Growing loan book expected to boost margins: SBI

An aggressive strategy on retail loans has helped the country’s largest lender, State Bank of India (SBI), grow its loan book at a rate higher than the industry average, even in the quarter to December ‘09 at a time when loan growth has generally been tepid.
The retail portfolio primarily comprises home loans, education loans and Car loans which grew at 29%, 32% and 46%, respectively. A high growth strategy in this segment is one which is fraught with a lot of risks. But for now, it’s not reflected in bad loans.
For instance, retail loans contributed only Rs 238 crore to the net additional gross NPAs of Rs 1,485 crore in the quarter to December ‘09. So, the concerns over falling assets quality due to an increased focus on retail loans have been belied, for now.
However, gross NPAs formed 3.1% of gross advances at the end of December ‘09 quarter. In terms of percentages, bad loans continue to remain high compared with 3% reported in the September ‘09 quarter. What could be of comfort is the fact that the pace of additions to bad loans has slowed down in the December ‘09 quarter.
While the bank added more than Rs 2,000 crore of gross NPAs to its books in the September ‘09 quarter, on a net basis, it has come down to less than Rs 1,500 crore in the December ‘09 quarter. With the rebound in growth, there is an expectation that the bank will be check the rise in bad loans.
SBI’s single-minded focus seems to be on retiring the high cost bulk deposits. At the same time, it has focused on mobilising more of low-cost current account and savings account (CASA) deposits, the share of which has gone up to 42.9% in the December ‘09 quarter compared to 41% during the previous quarter.
The bank reported a flat profit on YoY basis in December ‘09 quarter due to the 34% growth in other operating expenses. With SBI opening more branches, operating costs will remain on high even in the next few quarters. However, the bank has shown that it has the ability to grow its loan book faster than the industry.
Margins are also expected to improve. It is likely that the bank will be able to improve its bottomline in the coming quarters. The flat profit reported in Q3 may not be indicative of a trend.

Comments

Post a Comment

Popular posts from this blog

How are Home Loan Interest Rates Determined

 Borrowers should possess a thorough knowledge of the key factors influencing home loan interest rates in India before applying for this credit option. Thanks to the easy availability of home loans, people can now fulfil their dreams of owning a home. Furthermore, the high-value loan amount and the competitive home loan interest rates have made this credit facility popular among homebuyers in India. The monthly instalments and borrowing costs are significantly impacted by interest rates. Therefore, borrowers should possess a thorough knowledge of the key factors influencing  home loan interest rates in India before applying for this credit option. How Do Financial Institutions Determine the Home Loan Interest Rates Lending institutions consider the following factors while determining the home loan interest rates for a particular borrower: Location of the property The property’s location also impacts the interest rates on a home loan. If a property is located in a posh location with am
Read more

SBI Cards shares up 0.78% as Nifty gains

 SBI Cards and Payment Services Ltd. traded 0.78 per cent up in Monday's trade at 12:28PM (IST). Around 123,822 shares changed hands on the counter. The counter opened at Rs 810.0 and touched an intraday high and low of Rs 818.0 and Rs 805.4, respectively, in the session so far. The stock of  SBI Cards  and Payment Services Ltd. quoted a 52-week high of Rs 1028.75 and a 52-week low of Rs 656.1. Total market cap of the SBI Cards and Payment Services Ltd. stood at Rs 76658.91 crore at the time of writing this report. Key Financials The company reported consolidated net sales of Rs 3453.32 crore for the quarter ended 30-Sep-2022, up 5.84 per cent from previous quarter's Rs 3262.85 crore and up 28.12 per cent from the year-ago quarter's Rs 2695.46 crore. The net profit for latest quarter stood at Rs 525.64 crore, up 52.4 per cent from the same quarter a year ago. Shareholding pattern As of 30-Jun-2022, domestic institutional investors held 11.34 per cent stake in the firm, whil
Read more

TSSC partners with SBI Card for placement-linked skill development courses for women

 The centre is set to provide National Skills Qualifications Framework (NSQF) and National Curriculum Framework (NCF) aligned short-term courses in telecom service job roles. Telecom sector skill training provider TSSC on Monday said it has partnered with SBI Cards and Payment Services for placement-linked skill development courses to train 763 women over the next two years. Under this partnership, Telecom Sector Skill Council (TSSC) has launched a telecom centre of excellence (CoE) at the Government College for Girls Gurugram under a CSR initiative for women empowerment. The project will cater to 763 candidates over the span of two years beginning from September this year, the statement said. “The CSR project under this collaboration will be a pertinent boost in skilling the female youth and help them inculcate the spirit of self-reliance to explore new job roles. This crucial partnership with SBI credit Cards for CSR is yet another step forward to drive equality of opportunity for
Read more