Coming years challenging for banks: SBI
The coming years will be very challenging for banks which will have to look beyond the bad loan resolution and address pressing issues such as frauds, cyber security and governance, State Bank of India (SBI) has said.
The operating environment has become increasingly complex, the state-owned bank said in its Annual Report 2017-18.
Resolution of stressed assets has progressed satisfactorily and the final outcome will take some more time to reflect in the profit and loss (P&L), it said, adding that this delay is mainly because new laws take some time to mature in practice. “The coming years will be very challenging for the banking system as a whole,” said the country’s largest lender.
“The structural transformation of banks must move beyond the non-performing asset (NPA) resolution and address other pressing issues, such as frauds, customer retention and servicing , human resource, cyber security and governance,” it added.
Of all the 21 public sector banks (PSBs), 19 have registered a staggering loss of ~873 billion in 2017-18, topped by scam-hit Punjab National Bank (PNB) which posted a net loss of nearly ~122.83 billion during the year. Indian Bank and Vijaya Bank were the only two PSBs which made profits.
SBI said the policy initiatives over the last four years have gathered momentum with far reaching structural transformation in all sectors and banks are unlikely to remain untouched by these changes.
With capital infusion in the PSBs, it will be up to them how they grab the opportunity and deploy technology to address some of these pressing issues, the SBI report said.
As on March 31, the gross NPAs of SBI increased to ~2.23 trillion (10.91 per cent of the gross advances), from ~1.77 trillion (9.11 per cent) by end-March 2017. The net NPAs or bad loans grew to ~1.10 trillion (5.73 per cent) from ~969.78 billion (5.19 per cent).
The largest lender of the country suffered a net loss of ~65.47 billion in 2017-18, as against a net profit of ~104.84 billion in the preceding fiscal year. “The year 2017-18 was a difficult year as far as net profits are concerned. The main contributing factors being increase in loan loss provisions, mark to market losses on government securities and provisions and payments to employees,” Chairman Rajnish Kumar said in the report.