SBI sees 25% growth in credit
The Hindu Business Line, April 16, 2009, Page 6
Lending, deposit rates may fall by around 25-50 bps: O.P. Bhatt.
Mr O.P. Bhatt, Our Bureau, Mumbai
The banking sector may see loan growth of 19-20 per cent in 2009-10. However, for State Bank of India the credit growth could be as high as 25 per cent.
“For the past two to three years, SBI’s growth has been much more than that of the industry. Also, with increase in efficiency and opening of more number of branches, we should be able to achieve the growth,” Mr O.P. Bhatt, Chairman, State Bank of India, said.
He was speaking at the launch of SBI Mutual Fund’s Micro SIP.
The bank has targeted a growth of 25 per cent in its earnings in 2009-10. The bank’s total business is now above Rs 12 lakh crore, with around Rs 2.5 lakh crore business coming in 2008-09 itself, Mr Bhatt said.
SBI, which has the largest network of branches at over 11,111, added 1,600 branches in 2008-09. The bank is planning to add another 800-1,000 branches in 2009-10, with the majority in rural and semi-urban areas.
The bank is also trying to reach another 50,000 unbanked villages with the help of its banking correspondents and point of sale terminals in 2009-10.
High deposit growth
Explaining the rationale behind providing loans at a low interest rate of 8 per cent, Mr Bhatt said that post-October 2008, the bank saw a deluge in deposits as investors looked to park their money in safe havens.
This provided the bank with sufficient liquidity and, hence enabled the bank to push credit to the needy sectors, he said. The inflow of deposits has been as high as Rs 1,000 crore a day in recent times, he said.
The slowdown in credit offtake and the RBI reducing the reverse repo rates to as low as 3.5 per cent, prompted us to provide home and SME loans at 8 per cent, auto loans at 10 per cent and loans for providing warehousing facility for agricultural produces at 8 per cent, to genuine borrowers with feasible proposal, Mr Bhatt said. Through the special home loans scheme (which provided loans at 8 per cent), the bank sanctioned loans worth Rs 1,350 crore in the 40 day period of February 2 and March 13.
Margins
Even a small variation in the prime lending rate or the margins can have a huge impact on the bank’s balance sheet, he said. The bank’s net interest margin (NIM) has been under pressure. “For the just ended quarter, we would be lucky to have our NIM at around 3 per cent. We will try to hold the NIM at 3 per cent for 2009-10 also,” he said.
“I expect the lending and deposit rates to fall by around 25-50 basis points in the immediate future,” Mr Bhatt.
Capital raising
On capital expansion plans, Mr Bhatt said the bank needs around Rs 60,000-70,000 crore in the next five years to aid growth. The bulk of the amount would come from retained profits and through raising Tier-II capital. “We are hoping the Government permits us to raise money through the rights issue”.
Also, with a Bill pending in Parliament allowing the Government stake to be diluted from 55 per cent to 51 per cent, there would be more room to raise capital.
“We will need more capital for growing internationally. We raised around Rs 20,000 crore last year and this year the amount raised will not be less than that,” Mr Bhatt said.
NPAs
The bank’s NPAs have come down for the just ended quarter. The NPAs have come down on a year-on-year basis for the domestic business. However, the NPAs have risen for the international business. The bank has around 100 offices abroad, Mr Bhatt said.
The Hindu Business Line, April 16, 2009, Page 6
Lending, deposit rates may fall by around 25-50 bps: O.P. Bhatt.
Mr O.P. Bhatt, Our Bureau, Mumbai
The banking sector may see loan growth of 19-20 per cent in 2009-10. However, for State Bank of India the credit growth could be as high as 25 per cent.
“For the past two to three years, SBI’s growth has been much more than that of the industry. Also, with increase in efficiency and opening of more number of branches, we should be able to achieve the growth,” Mr O.P. Bhatt, Chairman, State Bank of India, said.
He was speaking at the launch of SBI Mutual Fund’s Micro SIP.
The bank has targeted a growth of 25 per cent in its earnings in 2009-10. The bank’s total business is now above Rs 12 lakh crore, with around Rs 2.5 lakh crore business coming in 2008-09 itself, Mr Bhatt said.
SBI, which has the largest network of branches at over 11,111, added 1,600 branches in 2008-09. The bank is planning to add another 800-1,000 branches in 2009-10, with the majority in rural and semi-urban areas.
The bank is also trying to reach another 50,000 unbanked villages with the help of its banking correspondents and point of sale terminals in 2009-10.
High deposit growth
Explaining the rationale behind providing loans at a low interest rate of 8 per cent, Mr Bhatt said that post-October 2008, the bank saw a deluge in deposits as investors looked to park their money in safe havens.
This provided the bank with sufficient liquidity and, hence enabled the bank to push credit to the needy sectors, he said. The inflow of deposits has been as high as Rs 1,000 crore a day in recent times, he said.
The slowdown in credit offtake and the RBI reducing the reverse repo rates to as low as 3.5 per cent, prompted us to provide home and SME loans at 8 per cent, auto loans at 10 per cent and loans for providing warehousing facility for agricultural produces at 8 per cent, to genuine borrowers with feasible proposal, Mr Bhatt said. Through the special home loans scheme (which provided loans at 8 per cent), the bank sanctioned loans worth Rs 1,350 crore in the 40 day period of February 2 and March 13.
Margins
Even a small variation in the prime lending rate or the margins can have a huge impact on the bank’s balance sheet, he said. The bank’s net interest margin (NIM) has been under pressure. “For the just ended quarter, we would be lucky to have our NIM at around 3 per cent. We will try to hold the NIM at 3 per cent for 2009-10 also,” he said.
“I expect the lending and deposit rates to fall by around 25-50 basis points in the immediate future,” Mr Bhatt.
Capital raising
On capital expansion plans, Mr Bhatt said the bank needs around Rs 60,000-70,000 crore in the next five years to aid growth. The bulk of the amount would come from retained profits and through raising Tier-II capital. “We are hoping the Government permits us to raise money through the rights issue”.
Also, with a Bill pending in Parliament allowing the Government stake to be diluted from 55 per cent to 51 per cent, there would be more room to raise capital.
“We will need more capital for growing internationally. We raised around Rs 20,000 crore last year and this year the amount raised will not be less than that,” Mr Bhatt said.
NPAs
The bank’s NPAs have come down for the just ended quarter. The NPAs have come down on a year-on-year basis for the domestic business. However, the NPAs have risen for the international business. The bank has around 100 offices abroad, Mr Bhatt said.
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