Mumbai, 3 Aug

State Bank of India (SBI) on Saturday reported a 4.25 per cent growth in its consolidated net profit in April-June quarter at Rs 19,325 crore, held back by a rise in loan loss provisions and lower growth in core income.

On a standalone basis, the profit growth was much slower at almost flat pace of 0.89 per cent during the quarter at Rs 17,035 crore.

SBI chairman Dinesh Kumar Khara, whose over four years stint at the helm will be ending soon, said the first quarter is generally slow and there were "distractions" which limited the growth.

He said the bank is confident of growth picking up in the remainder of the fiscal year, and achieving his aspiration of the largest lender reporting a net profit of Rs 1 lakh crore in FY25.

The core net interest income grew 5.71 per cent to Rs 41,125 crore on the back of a 15 per cent advances growth and the domestic net interest margin narrowing by 0.12 per cent to 3.35 per cent.

The other income declined to Rs 11,162 crore in the latest first quarter from the Rs 12,063 crore recorded in the year-ago period, and the fall was attributed by Khara to the change in regulation that led to the reclassification of investment book.

Khara declined to comment on the impact of the RBI's draft norms on liquidity coverage ratio, but pointed out that the critical number for the bank stands at 129 per cent whereas it has a comfort level of taking it down till 110 per cent.

The deposit growth came at 8 per cent, and Khara said the bank will be able to fund the credit growth target of 15 per cent even if the deposit growth is sustained at the same level. However, he added that the bank would want to increase the deposit growth to 10 per cent.

He, however, made it clear that the bank will not want to compromise on NIMs in the process and hinted that more hikes in deposit rates are not in the offing. It will target to keep the NIMs in the 3.2-3.4 per cent range, the chairman said.

Khara explained that the bank has been able to manage with a lower deposit growth because it had put its accretions in the past into investment book which is now being deployed for advances.

Corporate loans grew by over 15 per cent during the quarter, while retail -- the mainstay in the last few years -- was slower at less than 14 per cent. Khara said within corporates, it is the mid market segment which grew 20 per cent where the bank sees maximum opportunity.

Large corporates have many alternatives like the bond markets to go to, Khara said, adding that the current corporate loan pipeline stands at Rs 4.62 lakh crore.

On the asset quality front, the bank witnessed fresh slippages of Rs 7,900 crore, with a major Rs 3,000 crore of it coming from personal and home loans.

Khara said a few states' inability to pay employee salaries on time led to slippages of Rs 1,600 crore but was quick to add that the amount has been recovered as the salaries came in.

The gross non-performing assets ratio improved to 2.21 per cent during the quarter as against 2.24 per cent in March.

The loan loss provisions jumped 70 per cent to Rs 4,580 crore, which included Rs 2,488 crore for the ageing assets, Khara said, asserting that there is no challenge on the asset quality front and he does not expect the quantum of money being set aside going up under his successor C S Shetty.

Khara said the RBI's increase in risk weights on assets led to a calibration on the personal loans front, but stressed that there is no adverse impact on the quality of the book and the GNPAs continue to be under 1 per cent.