India’s top lender SBI aims to achieve double-digit deposit growth

STATE Bank of India (SBI), the country’s largest lender, is aiming for double-digit growth in deposits as loan demand gathers steam and utilisation of existing credit lines improves, a top executive said on Friday (Sep 16).

“We believe 9 per cent to 10 per cent (deposit growth) is definitely possible for us, it is a sustainable growth rate, though we have an internal target of 11 per cent to 12 per cent,” Challa Sreenivasulu Setty, managing director at SBI, told Reuters.

Alongside stepping up efforts to garner more domestic deposits, banks are also seeking foreign deposits more aggressively.

Setty said foreign currency deposits of non-resident Indians in domestic banks “still needs improvement” even after banks have increased interest rates.

“I think we have to still witness more momentum in these FCNR flows,” he said.

In the quarter to June end, SBI’s deposits grew 8.73 per cent, registering a marginal decline from the March quarter. The bank’s advances grew 15-16 per cent annually.

SBI has also seen its credit line utilisation inch up by 10 percentage points over a year ago to nearly 60 per cent.

“We are witnessing capacity utilisation going up in many industries and working capital utilisation is also going up which shows that growth momentum will continue.” he added.

SBI expanded its domestic loans by 14.93 per cent year-on-year in the last quarter, led by strong growth in retail loans. It expects that its international asset book will continue to be around 15 per cent of the total assets.

SBI had international gross advances of 4.49 trillion rupees at end-June, up over 20 per cent compared to last year.

The bank is also aiming to focus on boosting its fee-based income from its overseas operations.

“We would like to now focus on how we can increase our fee based income, whether we can take larger participations and also be part of the club deals and be part of the origination and then distribute later,” Setty explained.

The bank remains watchful about the volatile global economic scenario and may review its growth strategy for international operations as the situation evolves, he said. For now, asset quality in this portfolio remains strong, with the bad loan ratio at 0.52 per cent.

SBI’s shares have risen 22 per cent so far this year. REUTERS