Things will only get better from here, both for the economy and the SBI: Ashwani Bhatia, MD, SBI

In an interview with ET Now, Ashwani Bhatia, Managing Director, talks about business during the Covid era. Raamdeo Agrawal is also part of the interview. Edited excerpts:

ET Now: How do you plan to make the next 10 years count?

Ashwani Bhatia: It’s pretty straightforward. There are many opportunities for growth in the economy itself. I think the results last year, as everyone knows, were very good. We have redesigned the systems, we are ready with digital platforms. We are a good franchise, we have a very good reach.

If India grows, it is natural that SBI grows along with the economy as well. Yes, the last few years have been difficult for us, but we have come back especially in the last two years. I think the next two years will be good as well and we showed that in the results of the last year.

Raamdeo Agrawal: How do you see the evolution of digital skills in the industry and where does SBI fit in that particular stack?

Ashwani Bhatia: We started pretty early. Whether it’s the YONO platform or our apps or our online banking or even our ATMs, it’s all part of our digital transition.

In the future, it will be a combination of bricks and mortar and digital. Today, over 90% of our work is done digitally. At some point, branches will only be distribution points.

To this extent, the State Bank of India is very fortunate. We have our subsidiaries – asset management is there, general insurance is there, life is there, the demat is there. Financial literacy will therefore take over.

The numbers we saw last year – the way demat accounts were opened, the way people entered the markets – were very positive. It’s a good trend for us. Today, banks take all the risks. If the money is invested in stocks or bonds, it actually spreads the risk.

Once the money hits the markets, pricing will become much more efficient, discovery will be better, resolutions will be much better, and customers will also become much more aware. We will stay with our customers to make sure they get the best products.

Raamdeo Agrawal: The last 10 to 12 years – especially the last three or four years – have been horrible in terms of the credit cycle. How do you see it going from here?

Ashwani Bhatia: The stress is there, but it’s a bit manageable. The risk mitigation we’ve built into our system has made it much more resilient. RBI has also become more active. Then there is the consolidation – from 28 we are now at 12 banks. Given all of this, I think the credit cycle will improve.

The RBI put under major exhibitions. SEBI is now trying to do a lot more when it comes to the bond market – listing guidelines, CP guidelines, CRS guidelines, etc. All of this will improve the credit cycle. The legal system has also helped to some extent. Overall, the facilitators are well in place.

AND Now: Your APNs are improving, but when it comes to cost / revenue and ROA, there’s still a lot to do. Can you do this?

Ashwani Bhatia: Last year, our ROA was 0.48. We think we should grow another 15 to 20 basis points this year.

Now looking at the size of our balance sheet, it is about Rs 45 lakh crore. The growth is very intact. The liquidity is there, the demand is there. Once the economy opens up, everything will come back in a month in a quarter. There are going to be revenge trips, revenge vacations, revenge trips, revenge meals. So things look pretty good on the macro side.

Like I said, our ROA should be around 0.7 or more. If that happens, our ROEs also go double digits. Last year, we barely got 10%.

For us the last three years have been a bit difficult. But last year has been pretty good. I think the markets know that too.

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