Can add one SBI to ourselves every six years if we grow at 12% CAGR: SBI chairman CS Setty

With just weeks to enter FY26, what would be your growth forecast for the bank?

Credit growth has been good for SBI. The system growth probably would moderate to around 11 - 12 percent in our assessment. SBI may have two percentage points more (growth). We are sticking to our full year guidance of 14–16 percent for FY25. With a lot of measures, both on the budgetary and monetary fronts, we assume and expect that credit growth will continue at the same pace next financial year.

Around mid-2024, we saw corporate growth catching up with the retail segment. Do you expect the trend to continue?

In our books, almost all segments, except unsecured personal loans, have grown secularly. On retail loans, predominantly, home loans have been growing pretty good. Growth rates across the segments, including corporate, is going to be robust. You are right that retail loans have been growing faster than corporate loans. I think we are one of the outliers where the corporate growth is also significant. In Q3, our corporate loans have grown by 14.5 percent year on year (YoY) and have good visibility on the capital expenditure and working capital loans.

Which segments, in your view, look favourable and where would you think it's time to pull back?

Every sector has good asset quality today. We are going through the most benign asset quality cycles. This is the time to put some confidence in the system and start looking at lending to sectors like agriculture, SME, retail and corporate. Definitely, there were some concerns on the unsecured personal loan front. Some of the regulatory measures and re-look at the underwriting standards on unsecured personal loans have slowed down growth.

But in our overall lending book, we do not see reasons to pull back. Whichever sector is requiring credit, everybody is interested in lending to them. The Union Budget had lot of nuanced approach in ensuring that consumption demand is pushed, credit to SMEs are available, and the agriculture sector is getting the required attention. These elements probably will spur better growth rates, and, resultantly, better credit growth.

SBI has been a big anchor in the banking system to pitch in and do some critical acquisitions at various points in time. If given a chance to decide on your M&A actions independently, would it be different?

It’s a hypothetical question. There's no correct or wrong answer to this. I believe that we have a fairly large size now, and I don't think there is any M&A opportunity. The banking system should be robust, and we should not have an opportunity to do that. We would like to grow organically. If SBI is growing at 12 percent balance sheet rate, with the compounding effect, we can add one SBI to ourselves every six years. We are busy doing our own business internally, and, organically, there is a great potential for this organisation.

Despite having one of the healthiest credit-deposit ratios in the industry, you are relentlessly on the pedal when it comes to deposit growth. Do you see this momentum continuing in FY26?

Deposits is a franchise for us. When you have 22,700 branches and growing, these branches primarily mobilise the savings of the society. Lots of investors also ask us that when you have such a healthy CD ratio, why are you still acquiring (deposits). It's important that (when) depositors come and trust us and want to keep (money) with us, we do not want to turn them away. Even during COVID, when nobody wanted deposits and deposits were flowing to us, we never turned back.  We have adequately compensated the customers. I don't think we will move away from deposit mobilisation.

You are giving a tough run to private players in terms of your return profile. Does that leave you with a lot of satisfaction, and where do you want to take it forward?

Our satisfaction comes from the fact that we stayed relevant in the changing times. That is important. We are a listed organisation and we always strive to ensure that all stakeholders (shareholders, customers and employees) are taken care of. Operating at scale and giving this kind of returns is (something) we feel satisfied. We have done a good job in terms of creating shareholder value. When operating at scale, maintaining the best-in-industry asset quality is also something which needs to be recognised. Most of the investors and analysts recognise that we are the gold standard in asset quality, and we make an attempt to ensure that we maintain the asset quality and the return profile through the cycles. Even if the cycle turns, we should be able to maintain a long average on RoA of more than 1 percent and RoE of more than 15 percent.

We are going through a round of rate cut cycle. How would you plan to defend your margins?

On the cost side, the staff costs are broadly rigid for us. What we are focusing on is how we use various income levers available to us, whether it is core income, other income, treasury income or even recoveries. If the cost income ratio is contained (at 50 percent), it would translate to margins. We will definitely look at maintaining the net interest margin at 3 percent.

SBI was on the forefront to bring in a lot of lateral hires to the bank. How do you see this shaping up as a standard practice in 5-10 years from now?

Some of the roles are frequently changing, and we may not be able to train our people to take up certain roles and deliver readily. We will continue lateral recruitment for some of the critical roles, either in cyber security, network management or core IT functions. We are taking almost 1,500 people in the current year, out of which 200 - 300 will be for highly specialised jobs like data scientists, UI, UX specialists, network engineers and data architects. This will continue.

The recent monetary policy comments from the governor gave some relief to banks on liquidity coverage ratio (LCR), expected credit losses (ECL) and project finance guidelines. What are your thoughts on this?  

A lot of suggestions have been given on the draft guidelines. RBI has been quite receptive to those suggestions. One of the important outcome of the (RBI) governor's clarification is that the overhang of these guidelines being implemented or otherwise has, at least, been put to rest. It's a positive.