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SBI Expects 14-15% Loan Growth in FY 2024-25: Chairman Dinesh Kumar Khara


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According to the chairman of the State Bank of India (SBI), Dinesh Kumar Khara, the bank is expecting a loan growth of 14-15% during the fiscal year 2024-25. Khara explained that the bank determines its loan growth rate by considering the GDP growth rate, inflation, and adding 2-3% on top of that. Based on this calculation, SBI anticipates a loan growth rate of around 14%. However, the final loan growth rate will depend on the lending opportunities available and the bank’s risk appetite. Khara mentioned that SBI would be happy to grow at this pace if the right opportunities arise.

Deposit Growth and Loan-to-Deposit Ratio

Khara also discussed the growth of deposits at SBI. He mentioned that deposits grew by 11% in the previous year. He further explained that the bank has some flexibility in terms of excess Statutory Liquidity Ratio (SLR), which ensures that there is no pressure to raise deposit rates to support the loan-to-deposit ratio. Currently, SBI’s loan-to-deposit ratio is around 68-69%, leaving room for lending without increasing the pressure on deposit interest rates. However, Khara emphasized that SBI gives importance to deposits and aims to improve the deposit growth rate by around 12-13% this year. To achieve this, the bank recently increased the interest rate for short-term deposits.

Net Interest Margin (NIM) Outlook

When asked about the Net Interest Margin (NIM) outlook for the current financial year, Khara expressed hope that it would be around the same level as the previous year (FY24) or could have a slight movement of 2-3 basis points. In FY24, the domestic NIM of the bank stood at 3.43%, a decrease of 15 basis points, while the whole bank NIM stood at 3.28%, a decrease of 9 basis points compared to the previous year. Khara attributed the decline in NIM to the rise in rupee liquidity and dollar liquidity cost due to the tight monetary policies implemented by central banks worldwide.

Non-Performing Assets (NPAs)

Regarding Non-Performing Assets (NPAs), Khara stated that the bank aims to have a downward trajectory for both net and gross NPAs. However, he mentioned that making projections about NPAs is challenging as it is also dependent on the macroeconomy. SBI is working to insulate its books from macro stress, but providing specific guidance on NPAs is difficult. Khara added that the bank has set its credit cost guidance at 0.50%, but the goal is to keep it at the level of 0.29%. In FY24, SBI saw improvements in NPAs, with gross NPA declining to 2.24% and net NPA standing at 0.57%. The credit cost also decreased to 0.29% by the end of FY24.

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