State bank of India conducted a conference call on 08 November 2024 to discuss its financial results for the quarter ended September 2024. CS Setty, Chairman of the bank addressed the call:

Highlights:

Q2FY25 results of the bank highlight continuity, consistency and significant long-term strengths. The bank has remained focused on strengthening the key components that contribute to sustainable value. It has prioritized liability franchise. The refined processes continue to improve underwriting standards.

The bank expects scheduled commercial banks deposits to grow 11-12% and credit by 12-13% in FY25.

The credit growth of the bank was 14.93% yoy, deposit growth was 9.13% end September 2024. The domestic CD ratio is at around 67.9% end September 2024.

The net profit increased 28% yoy to Rs 18331 crore in Q2FY2025.

The bank has been seriously pursuing deposit growth, which has crossed a milestone of Rs 50 lakh crore to Rs touch Rs 51 .17 lakh crore end September 2024.

The bank has more than 50 crore customers serving one out of every three Indians

The bank has maintained Casa ratio at more than 40%.

The credit growth continues to be robust across all segments. Domestic advances have grown by 15.55% yoy driven by 18.35% growth in corporate, 17% in agriculture, 17% MSME and 12% in retail segments. Foreign offices advances have grown by 11.56% yoy.

As regards to asset quality, the slippage ratio was 0.51% with retail slippage ratio at 0.31% in Q2FY2025. The credit cost was 0.38% and PCR is at an all time high of 75.6%.

Net NPA ratio improved 11 bps yoy and stands at 0.53% end September 2024.

The liquidity coverage ratio is healthy at 129% end September 2024.

The domestic CD ratio was at 67.87% indicating a significant potential to grow the credit portfolio.

The bank remains well capitalized and has sufficient headroom to take care of business growth requirements. Capital adequacy ratio is at 13.76% and considering profits for H1FY25 it would be at 14.79%.

RoE is higher than credit growth indicating in addition to CET I ratio.

More than 8 crore customers have been registered on YONO driving the digital agenda of the bank. About 61% of regular savings bank accounts are opened through YONO in Q2FY25.

Subsidiaries are consistently performing well and continue to create significant value. The bank will nurture these subsidiaries and maintain leadership positions in the respective businesses.

The bank has continued to report RoA and RoE of greater than 1% and 20% at the end of H1FY2025.

The return on RWA was healthy at 2.07%.

On the liability side, the bank continues to focus on increasing share in the current account while maintaining leadership position in Saving Bank deposits by further strengthening customer outreach and branch network.

The bank aims to continue to hold on to the deposit market share of 22-23%. As per the bank, the incremental credit growth would be taken care of by incremental deposits.

The bank has maintained the credit growth guidance of 14 to 16%.

The bank aims to accelerate deposit growth above 10% and expects 10-10.5% growth possible.

The express credit growth moderated on account of demand conditions and higher repayments, while the bank is observing demand coming back in the unsecured segments. The tenure of express credit is low at 14 months. The bank can accelerate express credit growth to double digits.

The bank''''s corporate loan book growth is expected to remain in strong double digits driven by strong sanctions pipeline and increase in the working capital utilization. The agriculture loan growth is strong for the bank, despite heavy rains and flooding.

The bank is taking various steps to improve the SME financing with database and analytics leading to fast sanctioning turnaround.

The home loan growth is expected to remain strong in the range of 13 to 14%.

The recoveries in written off accounts has improved to Rs 2336 crore in Q2FY2025, while the bank expects to continue current run rate of recoveries in written off account going forward with good visibility.

The bank expects the bond yields to remain in the range of 6.6%-6.9% which still gives room for trading and MTM gains.

The forex income jumped in Q2FY2025 due to volatility and proprietary derivatives book contributing to the gains.

The bank wants to improve its loan processing charges and the renewed focus on non-interest income will continue.

The provisions were lower in Q2 last year on account of NPA automation leading to reversals of provisions of Rs 1010 crore.

The bank does not have concern on its retail personal loan book growth as well as asset quality.

The deposit rates have peaked.

With the regulatory nudge, more and more loan books are shifting to the repo rate. With MCLR loan book at more than 40% and rate cut likely in February 2025, the bank expects to maintain stable margins.

In the current account, the bank wants to reduce the dependence on the government deposits which has reduced but still remains significant.

The bank has fully provided for the wage revision, while also fully provided for the employee AS 15 pension benefits.

The bank is focused on maintaining a cost to income ratio below 50% which is possible with no more wage provisions and digitalization leading to improvement in efficiency.

The bank aims to maintain RoA above 1%.

More than 95% of the unsecured personal loans are extended to salaried customers.

The MFI loan book of the bank is marginal at Rs 10000-11000 crore and it is behaving well.

Bank currently does not have plans for monetization of Yes Bank shareholding.

The bank expects to maintain credit cost below 40 bps and slippage ratio below 60 bps.