SBI targeting at least 15% loan growth in FY23, says Chairman Dinesh Khara

State Bank of India Chairman Dinesh Kumar Khara

State Bank of India (SBI), the country’s largest lender by assets, is targeting a loan growth of at least 15 percent in this financial year, chairman Dinesh Kumar Khara told CNBC-TV18 on September 9.

“At least for the current (financial year) I can say with some bit of certainty (that) the way things are, I am hoping that we should be in a position to record at least 15 percent growth in the loan book,”  Khara told the television channel.

The bank’s current retail loan growth was “quite sustainable.” More so, loan growth was uniform across retail segments such as personal loans, and auto loans, he said.

On the corporate side, too, SBI’s sanctioned project loans stood at Rs 1.5 lakh crore to Rs 1.7 lakh crore, he said. About 70 to 75 percent of these projects were from the private sector.

The bank was seeing good traction from renewable energy and electric vehicle segments, the chairman added.

SBI’s loan growth stood at 14.9 percent in April-June, up from 11 percent in the previous quarter and 5.8 percent in the same quarter of the last financial year.

Most banks are aiming for a higher credit growth this fiscal as the economy picks up pace and credit growth expands.

Also read: Bankers set eyes on double-digit loan growth in FY23 as credit demand makes comeback

Guidance

Khara said on September 9 that the state-run lender was targeting credit costs to be less than 100 basis points in FY23. One basis point is one-hundredth of a percentage point.

As far as net interest margins are concerned, SBI expects a range of 3.15 percent and 3.20 percent to hold. SBI’s NIMs stood at 3.23 percent in the April-June quarter.

The bank had raised Rs 6,800 crore through additional tier 1 bonds, Khara said. It would raise additional funds via tier 2 bonds.

The state-run lender expected 100 bad loan resolutions to happen through the bankruptcy court or the National Company Law Tribunal, the chairman said. So far in FY23, there have been 80 liquidations, he added.

On August 6, SBI reported a net profit of Rs 6,068 crore for the June quarter, missing the Street estimates by a wide margin as treasury losses eroded profitability. Beyond the treasury hit, SBI’s core performance was resilient.

Net interest income, the difference between the interest income the bank earns from its lending activities and the interest paid to depositors, grew by a healthy 12.87 percent to Rs 31,196 crore for the quarter on the back of a robust 14.9 percent loan growth and stable margins.

Provisions toward bad loans declined, as asset quality improved. Provisions declined 15 percent to Rs 4,268 crore for the three months ended June 30, aiding net profit growth.

SBI’s gross bad loans ratio improved from the year-ago period and its already strong provision cushion strengthened further.

The total pile of gross bad loans declined 15 percent from a year ago to Rs 1.13 lakh crore as of June end. Gross bad loans formed 3.91 percent of the loan book as against 5.32 percent in the same quarter of the previous financial year.