SBI aims for top slot in retail space

Mumbai: State Bank of India (SBI) aims to become the market leader in the retail lending space chairman Pratip Chaudhuri said on Friday. “We were never the leaders in the retail segment but have been catapulted to among the top players and would like to consolidate our position to become bigger,” Chaudhuri said at his first press conference after taking over from the erstwhile chairman OP Bhatt, on Thursday evening.

The chairman hopes to retain SBI’s status as the biggest corporate lender which is evident from the fact that the corporate banking portfolio will now be supervised by two deputy managing directors.

Chaudhuri observed that there would be no significant ‘shifting of gears’ and that bank would ‘consolidate our growth both in the corporate and retail spaces.

“Our loan growth in 2010-11 has been in line with that of the industry or slightly lower and we need to regain our leadership,” the chairman said adding that the bank’s retail network would continue to be expanded.

The chairman hinted that the bank’s special home loan schemes may be modified since the higher provisioning norms for such assets of 2%, as prescribed by the regulator, were beginning to hurt.

“We are continuing with the schemes for the present. At the same time, we are in dialogue with the Reserve Bank of India and will try to address the concerns of the regulator, deliver value to the customer and also make sure the provisioning is affordable,” Chaudhuri said.

The SBI chairman also observed that the bank needed to ensure that non-performing assets are brought down to appropriate levels. “We can’t say there are no challenges and we need to focus on some of the stress areas and make sure that our npas are better than the industry’s” he said.

The bank has decided to take fresh exposure to the telecom sector to the extent of Rs 1000 crore, the chairman said saying it was a sunrise sector. On allowing large industrial houses in the banking space, Chaudhuri said the bank welcomed competition. "We are not in favour of entry barriers, we have lived with competition. Let there be as many players."

Chaudhuri was confident that the government would give the bank the go ahead for the proposed rights issue. “The government is convinced of the bank’s need for capital but there have been several other banks whose requirements needed to be met.

We believe the amount raised needs to be substantial and we believe SBI will receive its adequate share,” the chairman asserted.

The chairman observed that the bank would gradually be replacing its high cost deposits with low cost deposits and justified the issue of retail bonds at high coupon rates saying the bank had not overpaid.

“The bonds also qualify as capital,” he explained adding that a premium of 400 basis points or 25 basis points annualised.“We would have been disappointed if they had been trading at a discount,” he said saying the retail issue had proved to be a game changer for the bond market.

Hemant Contractor, managing director, SBI observed that the bank would attempt to grow its top line and bring down interest costs so as to improve its margins. He said the bank would like to increase the tenor of the loans because they resulted in better yields.

State Bank of India chairman said the merger of the associate banks with State Bank would continue pointing out that the consolidation was creating both value and synergies. Chaudhuri said SBI would prefer to set up a subsidiary in a foreign country rather than overpay for acquisitions.

Source: Financial Express