SBI Chairman dismisses asset quality fears, cites Q1 seasonality

SBI Chairman CS Setty dismissed concerns over sequential asset quality pressure, citing Q1 seasonality. He reaffirmed a robust outlook, maintaining credit growth guidance at 14-15% and highlighting strong year-on-year performance improvements.

Chairman Dismisses Sequential Asset Quality Concerns

State Bank of India (SBI) Chairman CS Setty dismissed concerns over sequential asset quality pressure and slowing private capex, clarifying that first-quarter performance is subject to seasonal variations. Speaking during the bank's Q1FY27 financial results press conference in Mumbai on Friday, Setty answered two questions from ANI News regarding slippages, credit expansion, and liquidity management, reaffirming a robust outlook for the fiscal year.

Responding to ANI's query on sequential stress--specifically what caused the uptick in Gross Non-Performing Assets (GNPAs) to Rs 74,273 crore and slippages to 0.57%, and whether a 0.28% quarter-on-quarter dip in corporate advances signals slowing private capex--Setty cautioned against drawing premature conclusions from sequential quarterly comparisons. "Q1 tends to be an outlier quarter from many aspects, whether in terms of business, yield income, or credit growth rates, because Q2, Q3, and Q4 pick up substantially. I normally suggest please don't compare sequentially. We have also highlighted that seasonality exists in this business... If you compare it year-on-year, there is a significant basis point improvement across overall aggregates. Recoveries and upgrades pulled back around Rs 4,900 crore, so there is nothing concerning or significant there."

High-Quality Growth in Agri, SME Segments

Addressing ANI's second question on whether rapid expansion in agricultural advances (up 25.43%) and SME loans (up 22.33%) harboured early signs of default or asset quality stress--particularly under the Emergency Credit Line Guarantee Scheme (ECLGS)--Setty reassured that portfolio risk remains well-managed and high-quality. "While we do have non-ECLGS growth as well, the SME numbers you see are predominantly supported by ECLGS. On agriculture, growth is driven by institutional finance, investment credit, and other structured segments. So, the growth contribution is coming from high-quality portfolios."

Robust Full-Year Guidance Reaffirmed

Elaborating on key balance sheet parameters, the Chairman noted that SBI has maintained its full-year credit growth guidance at 14% to 15%, backed by broad-based demand across retail, MSME, and corporate segments. Deposit growth is projected at double digits between 10% and 11%, supported by healthy retail CASA growth, with additional headroom to comfortably push the Credit-to-Deposit (CD) ratio up to 80%, he added.

To optimise funding costs and replace high-cost wholesale deposits, Setty said that SBI has mobilised $1 billion via commercial paper and aims to tap up to $10 billion in Foreign Currency Non-Resident FCNR(B) deposits, backed by a substantial excess SLR liquidity buffer exceeding Rs 4 lakh crore. He also added that the management reaffirmed its key full-year targets, maintaining Net Interest Margin (NIM) at approximately 3.00%, Return on Assets (ROA) at around 1.00%, and Return on Equity (ROE) above 15%.

Focus on Responsible AI and Digitalisation

Furthermore, as a leading player in UPI and digital transactions, SBI is deploying a Board-approved Responsible AI Policy to reinforce cybersecurity, anti-money laundering controls, and back-office processing efficiency, Setty mentioned.

Strong Q1FY27 Financial Performance

The lender concluded its Q1FY27 performance on a strong note, reporting a 10.23% year-on-year increase in standalone net profit to Rs 21,121 crore, up from Rs 19,160 crore in the corresponding quarter of the previous fiscal. SBI's Net Interest Income (NII) surged 14.88% year-on-year to Rs 46,992 crore, while gross advances crossed the Rs 50 lakh crore mark to reach Rs 50.47 lakh crore. On an annual basis, asset quality indicators showed marked improvement, with the Gross NPA ratio declining by 36 basis points to 1.47% and Net NPA standing at 0.38%. Additionally, total business for India's largest public sector lender crossed the Rs 110 lakh crore milestone during the quarter, driven by total deposits reaching Rs 60.06 lakh crore. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)