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State Bank of India Expects Advances to Surge by 10% to 20%

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Top officials from the Bank of India expect advances to edge higher by 10% to 12% in the current fiscal year, even though corporate loans are still in the shadows and yet to pick up.  

New reports put the bank’s year-to-date (YTD) loan growth at 5%, with Agriculture, Retail sector advances, and MSME loans fingered as the main drivers.

Between January and June, the bank showed a growth of nearly 5%. Speaking to analysts, A K Das, Managing Director and Chief Executive Officer of the bank, stated that the bank’s advance growth guidance is expected to come in between 10 to 20 percent for the year. He further added that even though corporate loans haven’t picked up yet, the second quarter presents some opportunity for movement in the corporate books.

Meanwhile, the Bank of India’s gross advances for global and domestic came in at Rs. 4,77,746 crore in June. In the first quarter, which ended in June, the bank reported a decline of 22% in net profit after reporting revenue of Rs. 561 crores. This is a significant drop from the Rs. 720 crores reported a year ago.

Speaking about the bank’s chances of achieving its loan growth target for the fiscal year, Das added that the lender is expecting the Net Interest Margin to grow by 2.9% domestically and 2.75% globally.

Managing and recouping bad loans 

Das further stated that there is a lot of pricing in the bank’s loan book happening domestically and globally, adding that the bank is working to maintain its guidance on NIMs. As per asset quality, the bank’s representative said the lender has a target to cut bad loans by Rs. 2,500 crores every quarter.

The bank’s strategy for bad debt management will include cash recoveries and upgradation. More so, the lender plans to recoup some loans through various OTS (one-time settlement) programs already in the process. 

The bank is optimistic about collecting at least Rs. 3,000 crore through resolutions via NCLT. Data released in June showed that the bank’s gross Non-Performing Asset (NPA) increased by 9.3%. This translated to Rs. 44.415 crores. In June 2021, the lender’s Non-Performing Assets (NPAs) came in at 13.5%

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