SBI Chairman Q&A: Here’s what Dinesh Khara said on bank’s credit and deposit growth, NPA movement and more

The bank has plans to register a credit growth of 15 percent in the fiscal year (FY) 2023-24, said Chairman Dinesh Khara.

State Bank of India, the country’s largest bank, on August 4 declared a 178 percent growth in net profit at 16,884 crore for the April-June FY24 quarter from Rs 6,068 crore last year.

Also read: State Bank of India Q1 Results: Net profit grows 178% to Rs 16,884 crore, asset quality improves

In a post-results media conference, Chairman Dinesh Khara highlighted that the bank is looking at a credit growth of 15 percent and deposit growth of 13 percent in FY24.

Khara also said that the lender has a Rs 3.5 lakh crore credit pipeline in place for lending to corporates in the current financial year. Here are the details from the session.

On CASA

The fall in the CASA (current account and savings account) ratio is perhaps a trend in the banking industry. All other banks have also witnessed this.

And as far as we are concerned, the drop in CASA is much lower compared to what the competition has seen.

Our effort would be to improve the CASA with the current account component, because when it comes to savings, these days with the kind of product variants available, people normally sweep their balances. As the economy develops, this is the tendency which will be seen.

On recoveries

In the April-June FY24 quarter, the bank recorded recoveries of about Rs 1,200 crore, whereas last year around the same quarter, this was Rs 500 crore more. We had some reasonably higher value of recoveries last year and now that the stock left out is not all that big a number, and that is a reason why recoveries are being affected.

Also read: SBI targeting 15% credit growth this fiscal, says Dinesh Khara

On asset quality

Underwriting is a very important component on the retail side of business and we have worked well on it. Also, we have a very robust control and follow-up mechanism. So that is nothing but the effective machinery on the ground to make the recoveries.

Slippages are not coming from the running accounts. And for that matter, even the stock of our stressed portfolio has also come down significantly.

Corporate, retail and SMEs (small and medium enterprises) do not have anything. Some slippages have come from SME and agri, and there also we could pull back a significant portion.

Also read: Don’t see any stress in SBI’s corporate loan book: Chairman Dinesh Khara

On credit and deposit growth

We are looking at a 14 to 15 percent credit growth. Currently, we recorded a growth of 13.90 percent. Our international book will be very selective and we may not grow as we would be growing in the domestic market for the simple reason that the international markets are very, very choppy, and we can take care of the quality of the risk.

We are looking at growing in retail, SME and also into agri. And when it comes to corporate, we are open to all kinds of opportunities, maybe renewable, maybe services, maybe infrastructure like roads, construction, but it should meet our risk appetite.

On the deposit growth front, we have grown at 12 percent and we'll try to inch it up further, maybe to the extent of 13-14 percent.

On net interest margin (NIM) contraction

Also read: SBI gains on almost three-fold jump in Q1 net profit

The reason is that in the last quarter of the previous year, we had about Rs 850 crore worth of interest coming on income tax refunds. These one-offs are ones which are normally seen in the last quarters.

Looking at the core business model of the bank, there is no challenge and we are at 3.47 percent on a year-on-year basis.

NIM is always dynamic because yield on advances will keep on changing and similarly the cost of deposit will also keep on changing, cost of resources will keep on changing. But yes, of course, we are very mindful that we should try to have a decent NIM, which also means that we should not unnecessarily overprice our borrowers and we should not underpay our depositors.

On YONO and digital growth

We have around 6.5 crore digital banking users. These are not just users of YONO (You Only Need One, the bank’s integrated digital offering) but also across our other digital platforms.

If at all there's a need for digital and technology upgradation, resources are there.

Also, we are investing into analytics and acquiring more customers on the asset side through the digital mechanism. Last year around the first quarter, we had underwritten about Rs 20,000 odd crore through digital. This year, it's about Rs 29,000 crore that we have already underwritten.

On slippages

If we look at that trend, it looks a little on the higher side. Last year in the same quarter, we had slippages of around Rs 9,700 crore and from there, it has come down to about Rs 7,600 crore. So whatever recoveries we are affecting in July, it will actually get reflected in the September quarter. To that extent, the subsequent quarters will have the impact of the recoveries of the previous quarter.