SBI Anticipates 14-15% Increase In Credit Portfolio For FY 2024-25: Chairman Khara

In FY24, the bank's domestic NIM was 3.43 per cent, a decrease of 15 basis points from the previous year, while the overall bank NIM stood at 3.28 per cent, down by 9 basis points year-on-year

The State Bank of India’s (SBI) chairman, Dinesh Kumar Khara, anticipates a loan growth of 14-15 per cent for the fiscal year 2024-25, in line with the current economic growth trajectory. In a conversation with PTI, Khara said, "Normally the way we look at it is that the GDP growth rate plus inflation and 2-3 per cent over that. That gives us the number around 14 per cent or so.”

"Hence, 14-15 per cent credit growth depends upon the opportunities available for lending, and it meets our risk appetite. We will be happy to grow at this pace," he added. Regarding deposits, he noted a growth of 11 per cent in the previous fiscal year.

"And we have some elbow room available in terms of excess SLR and, which ensures that we don't have any pressure on us to raise the deposit rates for supporting our loan-to-deposit ratio," he said.

The bank holds an excess of Statutory Liquidity Ratio (SLR) ranging between Rs 3.5 lakh crore and Rs 4 lakh crore. "Incidentally, I may add here that our loan-to-deposit ratio is around 68-69 per cent only. That leaves enough room for us to lend without having pressure on the deposit interest rates,” he highlighted.

"We always give importance to deposits. That is the reason why we increased the interest rate for the short-term deposits recently because we felt that there's room for improvement...we should improve our deposit growth rate to some extent during this year. And our effort would be that we should at least grow around 12-13 per cent this year,” he said.

Last month, SBI increased the fixed deposit rate by up to 75 basis points on select short-term maturities.

The rate for retail term deposits with maturities ranging from 46 to 179 days increased by 75 basis points to 5.50 per cent from 4.75 per cent.

When asked about the outlook for Net Interest Margin (NIM) in the current financial year, Khara expressed optimism, noting it would likely remain around the same level as in FY24, with potential movements of 2-3 basis points.

In FY24, the bank's domestic NIM was 3.43 per cent, a decrease of 15 basis points from the previous year, while the overall bank NIM stood at 3.28 per cent, down by 9 basis points year-on-year.

The increase in rupee liquidity and dollar liquidity costs, driven by tight monetary policies implemented by central banks globally, was a significant factor influencing the NIM during FY24.

Regarding Non-Performing Assets (NPAs), Khara mentioned, "We should have a downward trajectory both for net and gross. However, it is very difficult to make any projections as it is also a function of the macroeconomy." The bank is taking steps to safeguard its portfolio against macroeconomic stress, yet providing specific guidance on NPAs remains uncertain.

Khara further stated, "Our guidance as far as our credit cost is concerned, we have kept it at 0.50 per cent, but our effort is to keep it at the level of 0.29 per cent."