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SBI targets double-digit growth in deposits, to increase commission-based revenue

India’s largest lender, State Bank of India (SBI), aims to achieve double-digit deposit growth due to accelerating loan demand and improved line utilization existing credit. Challa Sreenivasulu Setty, managing director of SBI, believes deposit growth of 9% to 10% is a sustainable rate for the lender, although it is targeting 11% to 12%.

SBI MD told Reuters: “We believe that 9% to 10% growth (deposit growth) is very possible for us, it is a sustainable growth rate, although we have an internal target of 11% to 12%.”

Apart from stepping up efforts to register more domestic deposits, the CEO said the bank was also seeking foreign deposits more aggressively.

He believes that foreign currency deposits of non-resident Indians in domestic banks still need to be improved even after the banks raised interest rates.

Currently, in dollars, SBI offers a rate of 3.50% on FNCR deposits on terms ranging from 1 year and above 1 year to less than 2 years. As for the rate, it is 3% for 2 years to less than 3 years of seniority, 3.10% for 3 years to less than 4 years of seniority, 3.15% for 4 years to less than 5 years and finally 3.25% over 5 years of seniority.

Setty thinks the banking sector still needs to show more momentum in these FCNR flows.

As of June 30, 2022, SBI reported total deposits of 40,45,696 crores up 8.73% from 37,20,987 crores recorded in Q1FY22. The bank’s CASAs and term deposits grew 6.54% and 9.34% year-over-year in the quarter. The CARA ratio, however, contracted to 45.33% in Q1FY23 from 45.97% in Q1FY22.

In addition, the chief executive told Reuters, “we are seeing an increase in capacity utilization in many sectors and an increase in the use of working capital, which shows that the growth momentum will continue. “.

In addition, SBI plans to increase its fee-based revenue from its overseas operations. Setty told the news agency, “We would now like to focus on how we can grow our fee-based income, if we can take bigger stakes and also be part of club deals and be part of origination and then distribute later.”

Additionally, Setty pointed out that SBI is mindful of the volatile global economic scenario and may revise its growth strategy for international operations as the situation evolves.

In Q1FY23, SBI’s asset quality improved with gross NPA at 3.91% from 5.32% in Q1FY22, while net NPA also improved to 1% from 1.77% in Q1FY22 . The bank’s slippage rate improved further to 1.38% in the first quarter of this fiscal year from 2.47% in the first quarter of FY22.

On BSE, SBI stock closed at 561.60 each down 1.84%. The bank’s market capitalization is exceeded $5.01 million.

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