State Bank of India
NSE:SBIN
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State Bank of India
Earnings Call Analysis
Q1-2025 Analysis
State Bank of India
The global economic activity has gained strength in recent months, with notable advancements in both advanced and emerging markets. Despite the progress, inflation targets are still being approached slowly, with central banks maintaining close watch on growth trajectories and labor markets. Domestically, India's growth momentum has accelerated, driven by a favorable monsoon and increasing investment announcements across various sectors such as non-renewable energy, real estate, and electronics.
State Bank of India (SBI) has shown strong performance with a net profit of INR 7,035 crores in Q1 FY25, marking a 0.90% increase year-over-year. Operating profit grew by 4.55% to INR 26,449 crores. The return on equity (ROE) stood at 20.98%, and the bank's cost-to-income ratio improved by 95 basis points to 49.42%. These figures underscore SBI's robust profitability and resilience despite economic fluctuations.
SBI's net interest income increased by 5.71%, thanks to improved yields and continued credit offtake. The operating expenses rose only marginally by 0.65%, demonstrating effective cost management. Despite a 45 basis point rise in the cost of deposits, the net interest margin (NIM) only dropped by 11 basis points, indicating prudent financial strategies.
The bank's domestic advances exhibited robust growth, expanding by 15.55%, with retail, agricultural, and MSME advances collectively surpassing INR 21 trillion. Notably, retail personal advances totaled INR 13.7 trillion, agriculture advances reached INR 3.09 trillion, and SME advances were at INR 4.43 trillion. The corporate segment also demonstrated healthy growth with an almost 16% year-over-year increase.
The bank has strategically allocated provisions, with INR 1,940 crores for slippage, INR 2,473 crores for aging provisions, and INR 106 crores for agricultural provisions, maintaining a disciplined approach to managing potential future risks.
SBI's digital banking initiatives continue to gain traction, with approximately 48 crore customers registered on YONO, the bank's integrated digital platform. YONO accounted for 63% of new regular savings account openings in Q1 FY25. Through YONO Business, the bank also witnessed significant engagement, with close to 29 lakh users.
Deposits grew by 8.18% year-over-year, with term deposits rising by 12.20% and CASA deposits by 2.59%. SBI's liquidity position remains strong, with a liquidity coverage ratio of 129%, comfortably above regulatory requirements. The bank is well-positioned to support continued credit expansion with a domestic credit-deposit ratio of 69.28%.
Looking ahead, SBI anticipates a 15% growth in credit across all segments. The bank aims to maintain its NIM at current levels, with potential variations of up to 10 basis points. Capital adequacy remains robust at 13.86%, with a CET1 ratio of 10.25%, providing sufficient headroom for future growth. The bank has also received board approval to raise INR 10,000 crores in Tier 1 capital and INR 15,000 crores in Tier 2 capital, ensuring a solid foundation for sustained expansion.
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Namaste, everyone, and good evening, ladies and gentlemen. My name is Sanjay Kapoor, and I am the General Manager of Performance Planning and Review Department of the Bank. On behalf of State Bank of India, I am delighted to welcome the analysts, the investors, colleagues and everyone present here today on the occasion of declaration of the financial results of the bank for quarter 1 of financial year '25.
I also extend a very warm welcome to all the people who are accessing the event through our live webcast. We have with us on this stage, Chairman, Shri Dinesh Khara at the center. Our Managing Director, International Banking, Global Markets and Technology, Shri C. S. Setty, our Managing Director of Corporate Banking and Subsidiaries, Shri Ashwini Kumar Tewari; our Managing Director, Retail Business and Operations, Shri Vinay M. Tonse; our Deputy Managing Director of Finance, Shrimati Saloni Narayan. Our Deputy Managing Directors, heading various verticals and Managing Directors of our subsidiaries are seated in the front row of this hall. We are also joined by the Chief General Managers of different verticals and business groups.
So to carry forward the proceedings, I'll request our Chairman, sir, to give a brief summary of the bank's quarter 1 FY '25 performance and the strategic initiatives undertaken. We shall thereafter state that we'll go to the question-and-answer session. However, before I hand over to the Chairman, sir, I would like to read out the safe harbor statement. Certain statements in today's presentation may be forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcomes may differ materially from those included in these statements due to a variety of factors. Thank you.
Now I would request Chairman sir to make his opening remarks.
Good evening, friends. Thank you very much for taking your time and joining us for this analyst meet post announcement of the quarter 1 financial year '25 results of the bank. At the outset, I would like to thank all our stakeholders, including our customers, shareholders, employees, and all concerned for their support and helping us in creating sustainable value, not only for the bank, but also for the economy as a whole.
I will first start with a brief description of the present, global and domestic economic scenario and will then discuss the bank's performance. In the last few months, the global economic activity appears to be strengthening across advanced economies and emerging market economies. Global trade is gathering momentum. Inflation is approaching targets, but the pace of disinflation has somewhat slowed down. Center banks are closely monitoring the growth trajectories, employment and labor markets and price trends. With U.S. Fed, they expected to have a 25 basis point rate cut in September '24. There is a huge, I would say, this is very positive for the global economy, and it is -- it all goes very well.
As far as domestic economy is concerned, the second quarter of financial year '25, has begun with gaining growth momentum. The benign monsoon pattern and its accelerated distribution of late should smoothen the inflationary expectations in the medium run. Latest numbers show that scheduled commercial bank credit growth was around 14%, while the deposit grew at about 11%. For the third consecutive year till now, the credit growth has been higher than the deposit growth.
New investment announcements, which were around INR 10 trillion during 2021, has improved to about INR 37 trillion in the last 2 years. Major industries where new announcements have been made include nonrenewable energy, real estate, including housing, electronics, renewable basic metal in organic chemicals, et cetera. The unit budget announcements are positive for the markets. The thrust to the consumption revival, PM Surya Ghar Muft Bijli Yojana, PMAY Urban, MSME and start-up agriculture and boost to the infrastructure throws up considerable opportunities for the banks.
As far as we, at State Bank are concerned, we have once again delivered excellent numbers. I'm happy to share that our net profit for the quarter 1 of financial year '25 is at INR 7,035 crores and shows an increase about 0.90% over quarter 1 of financial year '24. Operating profit at about -- at INR 26,449 crores, has increased by 4.55% Y-o-Y. Bank continues to report ROE of greater than 1%, which is at 1.10% for quarter 1 of financial year '25. The ROE of the bank for the quarter 1 of financial year '25 is at 20.98%. The cost-to-income ratio of the bank is at 49.42% for the first quarter of financial year '25 and shows an improvement of 95 basis points over quarter 1 financial year '24.
Net interest income for quarter 1 financial year '25 has increased by 5.71% Y-o-Y on the back of the improvement in yields and continuing credit offtake. Operating expenses have increased marginally by 0.65% Y-o-Y. We believe sustaining our profitability at this level highlight the resilience of the underlying value drivers of the bank. As far as deposits are concerned, our deposits have grown by 8.18% Y-o-Y. And term deposits have grown by 12.20% Y-o-Y. CASA deposits have grown by 2.59% Y-o-Y, and we have taken several steps to strengthen our liability franchise.
I'm pleased to share that the credit growth continues to be robust across all the segments. Our domestic advances grew at 15.55%. And the Retail, Agri and MSME advances have crossed the number of INR 21 trillion during first quarter of financial year '25. Out of the world, the retail personal advances constitute about INR 13.7 trillion. Agri advances at INR 3.09 trillion and SME advances at INR 4.43 trillion, they are growing at 13.60%, 17.06% and 19.87% respectively. The corporate segment is also showing healthy growth of almost 16% Y-o-Y. Our foreign offices have continued to perform well with advances growing at 14.41% and deposit growing at 10.48%. Our liquidity position is comfortable with the liquidity coverage ratio being about 129% as on 30th June '24, which is well above the regulatory benchmark.
The domestic CD ratio is at 69.28% indicating cushion to grow our credit portfolio. I'm happy to share that the progress we are making in the digital banking, almost 48 crore customers have been registered in YONO, driving the digital agenda of the bank. 63% of the regular savings bank accounts were opened through YONO in quarter 1 of financial year '25. YONO Business has gained significant traction with more than 29 lakh users having registered till now. We are also leveraging analytics with significant business of INR 25,438 crores underwritten during the first quarter of financial year '25. As regard asset quality, our gross NPA ratio has improved by 55 basis points Y-o-Y and stands at 2.21% as of June '24 and continues to be at its lowest level in more than 10 years.
Our net NPA ratio has also improved by 14 basis points Y-o-Y and stands at 0.57%. Slippage ratio for quarter 1 of financial year '25 has improved by 10 basis points Y-o-Y and stands at 0.84%. We have a well-provided stress book with PCR, including AUCA standing at 91.76% and PCR, excluding AUCA standing at 74.41%. The bank remains well capitalized and we have sufficient headroom to take care of the normal business growth requirements. Our capital adequacy ratio stands at 13.86% with CET1 ratio at 10.25% without considering the plowback of the profit, both the ratios are well above the regulatory requirement.
Our subsidiaries are also consistently performing well and continue to create significant value for all the stakeholders and most importantly, for our customers. We'll continue to nurture these subsidiaries and see them creating value for their own shareholders as well as the shareholders and the customers of the bank.
To conclude, I would like to thank -- thank you all once again for all your support to the bank. The bank while pursuing its own progress contributes to the progress and growth of the economy. We remain committed to rewarding your trust in us with superior sustainable returns over the long term.
My team and I are now open to taking your questions. Thank you.
[Operator Instructions] And the first question is here.
This is Manish Ostwal from Nirmal Bang Securities. Sir, my question on the -- our slippages during the quarter. So we have seen some uptick. It's largely seasonal in nature or election or heat wave impacted retail collection during the quarter?
As far as the slippage in the first quarter is concerned, I would actually split them into two or three reasons. One, of course, these are the aging provisions on the standard assets. Our book is growing. So that is one of the reasons. The second reason is there some kind of slippages, which are seen in the unsecured personnel and that was essentially on account of some delayed credit, which you had seen in some of the states on account of the salary, delayed credit of the salary. But when we look at the slippage ratio in the previous years also in the quarter 1. In the year '22, it was at 1.38%. Quarter 2, it was -- in quarter 1 of '23, '24, it was at 0.94%. And now, it is at 0.84%. So actually, it is lower in terms of the percentage point. And out of the INR 7,900 crores slippages also, which have been seen as on 30 June, almost INR 1,600 crores have already been pulled back.
So this is the kind of a scenario. And I actually don't really worry much about it. We're in a position to have a decent quality. There is nothing wrong with the underwriting. It's only essentially seasonal, I would say. Part of it is seen even in agriculture also, but that is invariably seen in the first quarter.
The second question on the -- given the current macroeconomic scenario, so we have seen the 15% loan growth and 8% deposit growth, so how do you see the deposit increase in the bank in the rest of the current financial year? And do you see the further cost of deposit to increase for the bank?
See, as far as even now also, we are at about 68% kind of a CD ratio. So deposit growth in absolute number is one aspect. Cost at which it is raised is the other aspect, which we cannot ignore. Though our cost for deposit has gone up by about 45 basis points, but our NIM compression has happened only to the extent of 11 basis points.
So that's a very clear reflection that it has been a very judicious strategy on the part of the bank to be very mindful in terms of the cost at which the deposits are being raised. Having said that, I would also like to mention that we are very mindful about the depositors' interests and that is the reason why in some of the buckets, we have increased the interest rates, but that is essentially to ensure that the franchise value stays intact. So that is what our philosophy has been.
15% growth in terms of loan book and 8% growth in deposit, we don't have any liquidity challenge for the simple reason that we have got a excess liquidity -- excess SLR to that to about INR 3.7 trillion. Another aspect which I would like to highlight is that we are opening almost about 60,000-odd savings bank account daily. And out of this, about 40,000 accounts are getting -- 34,000 to 40,000 accounts are getting opened through YONO. Another data point, which I must share with you is our -- the savings account balance used to be about INR 12 trillion in March '20, and it has moved to about INR 17 trillion now.
So -- and incidentally, our savings bank deposit has outstanding balance in savings bank accounts are 3x of the next highest -- next largest bank. So this is something which I want to highlight in terms of the franchise. Apart from that, for current account also, we are taking various initiatives. 60-odd transaction banking hubs we have already created and we are having 500-odd relationship managers only for mobilizing current account and that to form the trade commerce industry, hospitals, nursing homes, et cetera, et cetera.
And this will -- this initiative, which you talk about almost about a year back, I'm sure it will start yielding results. It may not be seen at the end of the month or end of the quarter, but during the period, if at all we look at the daily average balance, we're going to see much better outcome of this. So we are quite cognizant of the kind of situation which is operating on ground. And it's very natural on the part of the depositors also to look at multiple sets. And -- but even when they're investing into those assets also, the channelizing source remains bank only. So I think with the kind of add-ons, which we are offering, I don't envisage any challenge to our franchise.
So more clarification on when you say balances is 3x of next largest bank, you're talking about PSU largest bank or the private?
Anybody, private sector also. When I say, when I say next largest. Yes, please.
So on the savings bank, our market share is 26.27%. In 2004, it used to be 20.2%. In 2014, it used to be 22.3%. So we have always gained market share while others have lost.
In fact, we are leveraging analytics to understand the behavior in the savings make account also. So a lot of work is being done, and I'm sure -- it will ensure that we stay ahead of the curve.
So first of all, congratulations on a very successful career at SBI. We really will miss interacting with you from the next quarter, and we wish you all the best. Thank you so, so much for all the learnings. Thank you so much, sir. Thank you. Sir, I had a couple of questions. The first question is that just in terms of margins, what is your outlook given that if that -- first of all, there's a deposit challenge for the sector. And then if REITs are cut, there will be some pressure, though not as much for you because you have a higher MCLR linkage. But in terms of guidance on margins and also if there was any one-off, I mean, if there was any interest on tax refunds this quarter or it was...
Nothing. There was nothing on that account.
And last quarter, there was.
So this is actually a pure play interest. Yes. So I think as far as the guidance on the NIMs are concerned, our effort and endeavor is to keep it at this level, but yes, of course, we all operate in the overall macro. And yes, of course, effort and endeavor has, well certainly be there to maintain the NIM, even if it moves.
I don't think it should have any significant change in the numbers. That's what my read is. And it has to be -- as I mentioned that when we have increased our term deposit rates, which happened almost about 6 months back, and into a 1- to 2-year bucket, which we have done. So it has an overall impact in terms of the cost of deposits, but nevertheless, we could pass on part of it to a greater extent. And that is the reason why the cost of deposits have gone up by about 45 basis points, but the NIMs have only dropped about 11 basis points. So this is going to be the -- this is likely to be the trajectory in the days to come to.
Got it. And sir, just in terms of CET1, what is the contribution from the new investment norms to CET1 for the quarter?
That was actually, I think, 4,600 -- please.
So the net impact on the reserves is INR 3,673 crore.
INR 3,673 crore. So basically, without profit, the CET1 has declined, right, despite new norms, new investments.
No, that was done as of 31st March.
It is 1st of April.
Either 30th June, the net impact is INR 3,600 crore positive on the same front.
Complement from my side also, sir. In spite of so many pressures and various changes by the RBI in the regulations2, 3 such things have come in last 3, 4 months, 6 months, the bank has performed very well. But still, sir, my question is on -- because generally, we compare with the immediate last quarter and therefore, the March quarter was better, but still in the other interest income, I think, if you compare from the last quarter, we have gone down by almost about -- by INR 6,000 crores.
See the point is, your last quarter, see this revision in the investment norms. So whatever profit was there, it was not through the other income route, it was all through the balance sheet route. AFS results, which have been created in the balance sheet. So that was actually about INR 4,600-odd crores.
INR 3,600 crore.
No, it's a net of. There was some other impact also. So that is something which is one of the reasons, but other than that -- sorry?
Profit and sale of and reinvestment of the...
It is actually remaining on account of that quarter.
This quarter we had less gain than last year first quarter. That is the main reason. Secondly, the provisions have inched up a little because of -- you see the increase in loan loss provision due to aging and also taxes also have increased. So that's the reason.
So like on every quarter...
Noninterest income, noninterest income, actually, at times, there is an income tax refund also in the last quarter. All those things are not there actually comparing with the year-end first quarter, but the year-end is not a comparison of apple-to-apple. That has to be -- that is what I would recommend.
That's what only I want to be reassured because in the first -- this quarter, there were some other problems also, the election duties and the usual transfers and other thing because on every front, like right from the loan processing fees to the commission, to the government commission, to the cross-selling and everything, there is a substantial decline.
So now going forward, are we going to be on the track, except that because of the regulations when the changes are there, that may not be there. And secondly, some trading gains, which are there, which many of the other banks have also made that, in any case, has to come as a profit now because of the change, instead of the treasury income, now it comes in the NIM where it has not been reflected so much. So overall, the treasury operation itself, whether it has been affected negatively, whether we are on the same part because we were making very handsome gains from the treasury.
Now, all those gains will be through the balance sheet, but you can [indiscernible] to regains, of course.
We do continue to have the trading in trading profits as yields will go down, and wherever, whatever is there in the HFT portfolio and a bit of AFS and 5% of HTM also, we can say that opportunity will continue to be there. But as far as the MTM gains are concerned, I think they are not going to be reflected in the P&L. They will be directly go into the reserves. I think this is what we need to understand, but we have a good amount of opportunity in terms of trading gains, not only from the fixed-income securities. I think on the equity side also, we've been doing very well. I can assure you that the treasury income will continue to be robust.
Sir, my second question is on the guidance. I mean, the note which is going on from RBI on the deposit source through the digital media and the increase in the provision rather double than this. Have you assessed the impact of that on our bank? And how much -- how many basis point it will impact our capital adequacy as well as the loss because of the blockage of their funds?
This is actually premature to really share this in an open forum like this. But as of now, we have got our own observations on these provisions, which we have shared with RBI -- which we'll be sharing with RBI now. And also, we will also be reaching out to IBA and to the government of India, describing its overall impact. So at a material point of time, let us see whether this consultation paper actually get converted into the regulation.
And the last one is just around, sir, is the gap is known between deposit and the credit growth, which we are having, wherever credit growth is intact. And the deposit is a pressure everywhere in the -- all the entire banking circuit.
Deposit also could be 12%, no issues, but at what rate that is more important? So that is the reason that when we have got the liquidity available through alternate channels, it makes all of sense that we should use that as against raising deposit at high cost?
So anything on capital account in future you have raised already. But going forward, now whether the time has come at this price that you think of really strengthening the entire CRAR.
We keep on reviewing the situations. But as of now, with the current capital and with the kind of liquidity, which we have, we can easily grow our book to the extent of about INR 6.5 trillion to INR 7 trillion. Board has already approved.
And today, Board has approved raising INR 10,000 crores worth of CET in Tier 2.
Tier 1.
Tier 1 and INR 15,000 crore Tier 2.
INR 25,000 crore approval has already been given for Tier 1 and Tier 2.
Sir, my name is Manoj Alimchandani. At the outset, Chairman, I would like to congratulate you for setting the path to profitability for SBI during your career, INR 1 lakh crore a mark and your very motivating speech to staff, fantastic work by all the stuff in improving their productivity and efficiency, number one.
Number two, sharpest mind, our CFO, you are among the sharpest minds in finance in the business in the country. We observed that in a large meeting also. And here, I'm sure she'll be -- would be making immense contribution on the board. Number three, a couple of questions. Your deposits, everybody struggling for CASA and savings account CASA, even private sector bank, we are struggling for one-one account or savings. It's not easy. Your foreign branches have today, deposit growth is over 10%. It's not easy, over 10% and hats off to all the team, in fact, any of foreign subsidiaries, director, it's really wonderful. It's not easy.
And now a couple of questions. I hope you are keeping your eyes on the ball as always, seeing the market cap of IDBI, divestment decisions and lots of foreign interest, how it has multiplied, and we are stakeholders in ES Bank. Today, which has huge potential, and we look forward from insights from you the further developments or what is happening.
I would like to share insight today, Reliance Power and Infra AGM was there. They are going to make good payments out of their HCCB fundraise to J.C. Flowers. And ultimately, Yes Bank and SBI would also benefit. SBI was also directly. So a lot of performance will come further also. So your insights on that, how we can improve that and also on some of our subsidiaries. How it can create value, particularly SBI Card, your general insurance is doing a fantastic job.
Life is doing a fantastic job. Mutual fund #1 [Foreign Language]. So it's not easy to go across the INR 10 lakh crores, right? So specifically, you can mention about that, and we look forward the maximum extension you can get so you can deliver all the targets and set the inspiring tone for the next Chairman and MD. But we get confidence of very good hands and further interaction with you and contribution to Viksit Bharat.
Thank you very much. Well, as far as Yes Bank, it's premature for me to comment. We are also watching very closely the developments which are happening over there. As far as our other subsidiaries are concerned, they have certainly created significant value for themselves, for their shareholders and also by virtue of being the manufacturer of the product in their respective area, they have created value for our customers as well.
So Internally, we have got a philosophy, how to leverage power of one. And that's a new paradigm, which we have set for ourselves. And I'm sure even this initiative will yield value and you will get to see even significant enhancement and value in the days to come from this initiative as well.
One more point, we mentioned about fundraise, you talked about results in Tier 1 and Tier 2, INR 10,000 crore plus INR 15,000 crore. And today, a premier channel is talking about INR 1,000 and INR 2,000 stock when all the previous chairmen were shouting at the top of their voice, including Arundhati Bhattacharya on discount to book value and doing it.
So this is not easy. You have achieved it. So based on what is the market perception, which you and your team have created, even INR 1,000 is undervalued. So when you do your Tier 1 fundraise, it should not be because we need INR 10,000 crores, just to achieve the target, our intrinsic value is much more, but do it during your time, so you can -- we can get much the highest value. So the current shareholders' value doesn't get diluted, we get rewarded and our clients are long-term investors.
Yes. We have plowed back about INR 1.14 trillion in the last 3 years. So that is something which is giving us the natural lever for growth. And I believe that this is best of the strategy when it comes to giving the muscles for growth to the bank. And I'm quite confident that the strategy has proven its value. I'm sure it will continue to be useful strategy, and we'll continue to create value for the shareholders. INR 1.14 trillion in 3 years is something which I think is never in the past.
No other Chairman has done it.
I will not say that. It's a team, which always works. It is not...
Chairman, this is a team. That's why I said sharpest brains in the country. We are proud of you, madam, contributing to women power, Viksit Bharat. And thanks, and all the best to your team. I hope many of your team members, they look at the broadcast, they gave me feedback that you mentioned this and they get inspired by higher levels of performance which you and...
No, we have been talking about this number in the Board room, by the way.
This is Jai Mundhra from ICICI Securities. So congratulations on a steady performance, 1.1% ROA. Sir, my question is on this CET1, so the new norms, you mentioned that they have contributed around INR 3,600 crores to the results. That is like 10 basis points of the RWA, 10 basis points CET1. I think 2 quarters back, we had sort of estimated that these new norms will give around 50 basis points of increment in the CET1, I mean this is what SBI had published 2 quarters back that the new norm should ideally give 50 basis point increment in the CET1.
So have we -- I mean, -- is that all done or maybe some of the value from Yes Bank or NSC, et cetera, that are yet to be finalized or this number is final?
No, I think, Yes Bank and NSC et cetera, that has not been done. It has not come into this.
So just to supplement what Chairman is saying. This 50 basis point estimate is on how we are going to allocate the portfolio among the STM, AFS and HFT. So we have decided that to take the opportunities of adding some duration to the HTM portfolio because HTM is unlimited now. So much of the SDLs, which we're procured, we put in STM. So that's the reason you don't see much of valuation gains going into the AFS reserve. So the 50 basis point is based on certain assumptions that is now how I'm going to structure the portfolio. So we would like to continue this current portfolio model, which means that the AFS reserve gains as on 30th June almost frozen, I can tell you that.
Secondly, sir, on unsecured Xpress Credit on a -- it has done fabulously well all this year despite COVID and everything. But this quarter, the GNPA have risen by around 20 basis points, right, 0.77 to point-something. Is that a change in the direction of the GNPA because we have held this book so clean so far? Or you think this is just a temporary thing and you can pull back?
It's a temporary situation, and I was explaining that in some of the states, there was a delayed credit of salary. That is one of the reasons why it has happened, but we have been in position to pull back a significant portion of that because as and when the salary got credited, we could pull it back. We're actually strengthening our digital offering in the Xpress Credit space also, we call it RTXC now. So that is something which we are not shifting this. So I think it's a trajectory phase. We should have been pushing to get out of this very soon.
Sir, lastly, if you can give some color on this Xpress Credit, now it has become a very significantly big book. What is the -- maybe the average ticket size and maybe how much is -- as you always mentioned, how much is government or maybe category 1 employer?
In fact, as far as the composition of the Xpress Credit is concerned, it has remained the same. There's no change in that. But yes, of course, we also are very mindful in terms of the RWA consumption in Xpress Credit. And that's at a portfolio level, we are very mindful in terms of the area of growth considering the RWAs, which are being consumed.
So you would have observed that our RWA consumption is just about 53 basis points, 53%. So that is something. We also, I mean, a lot has been talked about ROA, but that ROA has to be seen in terms of our RWAs also. And if at all, we will look at the average ticket size of the -- of the Xpress Credit.
INR 7.18 lakh.
It is actually at INR 7.18 lakh. And also our yield is perhaps one thing, which has to be seen in the context of the RWA. That is why we are really looking at all opportunities where all we can grow and how best we can consume the RWAs. That is something which is on the top of our mind.
And the penetration in these accounts is just 27.20%.
That I think, as far as opportunity is concerned, there is no dealt of opportunity. There's ample opportunity which exists. We have to take a call, shall we or shall we not grow considering the RWA consumption?
Lastly, sir, if you have the number handy for the mix of loans by benchmark, how much is repo-rate linked and MCLR and fixed rate et cetera?
No, I think this number is very much there. MCLR is about 36%. And EBLR is about 25%, 27%.
27% and fixed rate is 20%. And T-bills plus others are 14%.
Sushil Choksey, Indus Equity. Congratulations for a stable result and best wishes to you and your future. Sir, hearing your opening remark and Fed and the current weak outlook from the global markets, I think specifically, the money markets in India should have a bumper harvest in the next 2 quarters. What's the outlook at SBI specific to our book?
Well, as far as that bumper harvest is concerned, we'll have to wait and watch how things really evolve at a macro level. It is -- there are multiple factors at play. It's not merely the interest rate at a Fed level. There are multiple other factors are also at play. That is something, which we'll have to wait and watch.
So I think that as far as SBI is concerned, we have seen a decent growth in the international book also about 14% kind of a growth. Lower interest rate in U.S. will certainly -- but of late, when it comes to the global economies also, there's a lot of decoupling, which has happened. It's not that U.S. Fed reduces interest rate, everybody else starts falling. We have actually seen that Bank of England reduced first. Australia also reduce it. U.S. Fed, all this well was saying that they will not reduce and certainly, a commentary has come that they might reduce.
Japan has increased. So I mean, the trends are very different, which very clearly means that each of the economy is probably evaluating the situations obtaining in their respective geographies and are accordingly operating. So all the central banks are not in seek. That is one aspect.
But nevertheless, since we are operating in 29 geographies. And we are in a position to evaluate the opportunities in each of these geographies. We will be having our strategies deliberate to suit their respective geographies, keeping the overall policy for the bank in mind.
Again, to your opening remarks of India's growth story, there's no better person to give us a guide where private CapEx and bean shoots, will it be visible in the next quarter or accelerated growth, what kind of information you are gathering and the discussions on borrowing the industry is having with you?
So my, I would reflect it in the sense that, if at all, we look at our proposals in pipeline, which is sanctions plus art, so the one which are awaiting disbursement, proposal pending for sanctions and including disbursements, it is at about INR 4.6 trillion -- INR 4.62 trillion. And a significant portion of that to the extent about 66% would be from the private sector.
The other indicator, which I can perhaps share with you is when it comes to the private sector commitment, it used to be somewhere around INR 10 trillion-odd. Now, it has moved to somewhere around INR 37 trillion. So that is a very clear reflection of the positive perception of the economy. And on the top of it, the government has the major lead in terms of pushing the growth, the kind of budgetary announcements, which they have made, I'm sure it will also show up in terms of the growth trajectory of Indian economy.
So these are some of the indicators, which I can share with you. And we have already seen, as far our SMA book is concerned, there's a 20% growth. In case of agriculture book also, the growth is to that 16%, 17% and with these kind of numbers, there is -- it's a very clear reflection of what's happening in the real economy. So these are some of the encouraging numbers and corporate book, particularly mid-corporate.
Mid-corporate are showing very promising trends and we have seen almost more 16% kind of a growth in the mid-corporate as well. So that's the sense, which I can share with you as far as the economic opportunities in the Indian economy are concerned.
So if you ignore the Q1 behavior pattern of consumers, specifically led by election and the heat wave, which many banks are identifying and maybe reality partially also or the staff was deployed for election. Based on your own bank and subsidiaries because you have the largest consumer base, how are you seeing the pattern growth in consumer retail business on the demand side as well as on the repayment schedules?
Well, when it comes to unsecured, particularly if at all, we have to see the unsecured book of SPA card. Yes, they had some pains in the past, but off-late, they have provided it adequately. So I don't think so that considering the kind of balance sheet size they have, it is not a reflection of the economy overall.
I would actually say that our book, which is more reflection for the economy and there, the kind of quality, which you have seen, the current trajectory, which is available, I think as far as the retail is concerned, we don't see any challenge. We expect that. We have seen the retail book growing at the rate of 16% CAGR for past couple of years. We expect that it might incur a bit, but that would be not essentially on account of the demand.
It will be more in terms of our considered choice to grow into that or not to go into that considering the RWA issues. But nevertheless, there's adequate demand which you are seeing. When it comes to mortgage book, there is adequate demand. When it comes to car loans, there's adequate demand, we are growing very well. So I think on the consumer side, these are some of the factors which you have to keep in mind.
When it comes to personal loan, pension loan, et cetera, there is adequate demand. So I don't see any reason why there should -- it should slow down going forward. And particularly, if at all, the economy has to grow at 7%, 7.5% retail will continue to be a major growth pillar.
So most of the banks are struggling where CASA and deposits are concerned. This is a hypothetical question, whether you may answer or not. Let's assume that we get 675, 680 on G-sec, and there is adequate demand at 9%, 9.5% where, if not AAA, AA and infrastructure projects are concerned, will you monetize excess SLR towards deployment in infrastructure?
We have already done that. We've already done that because our yield on investment was about 7.2% and when it comes to our yield on advances, it is at 8.86%. So this movement which has happened in the corporate book has essentially come from the treasury. We have unbound our position and supported the corporate book.
And last question, your infrastructure raise has been at a super fine rate and may even get better. Will that support credit growth from your perspective when you are able to [indiscernible]?
No, we are tapping all possible channels for supporting the growth. Our infrastructure bond is now at about INR 60,000 crores, which is the highest in the industry. Our infrastructure book is at about INR 3 trillion. So we have got ample scope to really ramp up this particular source of funding. We have already opened our CD program, which is at about INR 50,000 crores. So we are tapping all multiple channels to see that how best we can have the balanced portfolio of raising resources and funding the growth which you are envisaging to come.
Sir, I have a follow-up question on the recent risk we have seen in the cyber site. So how we are taking the action or measures to improve our cyber risk in our banking operations. And last 3, 4 years, how much you lost on -- in a cyber risk perspective for the bank?
As far as loss is concerned, we have not lost anything. The other piece is that how are we geared up, I would only say that for ensuring that we should say secure as far as cyber is concerned, we have to run on the treadmill every day, and we are doing that. I assure you that. Some event which happened in case of CH. That was a one-off essentially because CH was more like a platform. They're offering themselves as a platform for multiple entities. And it was a stand-alone VLAN kind of issue, which had not impacted the CH operations.
But yes, of course, as a precautionary measure as prescribed by NPCI and RBI. Everything was subject to greater scrutiny and independent scrutiny by an agency, and they have given a clean chit. So that very clearly means that the best of the practices are at play. But yes, of course, as I mentioned, to ensure that we should secure from the cyber angle, we have to run on the treadmill every day, and we must do at least 1,000 steps every day -- 10,000 steps every day. We are doing that.
And the last question on the economy outlook, we have a 7% for the current year, and credit growth in the system is looking very good -- so is it -- in banking, the general saying is that the good times create the new risk to the balance sheet. So last time you had indicated that some of the project powered precipitate lending, some players are not factoring the project risk while in sensing those loans, and we saw the RBA action on that. So if I ask you top three risks, which you visualize for F '25 over the medium term for the banking sector being a leader, what will be those risks, it will be great to hear from you.
See, there would be -- as far as the risks are concerned, there is no end to the list of the risk, but the prudence lies in the -- our ability to recognize them and put in place the mitigants. So that is something which we are doing. And price risk in case of such kind of long-term projects is always there. But yes, of course, we have got the sector consultant.
When we are doing the sensitivity analysis, we factor in such kind of risk and also give the shock accordingly and see that what is the resilience of the project. And also some of the learnings from the past in terms of execution is something which we have already factored in. And when it comes to the product itself, we have factored in such learnings at a product level itself. So that we should not fall prey to any of such risk. And on the top of it, as far as the structure is concerned, we have strengthened our structure adequately to ensure that we should ward off any such risk.
And 1 small data point, is there any large repayment telecom exposure during the quarter?
Whatever has been done, it is to the securest of the agency -- of the entities. Actually, there's a reduction.
Sir, I have a few follow-up questions. Firstly, that you had given a rough impact of ECL 2 years ago, and now obviously, the impact could be lower.
Unfortunately, it has remained a consultation paper. I was looking at it. it should become a regulation, at least we can plow back some amount which we have been running with us.
So -- but could you -- because the governor has mentioned, right, that he'll finalize the guideline soon and then.
No problem. We'll be better off.
Okay. But any rough impact last time given an impact. So it's much less.
I think, no see, the point is that it is a PD and LGD. And over the years, we have seen that the asset quality has improved. The impact will actually get softened over the period. If at all it happens, it will be to our advantage.
Okay. It means you will not have to make additional provisions or you are seeing...
No, we are continuing our old practices of making provisions. As a bank, we have always believed in ensuring that the balance sheet should stay absolutely healthy, there should not be any challenge. We actually go to our relationship here to inquire what is your sense about the asset quality, if at all, they have any discomfort we'd rather make provision as against allowing them to have a discomfort.
So if -- unless there's an asset quality event, basically, your credit cost trajectory should remain like what you guided to now on an incremental basis every year. When it's easier to go to...
We are hopeful for that. We are hopeful for that.
You have one last question.
Sir, RBI has been flagging that loan growth is exceeding deposit growth and I don't know why, but what is the solution that they are expecting from the bankers? Are they going to slowdown loans and repay borrowings and make the ratio look mathematically better? Are they expecting, in order to move loans into investments, make the ratio -- it's -- at the end of the day, assets and liabilities will balance? I don't really understand what they're expecting. So if you could just share some insights, that will be good.
No, what is their mind, I will not be in a position to read that mind. But nevertheless, whatever my assessment of the situation I can certainly share with you, as a regulator, it is incumbent on them to ensure that all entities should stay afloat and do well. That is perhaps one of the areas. And you would have observed that there are some entities, which have got credit deposit ratios much more than 100%. So naturally, they have that in mind, perhaps. And also it's likely contingent impact on the system. And that is the reason why they are really looking at it.
But nevertheless, I think more than the regulator as a financial sector player, it is incumbent and particularly the Board on entities, It is an incumbent on each one of us to ensure that we should practice prudent policies so that there are no shocks. And this is something, which we believe, we practice, and we will continue to practice.
Is there a glide path for the banking system?
I think it is -- it would be the self-control mechanism for each of the entity. They will have to decide whether they should have their loan growth, they should not have their loan growth. One of the entity has already -- has already offered to sell part of their asset book. All of you are aware, I did not really elaborate. So I think these are the kind of adjustments, which people will be resorting to.
And secondly, just on Mahrukh's question. It's a technical question. Can you reassign NPL provisions into standard assets when you move to IND-AS? Like some of the excess.
To my mind, we have got some of the non-NPA provisions, also, which you're holding. And also, we have got some kind of allocated provisions where the provisions are not really required. So we have got various categories. Maybe it would be premature for us to really comment on it, but nevertheless, we'll have it evaluated. If at all we can reassign we'll have to, in any case, at the end of the year, we'll have to appropriate it towards the balance sheet. We cannot take it beyond the 31st March.
Sir, this is Mahesh from Kotak. Congratulations for where you have taken SBI under your watch. Two basic questions from my side. One, on the slippages of -- for the quarter, could you also give us a breakup how much of it has come from personal loans?
Maybe I think I'll request Saloni to share with you.
Sorry, just to clarify because when you said some state governments had delayed payments, the probability that it would move straight to 90 DPD is a bit harsh to understand. So just trying to understand how can you see us in 1 quarter.
Yes, please.
So the slippages that we see this time around, the P segment, that means the home loans as well as all the other P segment loans like unsecured and all put together is INR 3,000 crores, and out of which, we have already pulled back a substantial amount because actually payments have been released as salaries also have been released. So that's not a concern. As on date, that is the position that...
No. I think I would say that all you have to read that situation, you compare our SMA 1, SMA 2 as on June '23 and what is the SMA 1, SMA 2 as on June '24. From INR 9,300 crores, it has come down to INR 7,900 crores.
Perfect. Sir, the rest of the slippages, ma'am, if you could just give that.
SME and you have agriculture and personal, all put together, there is a slippage of around.
Can we get a backup with that, ma'am?
Yes. SME is INR 2,000 crores, INR 3,000 crores roughly is retail.
Is the retail loans.
INR 5,000 crore, and rest is agriculture, INR 200 crores is CCG. I mean large value account.
Second question, on the credit cost again. For this kind of slippages, you have reported a fairly high credit cost of about 4,500, which also there is.
There are some standards set provisioning us, on a standard set provision has also taken place. Aging provisions.
So there are basically, sir, May I respond to this?
Yes.
So basically, provisions due to slippage is INR 1,940 crores, which next quarter definitely should be much better. Provision due to aging is INR 2,473 crores, which we have mentioned. And the third is provision due to agriculture, where we keep extra provision for agriculture, where the limit is beyond 135%, although they're all standard. But as a prudent measure, we keep this provision, which is -- which comes to INR 106 crores. So total provision for this quarter is INR 4,518.07 crores.
Sir, the question, firstly, with respect to the Xpress Credit. So when we look at it, one of your subsidiaries have highlighted a lot of overleveraging of the customer. So at any point in time, we are also seeing within our Xpress Credit customers, any kind of overleveraging a few more facilities, which they would have taken after we would have given them the PL.
No. See, the point is that when it comes to Xpress Credit and when it comes to the card, the target segments are very different. In case of Xpress Credit, the target segment are the ones who are availing salary -- who are maintaining their salary accounts with us. When it comes to card, it's a very different universe. 50% of the cards are being sourced from the market, 50% of the cards are being offered to the SBA customers. So the universe is very, very different. And that is the reason why perhaps the kind of trajectory of the stress in both the books cannot be compared.
But we have not seen any trend in terms of overleveraging.
Nothing like that. And second, when -- sorry.
Ticket size is also fairly large.
Ticket size is...
Ticket size is also -- our ticket size is somewhere around 7.
7.1 -- 7.18.
And secondly, when we look at it, still, we are following either in line with the industry growth or lower than that. And now we have seen many of the private banks, one of the leading bank growing much below the industry average. So when do we see maybe catch up on the growth? And now when we look at the rate differential in the deposits, that is also quite huge, almost like 40 basis points in the fixed deposit rate, not in the shorter-term bucket. So would we be looking at raising the deposits growing at a slightly better than industry average because there is a case, which is being made that PSU banks should ideally now start gaining the market share and you are the leader?
See, the point is that I would be more than happy to grab that deposit, provided that deposit is available at a cost, which I would like to be. If at all, deposit is available at 8%, and we have to do underwriting of the quality assets, no borrower would be willing to pay me 10%. That has to be kept in mind. So if at all, we have to underwrite the quality assets, we have to have a very sharp eye on the cost of our resources. We cannot take it away. When it comes to the growth, growth has to be seen not only in terms of number, but the quality of number also. So I very firmly believe in this, and we have practiced this in this bank, and the outcomes are all before you.
Sir, last data point, stand-alone LCR?
INR 129 crore.
Stand-alone LCR, we are at INR 129 crore.
INR 129 crore.
Consol is INR 129 crore or stand-alone. Stand-alone is also INR 129 crore.
The stand-alone means only bank.
Yes, on the bank.
Bank is INR 129 crore with one consolidated LCR from the other entities.
Sir, the last one, some data point, Sir, we have been talking that, yes, you are making provisions for standard asset, right, from the COVID and so many other and we are having a lot of copper provisions. Can some ballparks of number that how much excess provision overall under all accounts beyond IRAC norms?
In fact, in a bank like ours, our DMD finance or our CFO, they have got pockets, which are not even known to the Chairman. So I'm not in a position to share with you that number. And I also encourage that she should have some -- she or he should have such pockets because we have to keep ourselves largest bank of the country, have to insulate itself from any of the rainy season. We don't want any challenge.
Thanks to you, sir, for outstanding leadership that you have provided at SBI and all these years, you took charge in a very difficult year. And you have ensured that SBI get its due recognition, at least in terms of market value. In terms of size always was there, but in terms of market value, you have certainly played a very instrumental role. Big thanks to you, sir, for all that.
Now a few questions, sir. Firstly, like on the credit growth, there has already been a lot of questions. But do you think that there can come a situation wherein the credit demand in the system, not from the SBI? SBI has already placed very well CD ratio for SBI is less than 70, we know that the credit demand from the system may remain unmet? Because this quarter, we have seen a lot of moderation from the other banks, the growth numbers have seen a cut and RPI has been pushing on the CD ratio is what we understand a lot more.
Well, I think my sense is that the market has got the control features and if at all, there is a demand the demand would be at the price. And if at all, people are willing to pay that price, the demand can be met also. And fortunately, today, the global markets are all integrated. So I think I don't see a challenge if at all, there is a demand. And if at all, there is a risk appetite for that demand. My sense is that it should not be a challenge.
Okay, sir. And second, sir, is on the OpEx. Now we have seen a very high OpEx in the past because of a provisioning that was going on in this quarter, it's a very sharp decline. So is this a sustainable number because the number that we are seeing this quarter is lower than what we, like, probably expected? And so because even the cost-income ratio has come below 50. So how should we look at it going further?
I think when it was not 50, I was being pushed to ensure that it should be below 50. Now I brought it to below 50. Now you are questioning why it is below 50. Anyhow, I mean keep it aside just in the lighter vein, but the fact of the matter is that if you recall, right, from the very beginning, our focus was that our income should grow because we have got certain cost rigidities and we cannot get rid of those cost rigidities.
So I think that's a reality. And last year, of course, we could not meet these numbers for the simple reason that we're required to make provisions for the wage increase. Now, all that is behind us. And I actually would say that this is a new normal, and we should be in -- we should have to stick to this new normal. Rather, I would rather expect that it should -- incrementally, we might see it coming down a bit also.
There are a few questions to online webcast.
Yes, I will just answer to those questions also.
Mr. Anish Raj has got a question. How SBI is going to fight with the deposit crisis. I would only like to reiterate some of the points, which I've already mentioned, but nevertheless, I'll say that. Our focus on the digital, as I mentioned, that about 40,000-odd savings bank accounts are being opened daily, whereas 60,000 savings bank accounts are open daily, I mean total number of savings back accounts are 60,000.
Focus on activation of our inoperative account is we are leveraging analytics targeting sources of the quality salary package is something, which we're already working on. And also raising of the deposit, interest rate and some of the select tuners, there's something, which we are working. So this is -- these are some of our initiatives, and we are quite confident it will start yielding results also very soon.
Next question is from Mr. Kaitav Shah. Could you throw some light on the credit growth aspirations and the key components of the growth? We are hoping our credit to grow at 15%. I would expect the broad-based growth in all the segments as the credit is concerned.
Mr. Deepanshu Khatri, any plan of merger of RRBs with the RBI? Any plans of list of SBI subsidiaries, companies like [XP General ]. As of now, there is no such plan. And that's where the RRBs are concerned. There's a need for some regulation until such time it comes. So we really cannot go to the market for any listing. And as far as subsidies are concerned, it is a little premature as of now to list any of our subsidiaries, which are eligible for listing.
Mr. [indiscernible], given the 0.89% year-on-year growth in net profit and 4.55% increase in operating profit, what specific strategies or operational improvement contributed to this performance and how do we plan to sustain the growth moving forward?
Our sharp focus on the asset quality. GNPA movement as GNPA has improved from 2.76% to 2.22%. Improvement in cost of income ratio by 95 basis points, leveraging technology to become future-ready organization and also focusing on improving income.
Mr. [ Pervez ] has asked a question, guidance on NIM in the coming quarters and rate cut effects of NIM. Now our target is to maintain NIM at the current level. There may be a variation to the extent of not more than 10 basis points, plus or minus.
Dhaval Gada, what steps is the bank taking in agri lending business to deliver much lower G&P in the future, a special drive and the time bound action plan for conducting regular recovery-cum credit camps. [indiscernible] at the branches, cluster of branches have been initiated. All agri-intensive [indiscernible] branches are geared up for KCC, ACC and also for the renewal exercise and drive for actual recovery of NPA. We're also looking at the investment credit and our experience in the past is that higher-value ticket size has got lower incidence of NPA, and that is something, which we are practicing on ground.
[ Sajana Fozdar ] from Nuvama comment on the lower growth in current account deposit this quarter. It's a general trend of funds that inflow during the last quarter -- quarter 4 of the financial year outflow during subsequent quarters of the next financial year, resulting in quarter-on-quarter negative growth. Negative Y-o-Y growth is on part of decline in the government account, funding in good time, they are actually following just-in-time approach. In nongovernment accounts, it's a competition from the private sector bank, but however, we are also meeting that competition by offering all add-ons, which are required.
Doshi Dikshit, our credit cost and slippages have gone up considerably after a good performance in the last 3 quarters. Can you explain why and will it remain elevated going forward? Do you expect stress in the book? Any update nonstakes in the Yes Bank? So many questions in one.
Credit cost has increased sequentially from 0.29 to 0.48 on account of the increase in hedging provision by almost INR 907 crores and slippage provisions about INR 340 crores. As on July '24, there is a pullback of around 20% against the slippages during the quarter 1 of '25.
Mr. C. Joshi, what should be the level of sustainable credit costs going ahead? What was the interest on IT refund this quarter? There was mill as far as IT refund was concerned. We expect the credit cost to be around 0.50% going forward. Do we have a CD ratio target? And if yes, when, then what it is for this year and next year, we expect CD ratio to be around 70%, and it might go up to 72%. So with this, I finish off answering all the online questions also.
Thank you, sir. And I trust all the questions have now been addressed. We'll be happy to respond to other's questions in offline mode. Let me end the evening with thanking the Chairman, sir; the top management team; the analysts; ladies and gentlemen, we thank you all for taking time out of your schedule and joining us for this event. To round up this evening, we request you all present here to join us for Hi-tea, which is arranged just outside this hall. Thank you very much.
Thank you very much once again, all the very best to all of you. Thank you.