14-16% credit growth expected for FY23: SBI chief

The country’s largest lender, the State Bank of India (SBI), on Saturday announced a 74% increase in its autonomous after-tax profit to 13,265 crore rupees in the quarter ended September 2022, from 7,627 crore in rupees in the quarter of the previous year.

This is the highest quarterly net profit ever for the lender, thanks to healthy growth in net interest income (NII) and lower bad debt provisioning.

Net interest income, which is the difference between interest earned and interest spent, increased by 12.83% to Rs 35,183 crore from Rs 31,184 crore last year. The growth was driven by improved credit drawdowns across all segments and strong asset quality, bank chairman Dinesh Khara told reporters.

The domestic net interest margin (NIM) improved by 5 basis points (bps) to 3.55%.

On the asset quality front, the gross non-performing asset ratio (GNPA) in the July-September 2022 quarter improved to 3.52% from 4.9%. Net NPAs fell from 1.52% to 0.8%.

The improvement in asset quality was reflected in the bank’s cost of credit which fell to 0.28% from 0.43%.

New slippages during the quarter amounted to Rs 2,399 crore compared to Rs 4,176 crore in the second quarter of FY22.

Loan loss provisions fell 25.5% to Rs 2,011 crore

of Rs 2,699 crore in the prior year quarter.

The bank recorded healthy credit growth of 19.9%, with business loans increasing by 21.18% and personal loans by 18.84%. Khara expects credit growth of 14-16% in the current fiscal year.

“There is an improvement in capacity utilization and the kind of demand we have seen on the pitch gives us confidence,” he said. The equity ratio (CAR) stood at 13.51% against 13.35%.

Khara said the bank remains very well capitalized and internal accrued liabilities will be more than sufficient to meet normal business growth needs.

Speaking on international trade settlement in rupees, its managing director (international banks, global markets and technology), CS Setty, said the lender had contacted its 250 correspondent banks for reconciliations but, so far, none special Vostro account has been opened.

“There are several banks that have come back to us for reconciliations. We need regulator approval here and they also need approval from their regulators. It’s all in the process,” Setty said, adding that the lender is pursuing him very seriously.

On July 12, the RBI had set up a mechanism to settle international trade in rupees “to promote the growth of world trade with a focus on India’s exports and to support the growing interest of the community world trade for the rupee”.