While SBI’s credit deposit ratio remains comfortable, chairman Dinesh Khara said, both the deposit growth and CASR ratio have been impacted as deposit accretion remains lower quarter-on-quarter.

State Bank of India‘s chairman Dinesh Khara spoke to CNBC-TV18 on Saturday, August 3, after the lender reported its first quarter earnings. “When it comes to deposit growth, it has to be seen at what cost, what interest rate are we raising the deposit. And you know, as a banker, we have to strike a balance among various conflicting demands,” he said.

SBI’s total deposits growth for the June quarter came in at 8.18% and its domestic deposits were at 8.08%. The lender’s whole bank net interest margins (NIM) for the first quarter was at 3.22%. The domestic NIM was at 3.35%.

Khara said it is important to be mindful, in terms of where the NIMs are. “Our cost of deposit has gone up about 45 basis point, but when it comes to NIMS, it has only dropped about 11 basis points. So that’s a very clear reflection that we have been very, very conscious in terms of the cost of deposits,” he said, adding that this is the reason why the absolute number of growth may not sound as big.

He pointed that despite this, SBI does have excess statutory liquid ratio of ₹3.7 trillion even today. This he said, is supporting the lender’s loan book growth, which is at 15.5%.

‘Hope to be able to defend NIMs at current levels’

Khara said SBI hopes to be able to defend its NIMs at the current levels. “Even our MCLRs have also gone up of late. And we will be in a position to have the better yield on advances. Our yield on advances have already moved to about 8.86%. And we should be in a position to improve our yield on advances going forward. So that is something which will help us in ensuring that our NIMS, we should be in a position to protect around these levels,” he said.

‘Should be able to maintain earlier guidance of about 14-16% credit growth for the year’

SBI currently has a loan pipeline of ₹4.76 trillion and it is equally split between the proposals in pipeline and also proposals which have been sanctioned but awaiting disbursement. “I think I expect that we should be in a in a position to maintain our earlier guidance of about 14 to 16% kind of a growth and more towards 15% kind of a growth is something which we expect to deliver in this year,” he said.

‘Do not envisage any challenge on asset quality’

SBI’s fresh slippages came in at ₹7,903 crore in the first quarter, which were ₹3,867 crore in the previous quarter.

“As far as slippages are concerned, about ₹7,900 crore worth of slippages which are seen in the first quarter, out of this more than ₹1,600 crore have already been pulled back. That is one. The second aspect is that in the first quarter, it is very unusual trend because we start the quarter, we start the financial year all afresh and we do not have the benefit of the previous recoveries which have been, which have taken place,” Khara said.

Hence, he thinks the first quarter always gets to see some kind of a higher slippages.

And as far as the asset quality is concerned, he said SBI’s SME book is now seeing a gross NPA number of around 3.5%, agri is 9%, corporate is 2.2% gross NPA ratios.

‘Our effort is to bring credit cost down as much as possible’

He said SBI witnessed an uptick in unsecured retail book due to delayed salary credit in some of the salary package accounts. However, all of these unsecured slippages got taken care of in July, he said.

On being asked what the credit cost for the full year could look like, Khara said that before also SBI has said it will keep it below 0.50, and now too at 0.48, the lender’s effort is to bring it down as much as ossible.

‘Not overly concerned about RBI LCR paper’

State Bank of India Chairman Dinesh Khara said he is not overly concerned about RBI’s liquidity coverage ratio (LCR) paper.

“Let us wait for RBI guidance on this and then we will really work it out. But our preliminary assessment does not really warrant any triggers of being overtly concerned,” he said.