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SBI chief don’t see room for further cut in Base Rate

, September 24, 2012, 0 Comments

State Bank of India’s chief Mr. Prateep Chaudhuri’s take on helath of SBI, RBI’s recent action and way forward to deliver high performance.

Key takeaways are as follows :

On rate cut

  • SBI Cut rates because “loan engine” was lagging “deposit engine”
  • May have room to cut spreads on loans to some sectors
  • Don’t see room for further cut in Base Rate
  • 80% of loan book to be impacted by base rate cut

NIM & Credit growth

  • Net Interest margin (NIM) around 3.9% at present
  • NIM improving, Aug NIM higher than Jul
  • Expect 20-25% growth in home, car loans FY13
  • Loan growth 14.5%, deposit growth 16.0% as of now
  • Maintain guidance for FY13 loan growth at 18-20%

Exposure to Sectors & NPA

  • Exposure to realty sector just 3% of loan book
  • No exposure to Deccan Chronicle
  • Bank’s exposure to state power boards “among the lowest”
  • Continue to discuss loan issues with Kingfisher Air
  • Exposure to power distribution companies among the lowest
  • Waiting for govt to notify education loan guarantee scheme
  • NPA in education loans 5-6%

Merger of Associate banks, Basel III & Liquidity

  • No movement on SBI associate banks’ merger
  • Need 1000-2000 crore rupee capital to merge an associate bank
  • Tough to merge associate banks without big capital infusion
  • Need 1-1.2 lakh crore rupees for bank, associates to meet Basel III
  • Have 70,000-80,000 Crore rupees of excess liquidity
  • Investing surplus liquidity in CPs, CDs
  • Current CP investment 11,000 crore rupees, CDs 8,000 crore rupees