SBI'S ASSET QUALITY REMAINS AN AREA OF CONCERN: FITCH

Global rating agency Fitch said the asset quality of the country's largest lender State Bank of India remains an area of concern due to its high non-performing loans.

"SBI's asset quality remains an area of concern especially in view of the slippages seen in FY10 (non-performing loans +24% y-o-y) and further in the first half of the current fiscal (+34% yoy)," the rating agency said in a statement.

Non-performing loans are those which are not earning income.

Fitch further said that given the management's strong focus on the above segments for better yields and under expectations of better economic growth, the bank's asset quality would be a key earnings driver through the medium-to long-term.

However, Fitch has retained highest long-term rating of SBI at AAA with stable outlook.

"SBI's long-term ratings reflect its incomparably strong pan-India franchise with over 13,000 branches and 17,000 ATMs, and are further underpinned by its strong credit fundamentals," it said.

It further said that the extensive branch presence provides the bank a unique competitive position - largest lender in India with close to one-fifth share each in both system advances and deposits.

Fitch further said that SBI's capitalisation levels continue to be above average, while its major share in central and state governments' banking business helps in a better-diversified earnings profile.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/sbis-asset-quality-remains-an-area-of-concern-fitch/articleshow/7119041.cms