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Informist, Friday, Nov. 8, 2024

 

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--SBI Setty: Endeavour to have LCR of 120% even after RBI norms are out 
--SBI Setty: Trying to promote green rupee term deposit 
--SBI Setty: Green rupee term deposit not attracting much attention 
--SBI Setty: Near-term aim is to reach INR 1 tln operating profit 
--SBI Setty: See good potential to increase co-lending activity within bank 
--SBI Setty: Want to use co-lending for priority sector lending purposes 
--SBI Setty: Don't think will take big bets on airlines going forward 
--SBI Setty: Slippages in agri segment will be contained going ahead 
--SBI MD Tewari: No plans to list MF arm, general insurance arm for now 
--SBI Setty: No plans for composite licence for insurance subsidiaries 
--SBI Setty: Compression in NIM is contained for now 
--SBI Setty: May not reach earlier guidance of 12-13?posit growth FY25 
--SBI Setty: Asset quality issues not there in our retail personal book 
--SBI Setty: Broadly believe that cost of deposits has peaked 
--SBI Setty: Would like to see deposit growth in double digits 
--SBI Setty: See loan growth at 14-16% FY25-end 
--SBI Setty: Focused on garnering deposits via branches 
--SBI Setty: Bank remains sufficiently capitalised 
--SBI Setty: Liquidity position is comfortable 
--CONTEXT: Comments by SBI Chairman Setty at post-earnings press meet 
--SBI Setty: Credit growth continues to be robust across all segments 

 

By Kshipra Petkar

 

MUMBAI – State Bank of India may not be able to achieve the deposit growth guidance of 12-13% in the current financial year ending March, according to its Chairman C.S. Setty. Addressing a post-earnings press conference on Friday, Setty guided for a 10-11% growth in deposits in the second half of 2024-25.

 

"The guidance holds for double-digit growth starting from 10%. We are endeavouring towards that (12-13%) but I think we will not be able to. But our effort to increase deposit mobilisation gives us the confidence that we will be able to achieve double-digit growth," Setty said.

 

SBI's deposits grew 9.13% on year to INR 51.17 trillion as of Sept. 30. Sequentially, the deposits grew 4.40%. Setty said the bank has been focussing on increasing its deposits through branches. The bank had earlier announced plans to add 600 branches in FY25. The bank has given guidance for a 14-16% growth in credit in the second half of the year. He said that the credit growth continues to be robust in all segments.

 

The SBI head said he believed that the cost of deposits peaked in India. SBI's cost of deposits inched up to 5.03% in Jul-Sept from 5.00% a quarter ago. Setty said the compression in net interest margin is contained and it has more or less stabilised. The domestic net interest margin of SBI in Jul-Sept fell 16 basis points on year and 8 bps on quarter to 3.27%.

 

"I think broadly the compression is contained, it is more or less stabilised for two reasons. One is that the deposit rates have peaked, and we have witnessed good growth in current accounts. We have also increased MCLR (marginal cost of lending rate) twice. So, that gives confidence that we will be holding up NIMs. It is not a very significant movement," Setty said.

 

On stress in its retail personal book, Setty reiterated that they are not seeing any asset quality issues there. "So, we would like to reiterate that asset quality issues are not there in our retail personal loan book and the growth probably would be slower in unsecured personal loans not because we do not want to lend but because of the demand," Setty said. "We are seeing in the month of October that the growth is coming back," he added.

 

Setty said the growth in the express credit business was slightly lower but hoped that it would bounce back to normal.

 

On the higher slippages in the agriculture loan segment, the SBI head said it would be contained going ahead. Setty said higher rainfall in certain areas and flooding impacted the recovery in the last two quarters. With the reservoir levels suitable for the crop, the bank expects the slippages would be contained going ahead and the upgrades would be significantly higher. 

 

Asked about SBI's views on the Supreme Court order to liquidate Jet Airways, Setty said the bank does not plan to take any big bets on the airline industry.

 

On co-lending, he said that the bank is keen on increasing the co-lending business, particularly for priority sector lending purposes. "We believe that co-lending is a good platform, but we would like to use co-lending mainly for PSL (priority sector lending). We have never used co-lending model for non-PSL. We will continue to do that. I think wherever and whichever partnership gives us access to PSL, we will pursue that," Setty said.

 

On the bank's green rupee term deposit, Setty said that it is not attracting much attention and the bank is trying to promote it. "Green rupee term deposits are not attractive. Customer awareness has to be created, if customers have to take a lower rate of interest. Probably, they are not ready for that," Setty said.

 

On the Reserve Bank of India's draft norms on the liquidity coverage ratio, Setty said the bank hopes to maintain the liquidity coverage ratio at 120% even after the norms are implemented. Currently, the bank's liquidity coverage ratio is at 129%. Setty said the bank's liquidity position is comfortable as of now.

 

Asked if the bank is considering a composite licence for its life and general insurance arms, Setty said there was no such plan. On the listing of their asset management company and the general insurance arm, SBI Managing Director Tewari said that there are no plans for that.

 

Setty said the board approval for raising INR 200 billion via long term bonds was for lending to the infrastructure sector. "This is mainly for infrastructure. We have a very significant infrastructure book and there is a good amount of interest among investors for this particular instrument. We would like to access the market and will be coming out with this," Setty said. 

 

On Friday, the bank announced a 27.9% year-on-year increase in its net profit to INR 183.31 billion in Jul-Sept. The bank aims to achieve a profit of INR 1 trillion going ahead. "Without giving forward guidance, I think we strongly believe that we have the potential to reach there. Timeline is something which we need to look at," he said.

 

The shares of the bank closed 1.9% lower at INR 843.15 on the National Stock Exchange.  End

 

Edited by Saji George Titus

 

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