Mumbai: A day after S&P downgraded its credit rating over asset quality concern, State Bank of India (SBI) Thursday said it is hopeful of improving its bad assets ratio by the end of the fiscal.
"Ultimately when it comes to FY13, we will be able to project a better position of NPAs (non-performing assets) than what has been seen till Q1," SBI managing director and group executive for national banking A Krishna Kumar told reporters.
He also denied there would be any impact of the downgrade on the operations, saying the downgrade forms only a small portion of the bank's overall rating.
"The SACP (stand-alone credit profile) is a part of the overall rating exercise. The SACP is an integral part of the issuer credit rating. In fact, there are other components like capital position, liquidity and earnings, and those remain strong as far as S&P is concerned," Kumar said.
Retaining the overall issuer credit rating at BBB-, Standard &Poor's had yesterday downgraded the SACP of SBI to BBB- from BBB citing poor asset quality, making it the second agency to downgrade SBI after Moody's within a year.
"The recent rating review would have absolutely no impact on the operations of the bank...So any impact in terms of probably cost of borrowing abroad will not be there because the rating is exactly the same," Kumar said.
The bank had posted a record gross NPA of 4.99 percent or a little over Rs 40,000 crore in the first quarter, despite a record profit of over Rs 3,500 core.
Deputy managing director for stressed assets management Soundara Kumar pointed out that bank's restructured assets are lower than the peers and the gross NPA plus the restructured assets are at 8-9 percent of the total assets book, which is on par with that of the peers.
A downgrade by Moody's came as a jolt to the bank, wrecking the share prices. Bank chairman Pratip Chaudhuri had said it would ask the agency to reconsider it but Kumar today said there is no progress on it.