SBI projects 14-15% credit surge in FY: Chairman Khara

18 Jun 2024 , 11:04 AM

Given the current economic growth rate, SBI’s chairman Dinesh Kumar Khara predicts 14-15% loan growth in fiscal year 2024-25. “Normally, we look at it as the GDP growth rate plus inflation, plus 2-3%. That gives us a figure of about 14%,” Khara told PTI in an interview.

“Hence, 14-15% credit growth depends on the opportunities for lending, and it satisfies our risk appetite. “We’ll be happy to grow at this rate,” he remarked.

He stated deposits increased by 11% last year.

“And we have some elbow room available in terms of excess SLR and which ensures that we don’t have any pressure on us to raise the deposit rates for supporting our loan-to-deposit ratio,” he stated.

The bank has an excess Statutory Liquidity Ratio (SLR) of ₹3.5 to ₹4 lakh crore.

“Incidentally, I would like to point out that our loan-to-deposit ratio is only around 68-69%. That gives us adequate room to lend without putting pressure on deposit interest rates.

Nonetheless, he continued, “We always prioritise deposits. That is why we just raised the interest rate on short-term deposits since we believe there is still potential for improvement…we should enhance our deposit growth rate to some amount this year. And we expect to grow by 12-13% this year.”

Last month, SBI increased the fixed deposit rate on some short-term maturities by up to 75 basis points.

For retail term deposits of 46-179 days, the rate raised by 75 basis points to 5.50% from 4.75%.

When asked about the Net Interest Margin (NIM) prediction for the current fiscal year, Khara voiced hope, stating that it will be around the same level as in FY24, with a possible 2-3 basis point shift here and there.

The bank’s domestic NIM was 3.43% in FY24, down 15 basis points (bps), while the overall NIM was 3.28%, down 9 basis points year on year.

The increase in rupee and dollar liquidity costs as a result of tight monetary policy implemented by central banks throughout the world had a significant impact on NIM in FY24.

In terms of Non-Performing Assets (NPAs), Khara stated, “We should see a decline in both net and gross. However, making forecasts is extremely difficult because it is also influenced by the macroeconomic environment.”

The bank is attempting to protect its book from macro stress, but it is impossible to provide any guidance on NPAs.

“Our guidance as far as our credit cost is concerned, we have kept it at 0.50% but our effort is to keep it at the level of 0.29%,” he stated.

SBI’s gross NPA fell to 2.24%, an increase of 54 basis points over the previous FY23, while its net NPA remained at 0.57%, an improvement of 10 basis points year on year. The credit cost also reduced by 3 basis points to 0.29% at the end of FY24.

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