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Published: July 15, 2024
Updated: July 15, 2024

State Bank of India

Customer base touches 50 crore mark GNPA falls to lowest level in 10 years

State Bank of India, the largest commercial bank in the country, has reported remarkable improvement in its asset quality during fiscal 2024. Indicating this at the conference call organized to discuss the performance of the bank during fiscal 2024, Dinesh Kumar Khara, the outgoing Chairman, revealed that the GNPA ratio of the bank has reached its lowest level in more than 10 years. The NNPA ratio also declined sharply to 0.57 per cent by the end of March 2024. “Now, the bank is focused on maintaining the best asset quality and the credit cost as low as possible,” he added.

Deposits have increased by 11% and term deposits by 16%. The bank aims to contain the share of wholesale deposits, while it has enough liquidity. The excess SLR of the bank stands at Rs 3.7 lakh crore, while the liquidity coverage ratio was at 124% at the end of March 2023. The agriculture and MSME loan book size has touched Rs 20 lakh crore, of which retail stands at Rs 13.5 lakh crore, agriculture Rs 3 lakh crore and MSME at Rs 4.4 lakh crore at the end of March 2024. The corporate loan book also surged by 16% at the end of March 2024.

DIGITAL THRUST

Maintaining that “the bank is taking a lot of initiative on the digital side,” Mr Khara added that “about 61% of the saving accounts are opened digitally.” The credit cost of the bank has declined by 3 bps to 29% in FY2024. The bank has well provided on the stressed book with a provision coverage ratio at 91.89% at the end of March 2024. With regard to guidelines on provisioning for project loans, the bank does not expect any big impact. It is sitting on non-NPA provisions of Rs 32,000 crore.

The miscellaneous income of SBI was boosted by recoveries income and dividend income from its subsidiaries. The bank has transferred 24 accounts with an exposure of Rs 7,451 crore to NARCL in FY2024. It is targeting loan growth of 13-15% for FY 2025. It is also expecting additional employee expenses of Rs 500 crore per month and Rs 6,000 crore annually for FY2025. It aims to maintain margins at the current level in FY2025.

According to Mr Khara, as the ROE of the bank is above 20% against the loan growth of 15%, it has enough headroom to plough back the capital. With the current capital position, it can grow its balance sheet by Rs 7 lakh crore, translating to 21% growth. As per the bank, the growth capital will never be a constraint for the bank as well as group companies. SBI is focused on maintaining the best asset quality and keeping the credit cost as low as possible. The bank has reduced the agriculture sector in NPAs from 15% to 9% and aims to further reduce it to 6 to 8%. The bank wants SBI General Insurance to grow further before it goes for an IPO.

According to Mr Khara, the bank has recorded recoveries of Rs 6,900 crore in FY 2024. There are no lumpy accounts left for recovery and recoveries ahead would be mainly contributed by granular accounts. About 13% of the loan book is underwritten through digital channels and the bank expects it to grow further going forward. About 36% of the loan book is linked to MCLR, 27% to TBLR, 21% to fixed rate, and 14% to others.