State Bank of India (SBI), the country’s largest lender, expects credit growth to remain in double digits as it ramps up efforts to attract more deposits where it sees growth in line with the sector. The bank reported a 74% rise in quarterly net profit on Saturday, driven by higher loan growth and improved asset quality. Net profit rose to a record 132.64 billion Indian rupees ($1.62 billion) in June-September, beating analysts’ forecast of 105.30 billion rupees, according to Refinitiv IBES data. Net interest income, the difference between interest earned and interest paid, rose 13% to 351.82 billion rupees.
Advances grew by 18.15% while deposits grew by 9.99%. “In the current financial year, we should have loan growth of 14-16%,” chairman Dinesh Kumar Khara said at a press conference. “We also now have cash investments, which we expect to loosen. Therefore, we believe that we will support credit growth,” he said, adding that there has been an improvement in capacity utilization and business has returned to pre-pandemic levels.
The bank has term loans of 2.4 trillion rupees as it sees demand coming from sectors such as infrastructure, renewables and services. And while the bank has not set a deposit growth target, Khara said SBI will not lag behind in the industry. Indian banks posted a 17.95% year-on-year jump in loan growth in the fortnight to October 7, central bank data showed, and market participants expect growth to accelerate in the coming months. The growth of deposits in this period amounted to 9.63%.
SBI’s core net interest margin (NIM), a key measure of profitability, improved to 3.55% from 3.50% a year earlier. It expects to maintain domestic NIMs at current levels. The lender’s asset quality also improved, with gross non-performing assets (NPAs) falling to 3.52% from 3.91% in the previous three months. Net NPA also improved and fell by 20 basis points. Total provisions declined to 30.39 billion rupees in June-September from 43.92 billion rupees in the previous quarter. The bank’s capital adequacy was 13.51% compared to 13.35% a year earlier.
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