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