We will strive to maintain NIM at 3%, says CS Setty, SBI Chairman

CS Setty Chairman SBI

State Bank of India’s (SBI) Chairman CS Setty on February 6 said that the lender will strive to maintain net interest margins (NIM) at 3 percent going ahead.

These comments came when the bank's NIM or net interest margin reduced by 21 basis points (Bps) and domestic NIMs reduced by 19 bps.

According to the investor presentation of the bank, SBI's NIM reduced to 3.01 percent in October-December quarter, from 3.14 percent in a quarter ago period and 3.22 percent in a year ago period.

Similarly, domestic NIM fell to 3.15 percent in Q3FY25, as compared to 3.27 percent in Q2FY25, and 3.34 percent in Q3FY24.

When asked about the rate cut by the Reserve Bank of India (RBI) and sustainability of margins, Setty said that repricing of deposits is an option that the bank have to defend margins in case it (rate cut) happens.

According to the Moneycontrol’s poll of economists and treasury heads across banks and market experts, hint that a brand new Monetary Policy Committee that will meet from February 4 - 7, led by Sanjay Malhotra, the new governor, Reserve Bank of India may hand out a rate cut in the upcoming Monetary Policy of Reserve Bank of India.

Being the first MPC under Malhotra, the expectation is that the repo rate cut or the benchmark lending rate fixed by the RBI could be reduced by 25 basis points (bps) from 6.5 percent to 6.25 percent in the upcoming MPC. The MPC will announce its decision on repo rate on February 7.

Further, on the deposit front, Setty added that higher CASA ratio as seen during the covid-19 pandemic is difficult now, and growth rate at that levels is also not possible.

CASA ratio of the bank dipped 198 bps on-year and 83 bps on quarter. CASA ratio fell to 39.20 percent in Q3FY25, from 40.03 percent in Q2FY25, and 41.18 percent in Q3FY24.