SBI Chairman Dinesh Kumar Khara tells CNBC-TV18 that the lender will be able to meet the credit growth in the economy and will calibrate interest rates in sync with market expectations. India’s largest bank by assets posted a strong quarterly performance, sending its shares to a record high.
“With the increase in the momentum of economic activity, we expect this increase in credit to continue in the near term… SBI will be able to handle the credit growth in the economy. Going forward, I still expect credit growth to be somewhere in the 14-16 percent range,” he said.
Khara also said that SBI is calibrating interest rates in sync with market expectations.
His remarks come days after SBI far beat Street estimates with a record quarterly profit of Rs 13,264.5 crore boosted by strong loan growth and improving asset quality. The lender reported a 12.8 percent rise in net interest income — or the difference between interest earned and interest paid — to Rs 35,183.4 crore.
Analysts in a poll by CNBC-TV18 had estimated SBI’s quarterly net profit at Rs 9,803 crore and NII at Rs 33,099.6 crore.
SBI management said that the lender has not only gone through thard times, but also grew strongly.
“Over the years, we’ve strengthened our underwriting processes quite a bit, which has helped us mitigate credit risk; we should be able to maintain this kind of credit quality,” Khara said.
SBI reported loan growth of 19.9 percent compared to the corresponding period a year ago, with domestic advances growing by 18.2 percent.
The improvement in its asset quality — measured as a percentage of bad loans to total loans — is reflected in lower credit costs, he said.
The net bad loan ratio decreased to 0.8 percent, down 72 basis points on the year.
The SBI chairman believes that the lender should have a “reasonably good chance of making good margins”.
SBI’s global net interest margin – a key measure of profitability for financial institutions – improved by 30 bps sequentially to 3.32 per cent in the July-September period.