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State Bank of India (SBI) has set its sights on notching up double digit loan growth in FY23 after two years of single digit growth, as economic prospects are looking brighter.
India’s largest lender has set whole bank (domestic plus overseas) advances growth target of 13.51 per cent for FY23. The state-owned bank’s advances had registered 8.47 per cent year-on-year (yoy) growth as at December-end 2021. In FY21, advances grew 4.81 per cent yoy.
“In the past few quarters, our effort has been to strengthen the balance sheet by improving margins and reducing credit costs. With the economic prospects looking brighter, we now also need to consciously focus on improving the Bank’s market share,” said Dinesh Kumar Khara, Chairman, in a note to his colleagues.
In this regard, Khara emphasised that SBI has to grow faster than its competitors, bring efficiencies in the organisation and deliver consistent profitable performance.
This will also improve the market valuation of the bank and make it an attractive proposition for investors, he added.
Corporate segment to jump start growth
Referring to the Budget providing for a sharp increase in public investment and capital expenditure, the SBI Chief observed that in the backdrop of the latest government initiatives seen to be supporting growth, credit demand is expected to pick up in FY23.
“While retail will continue to have our focus, it is the corporate segment which is expected to jump start the growth in the loan book. With the US and UK markets showing a good traction, we expect a healthy growth in overseas business too,” Khara said.
As per SBI’s assessment for FY23, all scheduled commercial banks’ (SCBs) are projected to grow their advances by 9.5-10 per cent (against 8-8.5 per cent estimated for FY22).
Deposit growth: Focus on CA
SBI is eyeing 10.82 per cent yoy growth in whole bank deposits in FY23. The bank’s deposits had registered a growth of 8.83 per cent yoy as at December-end 2021. In FY21, deposits were up 13.56 per cent yoy.
Within deposits, SBI wants to increase the share of low-cost current account, savings account (CASA) in domestic deposits to 46.33 per cent by March-end 2023 against 45.74 per cent as at December-end 2021.
The bank also expects to improve the share of current account (CA) in domestic deposits to more than 7 per cent by March-end 2023 against 6.11 per cent as at December-end 2021.
Per the note, SBI will make concerted efforts to improve the Credit-Deposit (CD) ratio to about 65 per cent in FY23 for domestic advances. As at February 25, 2022, the Bank’s CD ratio was at 61.37 per cent against 71.69 per cent for ASCBs.
CD ratio indicates how much a bank lends out of every ₹100 deposit it mobilises.
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