ET Now: How do you plan to make the next 10 years count?
Ashwani Bhatia: It is quite simple. There is ample growth opportunity in the economy itself. I think the results of the last year as everyone knows have been very good. We have revamped the systems, we are ready with the digital platforms. We are a good franchise, we have very good reach.
If India grows, it’s natural that SBI also grows with the economy. Yes, the past few years were tough for us, but we have come back especially in the last two years. I think the next two years will also be equally good and we have displayed that in the results over the last one year.
Raamdeo Agrawal: How do you see digital competency shaping up in the industry and where does SBI stand in that particular stack?
Ashwani Bhatia: We started pretty early. Whether it is the YONO platform or our apps or our internet banking or even our ATMs — it’s all part of our digital move.
Going forward, it is going to be a combination of both bricks & mortar and digital. More than 90% of our work today is done digitally. At one point, branches are going to become nothing but distribution points.
To that extent, State Bank of India is very lucky. We have our subsidiaries — asset management is there, general insurance is there, life is there, demat is there. So financial literacy is actually going to take over.
The numbers that we saw last year — the way demat accounts were opened, the way people got into the markets — were very positive. This is a good trend for us. Today, the banks take all the risk. If the money actually gets into equities or bonds, it actually distributes the risk.
Once the money gets into the markets, pricing is going to become much more efficient, the discovery is going to be better, resolutions are going to be much better and the customers are also going to become much more aware. We will remain with our customers to ensure they get the best products.
Raamdeo Agrawal: The last 10-12 years — particularly the last three-four years — have been horrific in terms of credit cycle. How do you see things shaping up from here?
Ashwani Bhatia: Stress is there, but it is kind of manageable. The risk mitigation that we have put into our system has made it far more resilient. RBI has also become more active. Then there is the consolidation — from 28 we are now at 12 banks. Given all this, I think the credit cycle will look up.
The RBI has put in the large exposure framework. SEBI is now trying to do much more as far as the bond market is concerned — the listing guidelines, the guidelines on CPs, on NCDs, etc. All this is going to improve the credit cycle. The legal system also has helped to some extent. All in all, the enablers are very much in place.
ET Now: Your NPAs are getting better but on the cost to income front and the ROA front there is still a lot of scope of improvement. Can you do that?
Ashwani Bhatia: The last financial year our ROA was 0.48. We think that we should be improving by another 15 to 20 bps this year.
Now looking at our balance sheet size, it is about Rs 45 lakh crore. The growth is very much intact. The liquidity is there, demand is there. Once the economy opens up, it will all come back into one month in one quarter. There is going to be revenge travelling, revenge holidaying, revenge journeys, revenge eating-out. So things look quite okay on the macro side.
As I have said, our ROA should be moving up to around 0.7 or so. If that happens, then our ROEs also move into double digits. Last year we were barely touching 10%.
For us, the last three years were a little difficult. But the last year was pretty good. I think the markets also realise that.