GuruFocus -
- Credit Growth: 14.93% year-on-year.
- Deposit Growth: 9.13% year-on-year.
- CD Ratio Domestic: 67.87%.
- Slippage Ratio: 0.51%; Retail Slippage Ratio: 0.31%.
- Credit Cost: 0.38%.
- Profit for the Quarter: INR18,331 crore, up 28% year-on-year.
- Total (EPA:TTEF) Deposits: INR51.17 trillion, up 9.13% year-on-year.
- Term Deposits Growth: 12.51% year-on-year.
- Current Account Deposits Growth: 10% year-on-year.
- CASA Growth: 4.24%; CASA Ratio: more than 40%.
- Domestic Advances Growth: 15.55% year-on-year.
- Foreign Office Advances Growth: 11.56% year-on-year.
- Net NPA Ratio: 0.53%, improved by 11 basis points year-on-year.
- Provision Coverage Ratio (PCR): 75.66%.
- Liquidity Coverage Ratio: 129% as of September 30.
- Capital Adequacy Ratio (CAR): 13.76% without profits; 14.79% with profits for H1 FY25.
- Return on Assets (ROA): Greater than 1%.
- Return on Equity (ROE): Greater than 20%.
- Return on Risk-Weighted Assets (RORWA): 2.07%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- State Bank of India (NS:SBI) (FRA:SID) reported a strong credit growth of 14.93% year-on-year, surpassing the industry average.
- The bank's profit for the quarter increased by 28% year-on-year, reaching INR18,331 crore.
- SBI's asset quality remains robust with a net NPA ratio improving by 11 basis points year-on-year to 0.53%.
- The bank's capital adequacy ratio stands at 13.76%, well above the regulatory requirement, indicating a strong capital position.
- SBI's digital banking platform, YONO, continues to grow with over eight crore customers registered, driving the bank's digital agenda.
- Deposit growth at 9.13% year-on-year lags behind credit growth, raising concerns about the sustainability of credit expansion.
- The bank's cost base remains substantial, highlighting challenges in managing compliance and establishment expenses.
- SBI's unsecured personal loan segment, Xpress Credit, has seen a slowdown in growth, attributed to demand slack and high repayment rates.
- The bank's reliance on other income, including trading gains and forex income, raises questions about the sustainability of such income levels.
- Concerns were raised about the elevated delinquency levels in the credit card segment, reflecting broader industry trends.
A: Challa Setty, Managing Director, explained that the bank aims to maintain its market share of 22% to 23% in deposits and ensure that incremental credit growth is supported by incremental deposits. The bank expects credit growth to remain at 14% to 16% and aims for deposit growth to cross 10%, with efforts to increase savings bank growth rates.
Q: What is the outlook for Xpress Credit, given the current growth rate has fallen below 10% year-on-year?
A: Challa Setty noted that the growth in Xpress Credit is expected to return, with the current month showing good traction. The bank anticipates a reasonable growth rate, although not at the previous 30% CAGR. Vinay Tonse, Managing Director, added that the busy season should help improve growth.
Q: What are the major sectors contributing to the corporate credit growth, and how is the bank planning to achieve its credit growth targets?
A: Ashwini Tewari, Managing Director, highlighted that infrastructure, renewable energy, roads, power, steel, and real estate are key sectors driving growth. The bank has a strong pipeline of proposals and is focusing on maintaining asset quality while engaging with corporates to understand their business plans.
Q: How does SBI plan to maintain its profitability and ROA, given the current economic conditions?
A: Challa Setty emphasized the bank's focus on consistency and maintaining a ROA of at least 1%. The bank aims to achieve this through operational efficiencies, digitalization, and a focus on increasing operating income, particularly from non-interest sources.
Q: What measures is SBI taking to increase its market share in deposits and credit?
A: Challa Setty mentioned that SBI is adopting region-specific strategies, focusing on growth centers for current and savings accounts, and targeting branches with negative growth trends. The bank is also enhancing its customer outreach and branch network to strengthen its deposit base.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.