State Bank of India (SBI) accelerated its home loan growth by nearly Rs 1,800 crore in December as against Rs 1,500 crore recorded in November, 2012. The single-month expansion, which the bank derives after subtracting loan repayments from disbursals is perceived to be the second all time high growth. The bank is also mulling a cut in base rate.
India's largest lender State Bank of India (SBI) accelerated its home loan growth by nearly Rs 1,800 crore in December as against Rs 1,500 crore recorded in November, 2012. The single-month expansion, which the bank derives after subtracting loan repayments from disbursals is perceived to be the second all time high growth, a source told moneycontrol.com.
SBI's outstanding for home loans stood at around Rs 1.13 lakh crore as December 31, 2012. Bruised with asset quality bouts from corporates, the lender decided to focus retail loans wherein the risk of defaults is mitigated. Suave
"Our retail book is contributing significantly. We are currently offering the cheapest home loan rate at 10% p.a. The recent ad campaign run by the bank has yielded results supported by our product quality. This has been made possible right sourcing, processing and sanctioning of home loan products. Each segment is working in sync with the other," said a bank insider who did not wish to be named.
The banking behemoth has of late dolled out limited period discounts on its home loans. Earlier, SBI halved its processing fees, now available at a little more than Rs 3,000 for home loans upto Rs.75 lakh.
In case of shifting loans from old rate to the new rate, the switch-over fee is reduced from 1% to 0.56% on the outstanding amount. Home loan borrowers of other banks now have to pay an uniform conversion fee of just Rs 1,000 only irrespective of any loan amount. The lender also removed the requirement of a guarantor for buying home loans.
All these factors, according to market analysts, have prompted many borrowers to look at SBI for home loans even though the processing time is higher than that of private sector banks. Emboldened by the response, SBI has extended the limited period offer from December 31, 2012; to March 31, 2013.
Meanwhile, the bank is deliberating over further cut in base rate, which was last slashed by 25 basis points to 9.75% on September 18, 2012. In its last asset liability committee meet (ALCO), the issue was discussed. The bank may soon take a final call based on three key areas: cost of funds, net interest margin and a cue for RBI’s January policy.
"The chairman (Pratip Chaudhuri) himself is keen on cutting rates. He wants to encourage borrowers to venture into taking advantage of lower rate of interest. As the largest bank in India, SBI assumes the moral responsibility for nation’s overall economic growth," said an SBI official with the direct knowledge of ALCO meet.
The bank is also in the process of short-listing consultants to introduce a full-swing online home loan application system by April, 2013. This will not only enable borrowers to apply for home loan online but also they can check their status. Customers may only need to visit the branch at the time of submitting physical documents.
SBI stock price
On December 19, 2014, State Bank of India closed at Rs 304.25, down Rs 2.8, or 0.91 percent. The 52-week high of the share was Rs 2977.85 and the 52-week low was Rs 287.20.
The company's trailing 12-month (TTM) EPS was at Rs 15.70 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 19.38. The latest book value of the company is Rs 158.43 per share. At current value, the price-to-book value of the company is 1.92.
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