The State Bank of India (SBI) reported a good fourth quarter with loan growth at an eight-quarter high. Discussing the bank's Q4 numbers and the Jet Airways account in detail, Rajnish Kumar, the SBI chairman, said that the Etihad Airways' bid for Jet Airways will be opened today and then all the contours will be known.
Etihad has said that it will continue to be minority shareholder, not exceeding 24 percent, based on that the requirement for capital is estimated to be about anywhere between Rs 4,500 crore to Rs 5,000 crore.
“SBI Capital Markets will reach out to various investors based on the resolution plan and seek financial closure—balance equity of Rs 3,400 crore and any other funding requirement which they might have stated in their bid and the sacrifice from the existing creditors because the liabilities are nearly Rs 14,000 crore to various class of creditors, so how much is proposed to be paid and whether all creditors agree, don’t agree,” Kumar said, adding that ultimately it is a process, which will kick start today.
He added, “At this stage there is no commitment from NIIF (National Investment and Infrastructure Fund), they did send email at the time of EoI (expression of interest) and they are nearly sovereign. So we will approach them but any new investor who puts money will have to be convinced that there is a credible resolution plan, only then you put money.”
After the resolution plan is opened today, it will then be presented to the investors, including NIIF. SBI Caps will reach out to several investors and see whether Rs 3,400 crore, which is the residual equity other than Etihad's stake, whether it can be mobilised or there is sufficient investor interest.
Moreover, whatever the unsolicited bids they will be approached if they are interested in putting equity, said Kumar. Therefore, Etihad’s Indian financial partner has not yet been decided, he confirmed.
Talking about SBI's numbers, he said corporate book net NPA stands at Rs 34,000 crore, which includes all sectors including power, IL&FS, out of that 50 percent is considered to be recoverable. So what remains is Rs 17,000 crore and for that the bank will have to make additional provisions, he added.
When asked if they had any more accounts in the watch list, he said there is no watch list and the bank was now going by SMA 1 and SMA 2. “We are very well prepared to account for slippages from SMA 1 and SMA 2,” he said.
The bank does not expect fresh slippage ratio to go above 1.60 percent. Even if any large account slips, the number does not go beyond 1.6 percent, he assured.
The bank does not expect slippages from NBFC (non-banking financial company) sector but certain accounts are under stress, he said, adding that the bank is watchful of those.
“For the bank as a whole, the resilience in the P&L in the balancesheet has been built-in,” he said.
With regards to loan growth, he said the overall growth will be at 12 percent in FY20.