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