent the spread of infections in areas where Covid cases are on the rise. On Wednesday, the Indian Banks’ Association convened a meeting of bank chiefs to assess the current situation.

The services that branches will provide will be determined by state-level bankers’ committees (SLBCs). The SLBC will also provide the specific standard operating procedures (SOPs) for branches. Bank branches, being classified as essential, have been exempted from the lockdown.

During the same period last year, bank branches cut down on several activities to reduce footfalls. In 2020, HDFC Bank reduced its operating hours and stopped the sales of foreign currency. SBI had restricted services like account opening, cash withdrawals, passbook printing and currency exchanges. in the first phase of the lockdown, last year.

Banker present at the meeting said, “Customers can obtain their balance or statement through a variety of digital channels. Customers can use missed call banking, WhatsApp banking, mobile applications, and ATMs to avail most of the services without having face-to-face interaction.”



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FT’s six suspended debt plans got ₹1,536 cr in April 1st fortnight

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The six suspended debt schemes of Franklin Templeton have received ₹1,536 crore from maturities, coupons, sale and prepayments in the fortnight ended April 15.

The Supreme Court appointed liquidator SBI Funds Management had completed distribution of ₹2,962 crore to unit holders last week.

With this, investors in the debt schemes have received ₹12,084 crore in two tranche since it was suspended for trading last April.

The six schemes now have ₹447 crore as on April 15.

In all, the six schemes had received ₹17,312 crore till April 15 from maturities, coupons, sale and pre-payments since winding up.

The fund house had repaid the entire debt raised by the schemes to meet redemption pressure amid Covid pandemic breakout last April.

The NAVs of all the six schemes were higher compared to that of last April 23 when the decision to wind-up was taken.

As per the Supreme Court order, SBI Funds Management has started selling off the assets held in the schemes and returning the money to investors at the earliest, said the fund house.

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Why HDFC deposits are a safe option for senior citizens

Personal Finance

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The prevailing low interest rates on deposits have been pinching senior citizens the most. Seniors who are more keen on capital conservation than higher interest rates can consider the deposits from HDFC. Currently, HDFC offers seniors 6.1 per cent interest for 24-month deposits

Depositors who wish to get regular payouts can opt for the non-cumulative option, with monthly/quarterly/half yearly or annual payouts. Those who don’t need regular payouts, can instead opt for the cumulative option which offers annual compounding.

The minimum amount that can be deposited with HDFC for a fixed deposit is ₹20,000.

While the deposits of HDFC, an NBFC, are not covered by deposit insurance (bank deposits of up to ₹5 lakh are covered by DICGC), its 40-year plus stable business provides significant confidence. Besides, the company has been maintaining a AAA rating on its deposits for more than 26 years.

How they fare

As interest rates have almost bottomed out, they are likely to inch up in the next two to three years. Hence, at the current juncture, it is wise to lock into deposits with a tenure of one or two years.

For such tenures, HDFC offers seniors better interest rates than those offered by prominent banks such as SBI (up to 5.6 per cent), HDFC Bank (up to 5.4 per cent), ICICI Bank (up to 5.5 per cent) and Axis Bank (up to 6.05 per cent), which are considered safest options among banks.

Other private sector banks and small finance banks, however, offer even higher rates (up to 7.5 per cent) for one to two year deposits. The recent debacles at YES Bank and other co-operative banks have stoked fear in the minds of depositors. Given that, seniors may prefer safety of capital over the lure of higher rates.

HDFC also offers better rates compared to corporate FDs with similar ratings from other NBFCs such as LIC Housing Finance, that offers up to 5.9 per cent for a tenure of up to 2 years.

About HDFC

Incorporated in 1977, HDFC, a housing finance company currently offers loans to individuals (comprising 76 per cent of the loan book) and corporates (6 per cent). HDFC also lends for construction finance (11 per cent) and lease rental discounting (7 per cent).

With an outstanding loan book of ₹,52,167 crore as of December 2020, HDFC is India’s largest housing finance company. HDFC’s non-performing assets (proforma) are contained at less than 2 per cent. In addition to that, the company’s provisions (cumulative including those related to covid) cover up to 2.56 per cent of the loan book exposure.

As at the end of December 31, 2020, HDFC’s capital adequacy ratio stood at 20.9 per cent, well above the regulatory requirement of just 14 per cent.

HDFC also has several financial subsidiaries –prominent ones among them are HDFC Bank, HDFC Asset Management Company, HDFC Life Insurance, HDFC Credila and HDFC Ergo. Its consolidated profits at the end of the first nine months of FY21 stood at ₹1,33,900 crore.

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SBI puts up for sale NPA account MSP Metallics, BFSI News, ET BFSI

Banking & Finance

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SBI has put up for sale non-performing asset (NPA) account MSP Metallics Ltd against which a total of 10 banks have collective loan outstanding of over Rs 1,493 crore. State Bank of India (SBI) has the highest share of lending (37.19 per cent) to MSP Metallics amounting to Rs 555.51 crore.

The other lenders to the company as part of the consortium arrangement are — Indian Bank (Rs 284.82 crore); Punjab National Bank (Rs 229.83 crore); UCO Bank (Rs 176.53 crore); Indian Overseas Bank (Rs 73.56 crore); Canara Bank (Rs 62.66 crore); Central Bank of India (Rs 41.91 crore); Union Bank of India (Rs 38.06 crore); Bank of Baroda (Rs 28.02 crore) and Bank of India (Rs 2.84 crore).

The total outstanding against all the 10 lenders stands at Rs 1,493.74 crore. The reserve price has been set at Rs 350 crore.

“In terms of the bank’s policy on sale of financial assets, in line with the regulatory guidelines, we place the…accounts for sale to ARCs/ Banks/ NBFCs/ FIs, on the terms and conditions indicated there against,” SBI said in a sale notice on its website.

The e-auction for MSP Metallics account is to take place on May 4, 2021.

SBI said the sale will be subject to final approval of the other banks who are part of the consortium lending.

“The interested ARCs/banks/NBFCs/FIs can conduct due diligence of these assets with immediate effect, after submitting expression of interest and executing a Non-Disclosure Agreement (NDA) with the bank,” SBI said.

The sale is on ‘as is where is basis’.

MSP Metallics runs an integrated steel plant at Marakuta, Jharsuguda district in Odisha.



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Govt appoints Anil Kumar Sharma on central board of SBI with immediate effect, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Apr 14 () State Bank of India on Wednesday said the government has nominated Anil Kumar Sharma, the executive director of the RBI, on its board with immediate effect. Citing a Department of Financial Services (DFS) notification dated April 13, 2021, SBI said, “..the central government hereby nominates Anil Kumar Sharma, executive director, Reserve Bank of India as director on the central board of State Bank of India with immediate effect… until further orders, vice Chandan Sinha.”

SBI’s central board of directors comprises a total of 13 members, headed by its chairman Dinesh Kumar Khara, as per its website. KPM MKJ MKJ

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How SBI is readying a big SME lending push, grow loan book to Rs 4 lakh crore, BFSI News, ET BFSI

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After crossing Rs 5 lakh crore in home loans, State Bank of India has set a similar target for the small and medium enterprises (SME) segment.

The bank plans to increase its SME market share to t 20% from 15% at present and grow its loan book to Rs 4 lakh crore in three years, according to a report.

How the bank plans to do it

State Bank of India plans to revamp its entire operational setup for lending to micro, small and medium enterprises to improve turnaround time and customer experience while keeping bad loans under a lid. It is seeking bids from consultants for the process.

In the request-for-proposal (RFP) dated March 26, the bank said “With the objective of becoming banker of choice for MSMEs, SBI intends to improve existing processes and structure in the SME space for achieving improvement in market share/enhance the portfolio while ensuring the asset quality,” SBI said.

The document said that the bank is looking to increase its market share in this category from 15%.

The bank wants to increase onboarding in its Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which is seeing poor offtake and high non-performing assets. It is looking to develop analytics tools to generate supply chain financing business from its existing current account (CA) base.

The segments

The bank lends to MSMEs under four verticals — SME Centre and relationship managers, supply chain finance, CGTMSE and cluster financing.

According to the RFQ, for the supply chain finance (SCF) vertical, SBI is looking to benchmark current dealer/vendor financing SCF journeys with global players and identify gaps. It wants to develop value chain analytics capabilities, including an analytics framework on the lack of transaction flows of the existing current account base to generate leads for vendor and dealer onboarding.

For the CGTMSE segment, the bank wants to under the reasons for the poor offtake of schemes and is seeking remedial measures. It wants to identify deficiencies while onboarding that could hurt asset quality.

At the SME centre, the bank is looking to identify gaps in the end-to-end process of loan origination, sanction and monitoring and propose changes in process flow and end-to-end digitisation specific to loans up to Rs 1 crore. It wants to reduce the turnaround time and improve on-boarding. To enable the relationship manager (RM), the bank wants to benchmark the digital offerings of RMs of peers and identify areas of data obtention that can be digitised and centralised.

In cluster financing, the bank wants to build a coordination mechanism with various government agencies for increased thrust in the cluster portfolio. The bank is also looking at tie-up with new fintech firms.

SBI has 1,770 relationship managers to cater to the MSME segment. It has more than 1,100 specialised SME intensive and MSME branches.

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Can’t reveal info of customers, recall RTI order, banks tell SC, BFSI News, ET BFSI

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NEW DELHI: Nearly six years after the Supreme Court ruled that RBI had to reveal information about functioning of banks under the RTI Act, major banks, including SBI and HDFC, on Friday urged the court to recall its order as they cannot reveal confidential information of account holders who may sue them for putting such details in public domain.

The SC had in 2015 directed that RBI can’t refuse to reveal information under the transparency law on financial health of banks under the pretext of ‘fiduciary relations’ with financial institutions and had held that the regulator was supposed to “uphold public interest and not the interest of banks”. Another round of litigation was initiated after RBI didn’t comply with the SC order and the court issued contempt notice. The proceedings were wound up in 2019 with RBI being given the last opportunity to comply to disclose its Annual Financial Inspection report of banks.

With RBI asking the banks to provide information to be disclosed under the RTI Act, third round of litigations has started with all major banks filing fresh applications and petitions seeking quashing or recall of earlier direction. Banks such as SBI, PNB, HDFC, Bank of India, Bank of Baroda made a pitch for re-examining the issue. Solicitor General Tushar Mehta with advocates Harish Salve and Mukul Rohatgi contended before a bench of Justices L Nageswara Rao and Vineet Saran the banking industry could be affected and the SC order might be misused for corporate rivalry. They said only RBI was heard by the SC and the banks were not parties in the litigation.



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