New Delhi: State Bank of India (SBI) on Saturday reported a 4.25 percent growth in its consolidated net profit in April-June quarter at Rs 19,325 crore, held back by a rise in loan loss provisions and lower growth in core income.
On a standalone basis, the profit growth was much slower at almost flat pace of 0.89 percent during the quarter at Rs 17,035 crore.
SBI Chairman Dinesh Kumar Khara, whose over four years stint at the helm will be ending soon, said the first quarter is generally slow and there were "distractions" which limited the growth.
He said the bank is confident of growth picking up in the remainder of the fiscal year, and achieving his aspiration of the largest lender reporting a net profit of Rs 1 lakh crore in FY25.
The core net interest income grew 5.71 percent to Rs 41,125 crore on the back of a 15 percent advances growth and the domestic net interest margin narrowing by 0.12 percent to 3.35 percent.
The other income declined to Rs 11,162 crore in the latest first quarter from the Rs 12,063 crore recorded in the year-ago period, and the fall was attributed by Khara to the change in regulation that led to the reclassification of investment book.
Khara declined to comment on the impact of the RBI's draft norms on liquidity coverage ratio, but pointed out that the critical number for the bank stands at 129 percent whereas it has a comfort level of taking it down till 110 percent.
The deposit growth came at 8 percent, and Khara said the bank will be able to fund the credit growth target of 15 percent even if the deposit growth is sustained at the same level. However, he added that the bank would want to increase the deposit growth to 10 percent.
He, however, made it clear that the bank will not want to compromise on NIMs in the process and hinted that more hikes in deposit rates are not in the offing. It will target to keep the NIMs in the 3.2-3.4 percent range, the Chairman said.
Khara explained that the bank has been able to manage with a lower deposit growth because it had put its accretions in the past into investment book which is now being deployed for advances.
Corporate loans grew by over 15 percent during the quarter, while retail -- the mainstay in the last few years, was slower at less than 14 percent. Khara said within corporates, it is the mid market segment which grew 20 percent where the bank sees maximum opportunity.
Large corporates have many alternatives like the bond markets to go to, Khara said, adding that the current corporate loan pipeline stands at Rs 4.62 lakh crore.
On the asset quality front, the bank witnessed fresh slippages of Rs 7,900 crore, with a major Rs 3,000 crore of it coming from personal and home loans.
Khara said a few states' inability to pay employee salaries on time led to slippages of Rs 1,600 crore but was quick to add that the amount has been recovered as the salaries came in.
The gross non-performing assets ratio improved to 2.21 percent during the quarter as against 2.24 percent in March.
The loan loss provisions jumped 70 percent to Rs 4,580 crore, which included Rs 2,488 crore for the ageing assets, Khara said, asserting that there is no challenge on the asset quality front and he does not expect the quantum of money being set aside going up under his successor C S Shetty.
Khara said the RBI's increase in risk weights on assets led to a calibration on the personal loans front, but stressed that there is no adverse impact on the quality of the book and the GNPAs continue to be under 1 percent.
The bank has formed a dedicated 500-member team of relationships managers to improve the current account deposits by engaging with private sector clients, including family offices and trusts as well, Khara said.
"We were known as a corporate lender for a long time, now we have oriented ourselves to be a corporate banker," he added.
It has also revamped the wealth management business by putting together a 2,000-member team of specialist relationship managers, he said, stressing that the benefits it will accrue will ensure that the cost to income ratio does not get impacted.
He said the bank is reluctant to sign up with a joint venture partner because of its discomfort in sharing the client data with anyone.
Its overall capital adequacy stood at 13.86 percent as on June 30, with the core buffer at 10.25 percent, Khara said, adding that at the current levels, the capital levels can sustain credit growth of up to Rs 7 lakh crore without dipping below the RBI-set minimum levels.
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