State Bank of India conducted a conference call 04 November 2023 to discuss
the financial results for the quarter ended September 2023. Dinesh Kumar Khara,
Chairman of the bank addressed the call:
Highlights:
The bank has recorded 8% growth
in the net profit to Rs 14300 crore in Q2FY2024. The return on asset has
improved 34 bps yoy to 1.1% in H1FY2024 and 3 bps to 1.01% in Q2FY2024. The
bank has recorded industry leading RoE of over 22% in H1FY2024.
The bank has exhibited an increase
in the margins on yoy basis with improvement in the yield and credit offtake. The
net interest margin stood at 3.29% in Q2FY2024. The bank expects to maintain
the NIMs at current level going forward, which have been impacted due to
increase in cost of funds.
The bank has recorded 21%
growth in the non-interest income driven by 10% growth in the core fee income
and increase in profit on sale of investment.
The operating expenses of
the bank have surged 35% in Q2FY2024 mainly on accounts of accelerated provisions
for wage revision at the rate of 14% from 10% earlier to leading to additional
provisions of Rs 3417 crore in Q2 and impacting the operating profit. The wage
revision is effective from November 2022.
The credit growth at 13.2% is
driven by all segments with SME growth at 22.8%, retail at 15.7%, agriculture
14.1%, while the corporate credit growth was moderate at 6.6% end September
2023.
With regard to the stress in
the unsecured loan portfolio as indicated by the RBI, the express credit
portfolio of the bank is a very quality portfolio with 82.6% of the customers
from the armed forces and 12% from the reputed corporate
The express credit portfolio
accounts for 25% of the retail portfolio of the bank at Rs 3.2 lakh crore and its
GNPA ratio stands at 0.69% end September 2023.
The domestic deposits have
increased by 11.8% driven by the current account and the term deposits. The saving
account deposits have increased by 4%.
The foreign offices of the
bank have crossed an important milestone of Rs 5 lakh crore loan book.
The bank has continue to
improve asset quality reducing GN{A ratio by 97 bps yoy to 2.55% which is one
of the lowest in the last one decade. The net NPA ratio has also declined 16 bps
yoy to 0.64% end September 2023.
The fresh slippage ratio has
moderated to 0.7%. The credit cost was low at 0.22% in H1FY2024.
The bank has improved the provision
coverage ratio to 91.93% end September 2023. The bank has reached 99.5% PCR on corporate
loan book.
The restructured loan book
of the bank stood at Rs 22854 crore end September 2023 with 50% provisioning.
The bank is well capitalized
and the capital adequacy ratio including the profits for H1 stands at 15.32%
end September 2023.
The bank is strongly
focusing on the digitalization and 61% of the saving accounts were sourced
digitally.
The bank has earned Rs 190
crore income on yoy platform through sales of third party products.
The subsidiaries of the
banks are performing well they are the leaders in their businesses and the
company would continue to nurture these subsidiaries.
Bank is targeting loan
growth of 12-14% for FY2024
The corporate loan growth is
expected to pick up to low digit.
The international loan book
is expected to grow at steady space.
The bank expects to maintain
the margins in the international book at current level for foreseeable future.
The bank has added 40 lakh saving
accounts in Q2FY2024 on daily basis. The bank is adding 30000 accounts on daily
basis through yono platform.
In the corporate book, the
bank has Rs 3.4 lakh crore of sanctions in the pipeline and Rs 1.4 lakh crore
of loans in the disbursements pipeline.
The share of MCLR linked
loan book stands at 38%, fixed rate 31% and EBLR at 27%.
The bank expects banking
industry credit growth in the range of 16 to 17% in FY2024. The banking credit
growth is robust at 19.3% compared with 16.7% growth year ago.
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