The State Bank of India will step up retail lending and expects most lenders to post higher than expected profits as the economy recovers faster than expected, according to President Dinesh Khara.
“The banks expected worse, so they stepped up risk management considerably,” Khara, who took over as the head of the nation’s largest lender in October, said in an interview with Bloomberg Television on Monday. “That is why we should see much better results than at the start of the pandemic.”
The SBI’s bad debt ratio fell to 5.28% at the end of September from 5.44% three months earlier, but the bank warned that it expects an additional 200 billion rupees (2.7 billion dollars) of loans deteriorate over the next six months as the pandemic hurts borrowers. However, the state bank has anticipated its potential bad loans in advance, which will prevent significant pressure from building up, Khara said last month.
Divestment of Yono
The bank is in no rush to divest its stake in its local digital app Yono, which has 28.5 million registered users, Khara said. Its predecessor estimated it could be worth $ 40 billion a few months ago.
“At some point we will look at this aspect,” Khara said. “We had introduced Yono as a delivery platform within the bank. It was in line with our ambition, with our digitization.
SBI raised $ 900 million in deposits and granted $ 400 million in loans through the app, Khara said. Yono contributed Rs 2 billion to the bank’s profits in July and is expected to add Rs 10 billion for the full year, according to the bank’s latest presentation to investors.
The Reserve Bank of India has urged banks to spend more on technology as consumers turn to digital platforms amid the pandemic.