SBI: SME bad loans a concern, will meet margin target

State Bank of India today said the increase in non-performing assets of the bank in the SME sector was a concern but maintained that it will meet its net interest margin(NIM) target of 3.75 percent for the full year.

The bank’s NIM in the first quarter came down marginally to 3.57 percent from 3.62 percent in the year ago quarter, Chairman Pratip Choudhury said.

He attributed in the increase in the bank’s non-performing assets (NPA) to the SME sector. Weak rains have pushed up the slippages in the agriculture sector, he said hoping a trend reversal in the second quarter.

[caption id=“attachment_413952” align=“alignleft” width=“380”]  The bank’s return on net worth stood 18.41 percent. Reuters[/caption]

He said the bank has been able to contain NPAs in large corporates to a large exgtent.

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He sees Rs 3,600 crore of assets becoming standard in the next two quarters.

The bank’s return on net worth stood 18.41 percent. Making a strong defence of the government recapitalising banks he said the while the government’s borrowing cost is 8-8.5 percent, the bank is giving a return of 18.4 percent post tax.

Choudhury said the first quarter is generally a weak quarter for banks. And considering this, the bank’s performance is good and this has become the new normal for the bank.

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The bank has managed to contain staff cost growth at 6 percent, which has improved the operational efficiency of the bank.

The bank’s an mark to market gain of Rs 521 crore In treasury operations in the first quarter.