S&P downgrade not to hit bank’s operations, says SBI

State Bank of India (SBI) says the downgrade of standalone credit profile by Standard and Poor's (S&P) will not have any impact on the bank's business. S&P on Wednesday had revised SBI's standalone credit rating to BBB- from BBB citing asset-quality concerns. However, A Krishna Kumar, MD and Group executive (national banking) of SBI, said the downgrade constitutes only one component of overall rating. The overall rating for the bank remained unchanged at BBB-.

"The recent rating by S&P will have no impact on bank's operations for the reason that it was BBB- earlier and is BBB- even now. So any impact in terms of cost of borrowing from overseas will not be felt," he said.

S Viswanathan, the managing director, said the bank will improve its non-performing assets (NPAs) position by the end of this financial year despite stress in segments like textiles, power and aviation. The gross NPA levels for bank rose sharply in the April-June quarter to around 5%. He said the bank has not seen any major deterioration in its restructured book portfolio in the September 2012 quarter.

Krishna Kumar said in recent weeks the bank had seen robust growth in the retail loan book following cut in base rates. "We have seen the doubling of applications both for the auto loan and home loan product. This includes refinancing of home loans or taking over home loans from other banks," said Krishna Kumar.

He added that while in the month of July-August the bank saw some 300-400 applications for auto loans on a daily basis, this has now risen to about 800-1,200 applications per day. The momentum is expected to sustain because of the festive season.

On the corporate loan side, Krishna Kumar pointed that there are initial signs of a revival in demand for corporate loans with improving market sentiments. Despite an improvement in the overall loan demand, the bank stuck to its loan targets it set at the beginning of the financial year. The bank expects its credit to grow at 15-18% this fiscal. Retail will grow at a faster rate of 18-20%.

ALSO READ

Plan child's education for better future

FCI plans Rs.5k-cr bonds to reduce borrowing costs

Spanco Rs.1,300-cr recast plans facing road blocks

FM sets up panel to ready blueprint for women’s bank