SBI sees double-digit loan growth in FY23 as economic outlook improves

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The State Bank of India (SBI) aims to accelerate double-digit loan growth in FY23 after two years of single-digit growth as the economic outlook improves.

India’s largest lender has set a growth target of 13.51% for all banks (domestic and foreign) for FY23. Public bank advances had grown by 8 .47% YoY (YOY) at the end of December 2021. In FY21, advances increased by 4.81% YoY.

“Over the past few quarters, we have focused on strengthening the balance sheet by improving margins and reducing credit costs. As the economic outlook improves, we must now consciously focus on improving the Bank’s market share,” said Dinesh Kumar Khara, Chairman, in a note to colleagues.

In this regard, Khara pointed out that SBI must grow faster than its competitors, bring efficiencies in the organization and deliver consistent profitable performance.

It will also improve the bank’s market valuation and make it an attractive proposition for investors, he added.

The business segment to kick-start growth

Referring to the budget forecasting a sharp increase in public investment and capital expenditure, the SBI chief observed that in the context of the latest government initiatives considered to support growth, credit demand is expected to increase in FY23. .

“While retail will continue to be our focus, it is the corporate segment that should reinvigorate loan book growth. With the US and UK markets showing good traction, we also expect healthy business growth to overseas,” Khara said.

According to the SBI assessment for FY23, all Scheduled Commercial Banks (SCBs) are expected to increase their advances by 9.5-10% (compared to the estimated 8-8.5% for FY22).

Growth in deposits: Focus on turnover

SBI expects 10.82% year-on-year growth in total bank deposits in FY23. During FY21, deposits increased 13.56% year-on-year.

Within deposits, the SBI aims to increase the share of low-cost current account, savings account (CASA) in national deposits to 46.33% by the end of March 2023 from 45.74% at the end of December 2021.

The bank also plans to improve the share of current account (CA) in national deposits to more than 7% by the end of March 2023 against 6.11% at the end of December 2021.

According to the note, the SBI will make concerted efforts to improve the credit-to-deposit (CD) ratio to around 65% in FY23 for domestic advances. As of February 25, 2022, the Bank’s CD ratio was 61.37% compared to 71.69% for ASCBs.

The CD ratio indicates how much a bank lends out of every ₹100 deposit it raises.

Published on

April 05, 2022

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