SBI’s non-performing loans affects asset quality

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

The asset quality of India's largest lender State Bank of India (SBI) remains an area of concern due to its high non-performing loans, global rating agency Fitch on Friday said. 

"SBI's asset quality remains an area of concern especially in view of the slippages seen in FY10 (non-performing loans +24 per cent y-o-y) and further in the first half of the current fiscal year (+34 per cent 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. 

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