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SBI's retail asset quality deteriorates amid pandemic, SME segment worst hit

SBI's retail asset quality deteriorates amid pandemic, SME segment worst hit

The gross NPAs of the bank have shot up to 5.32 per cent in the first quarter of 2021-22 as against 4.98 per cent in the immediate preceding quarter

SBI's asset quality deteriorates in the SME, home loan and other retail loan products post the COVID-19 second wave SBI's asset quality deteriorates in the SME, home loan and other retail loan products post the COVID-19 second wave

The country's largest bank, the State Bank of India's (SBI) non-performing assets (NPAs) in retail assets are inching up post the second COVID-19 wave hit the country. 

The overall gross NPAs are up in the Q1 of 2021-22 after showing a decline in the last five quarters. The gross NPAs have shot up to 5.32 per cent in the first quarter of 2021-22 as against 4.98 per cent in the immediate preceding quarter. The gross NPAs are almost back to the corresponding first quarter of the previous financial year 2020-21. 

The gross NPAs in the personal segment which also includes mortgages have increased from 0.80 per cent in the March quarter to 1.28 per cent in the June quarter. In absolute terms, the NPAs have increased from Rs 6,984 crore to Rs 11,194 crore in the same period. 

Also Read: SBI waives off home loan processing fees till August 31

The bank's retail portfolio largely caters to salaried class and government employees. The home loan portfolio is about one-fourth of the total advances. "We have no reason to slow down the home loans. We will continue growing the book," said Dinesh Khara, chairman of SBI in a media conference. 

The SME (small and medium enterprise) segment is the worst hit with gross NPAs jumping from 7.67 per cent to 9.22 per cent in the same period. The rise is from Rs 21,402 crore to Rs 26,293 crore in absolute terms. In fact, the NPAs have been rising despite the moratorium, additional funding under government guarantee and one-time loan restructuring.

While the services sector is the hardest hit post the COVID-related disruptions, the bank's chairman says the stress is coming from across the sectors. 

In absolute terms, the bank's gross total NPAs are at Rs 1.34 lakh crore in the June quarter of 2021-22. 

The fresh slippages in the first quarter of 2021-22 are at Rs 15,666 crore. The slippages in the first quarter are high if one compares them to Rs 28,564 crore in the entire previous fiscal 2020-21. The slippages are almost 4.5 times the first quarter of the previous fiscal. 

Also Read: SBI sits on a Rs 60,000 crore NPA time bomb

"We have seen a very tough first quarter. The slippages were low earlier because of the RBI's moratorium," explained Khara. 

"The fresh slippages are coming primarily from SME and home loans," said Khara. He, however, adds, that the revival of the economy is on track. "The slippages have come because of unusual situation. Our retail book is well diversified. These slippages are expected to pull back once things normalises in the economy," said Khara. 

The bank's provision coverage ratio (PCR) is also lower at 85.93 per cent as compared to the previous five quarters. But the PCR as compared to the RBI's regulatory requirement is much higher. " We have already provided for the corporate book," said Khara. The retail book with higher mortgages is secured because of the collateral value.