State bank of India conducted a conference call on 18 May 2023 to discuss its financial results for the quarter ended March 2023. Dinesh Kumar Khara, Chairman of the bank addressed the call:

Highlights:

The bank has recorded highest ever net profit in Q4 and the profit has also surprised Rs 50,000 crore mark to touch all time high in FY20203. This is also the highest net profit by any bank in India.

The return on asset has been above 1% for last three straight quarters

Domestic loan growth is healthy at 15% driven by the retail advances rising 18%, agriculture 13%, SME 17% end March 2023.

The bank is targeting loan growth of 12-14% for FY2024. The bank is not required to accelerate deposit growth aggressively to fund advances growth as it has a excess SLR investments of Rs 4 lakh crore.

The bank has witnessed 16 bps increase in cost of funds in FY2023.

The bank has reduced gross NPA ratio by 119 bps to 2.78% and net NPA ratio is also reduced by 35 bps to 0.67%. The fresh slippage ratio has dipped to 0.65% in FY2023.

The restructured loan book of the bank has declined to Rs 24302 crore end March 2023, while the bank is holding provisions of 30% on restructured loan book as against regulatory requirement of 15%.

The restructured loan book is behaving well and SMA book in the restructured loan book stands at 11%

The bank does not expect much pressure on margins as much of its MCLR linked loan book is yet to reprice.

The bank is well capitalised for growth. It can fund credit growth of Rs 7 lakh crore without raising capital. The plough back of profit helps to improve CRAR. Bank is not looking to raise capital in the near term.

The other income for FY2023 was impacted due to MTM loss of Rs 7000 crore in Q1FY23, further impacting cost to income ratio. Thus, bank expects an improvement in cost to income ratio for FY24.

Xpress credit portfolio is unsecured, but its high quality as it primarily related to corporate salary accounts. Around 83% of customers are from armed forces and government employees and an additional 12% of customers are employed at reputed corporates.

The bank is focused on expanding the contribution of fee income to be driven by segments such as cross-selling, forex income and loan processing fees.

The bank aims to increase the loan processing fee income from the current Rs 3600 crore in FY23 to US$ 1 billion in the medium-term.

The bank does not have plans to raise the savings account card rate.

The operating expenses of the company were boosted by high provision for wage revision provisions (at the rate of Rs 500 per month with Rs 1500 crore in Q4FY23 and Rs  2500 crore in FY2023, provisions for performance linked incentive of Rs 600 crore and increase in pension provisions. About 80-90% of the staff costs are driven by pension liabilities.

The overhead expenses were driven by investment in technology, insurance and GST.

The bank is awaiting clear guidelines on ECL from the RBI and it is well prepared for it

The bank aims to grow digital spending on a sustainable basis and become the digital bank of choice.

The bank expects global business to increase further due to increase in exports going ahead.

YONO platform is contributing 64% of the new saving account addition. It will see further upgrades in the upcoming quarters.

Subsidiaries have been performing well creating value for the stakeholders.

No plans for listing of any subsidiaries.