...for State Bank of India crossing 100 lakh crore rupees. You know, how do you see growth trends shaping up for the rest of the year, and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, a lot of efforts are being made both on the fiscal side as well as the regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. We have seen sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. In corporate credit also we have seen a turnaround. In the last quarter we had an almost negative growth rate in the corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very confident. I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain, or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, below 50 basis points, is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality, and there are no concerns in any of the segments.
Okay. Mr. Setty, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground increased credit demand, and going ahead, how much of a boost will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of the home loan segment, in terms of the SME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have a very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to the 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe it's too early to talk about sustained consumption demand, we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel or cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates, and some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth, and if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter, which is eminently feasible to take to 10%. So this is what we are expecting. In terms of pipeline, more than 7 lakh crore pipeline is available. This is a combination of working capital under-utilization and term loans sanctioned but under disbursement, and term loans in the process of sanction. I think this is a good pipeline to have. The first credit demand obviously will come from the higher working capital utilization, followed by the draws from the term loans which are already sanctioned, and of course the ones which are going to be sanctioned. So there's good visibility; it's only a matter of how they're spaced out which contributes to the growth rates.
Well, Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement, 2.97%. With the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down, and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired. CASA has witnessed a good growth rate, and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh crore is a remarkable one, and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources, while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back-of-the-envelope calculation on what the impact could look like, and will you start to make some additional provisions in the coming quarters to meet the requirements?
One is the long roadmap which is proposed almost five years from now, and once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the roadmap. It's not that we are going to frontload any of the provisions. At this moment we are thinking that the four to five year period which is given for implementation roadmap, we will definitely be using it, which means that the impact on the balance sheet would be limited.
Well, Mr. Setty, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that they have a long-term strategic investor, how long will you expect to hold on to the stake, or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, that's a call which our board will take at the appropriate time. So till that time, we still have a board seat on Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path, and we are not in a hurry to exit, neither we have any compulsion to stay back.
All right, Mr. Setty, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker M&M surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins stood at 14.5%, expanded more than expected. Sudashan Kumar is here with more. Sudashan, take us through the numbers.
It's an operationally strong set of earnings from Mahindra and Mahindra for Q2 FY26, and the biggest positive surprise was the improvement that the company has seen in the margin and also on the market share front. It continues to gain, and in LCV it has gained market share of almost 100 basis points. In SUVs the gain is of almost 400 basis points, and in tractor also it has gained almost 50 basis points. Talking about the headline numbers, profit has increased by 18% and revenue, as per the expectations, we were expecting an increase in the range of 20 to 23%. Company has reported an increase of 21%.
SBI has seen a jump in profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved. Fresh slippages came down sharply and advances growth was above the industry average. For more on the numbers, I have with me the man of the moment, Chairman of State Bank of India, Mr. Challa Setty. Mr. Setty, first up, congratulations. It's been a bit of a milestone quarter for State Bank of India, crossing 100 lakh crore rupees. How do you see growth trends shaping up for the rest of the year, and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, a lot of efforts are being made both on the fiscal side as well as the regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. We have seen sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. In corporate credit also we have seen a turnaround. In the last quarter we had an almost negative growth rate in corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very confident. I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain, or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, below 50 basis points, is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality, and there are no concerns in any of the segments.
Okay. Mr. Setty, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground increased credit demand, and going ahead, how much of a boost will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of the home loan segment, in terms of the SME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have a very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to the 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe it's too early to talk about sustained consumption demand, we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel or cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates, and some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth, and if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter, which is eminently feasible to take to 10%. So this is what we are expecting. In terms of pipeline, more than 7 lakh crore pipeline is available. This is a combination of working capital under-utilization and term loans sanctioned but under disbursement, and term loans in the process of sanction. I think this is a good pipeline to have. The first credit demand obviously will come from the higher working capital utilization, followed by the draws from the term loans which are already sanctioned, and of course the ones which are going to be sanctioned. So there's good visibility; it's only a matter of how they're spaced out which contributes to the growth rates.
Well, Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement, 2.97%. With the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down, and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired. CASA has witnessed a good growth rate, and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh crore is a remarkable one, and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources, while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back-of-the-envelope calculation on what the impact could look like, and will you start to make some additional provisions in the coming quarters to meet the requirements?
One is the long roadmap which is proposed almost five years from now, and once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the roadmap. It's not that we are going to frontload any of the provisions. At this moment we are thinking that the four to five year period which is given for implementation roadmap, we will definitely be using it, which means that the impact on the balance sheet would be limited.
Well, Mr. Setty, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that they have a long-term strategic investor, how long will you expect to hold on to the stake, or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, that's a call which our board will take at the appropriate time. So till that time, we still have a board seat on Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path, and we are not in a hurry to exit, neither we have any compulsion to stay back.
All right. Mr. Setty, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker M&M surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins today at 14.5% expanded more than expected. Sudashan Kumar is here with more. Sudashan, take on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved, fresh slippages came down sharply, and advances growth was above the industry average. For more on the numbers, I have with me the man of the moment, Chairman of State Bank of India, Mr. Challa Setty. Mr. Setty, first up, congratulations. It's been a bit of a milestone quarter for State Bank of India, crossing 100 lakh crore rupees. How do you see growth trends shaping up for the rest of the year, and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, a lot of efforts are being made both on the fiscal side as well as the regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. We have seen sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. In corporate credit also we have seen a turnaround. In the last quarter we had an almost negative growth rate in corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very confident. I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain, or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, below 50 basis points, is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality, and there are no concerns in any of the segments.
Okay. Mr. Setty, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground increased credit demand, and going ahead, how much of a boost will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of the home loan segment, in terms of the SME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have a very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to the 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe it's too early to talk about sustained consumption demand, we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel or cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates, and some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth, and if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter, which is eminently feasible to take to 10%. So this is what we are expecting. In terms of pipeline, more than 7 lakh crore pipeline is available. This is a combination of working capital under-utilization and term loans sanctioned but under disbursement, and term loans in the process of sanction. I think this is a good pipeline to have. The first credit demand obviously will come from the higher working capital utilization, followed by the draws from the term loans which are already sanctioned, and of course the ones which are going to be sanctioned. So there's good visibility; it's only a matter of how they're spaced out which contributes to the growth rates.
Well, Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement, 2.97%. With the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down, and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired. CASA has witnessed a good growth rate, and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh crore is a remarkable one, and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources, while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back-of-the-envelope calculation on what the impact could look like, and will you start to make some additional provisions in the coming quarters to meet the requirements?
One is the long roadmap which is proposed almost five years from now, and once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the roadmap. It's not that we are going to frontload any of the provisions. At this moment we are thinking that the four to five year period which is given for implementation roadmap, we will definitely be using it, which means that the impact on the balance sheet would be limited.
Well, Mr. Setty, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that they have a long-term strategic investor, how long will you expect to hold on to the stake, or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, that's a call which our board will take at the appropriate time. So till that time, we still have a board seat on Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path, and we are not in a hurry to exit, neither we have any compulsion to stay back.
All right. Mr. Setty, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker M&M surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins today at 14.5% expanded more than expected. Sudashan Kumar is here with more. Sudashan, take on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved, fresh slippages came down sharply, and advances growth was above the industry average. For more on the numbers, I have with me the man of the moment, Chairman of State Bank of India, Mr. Challa Setty. Mr. Setty, first up, congratulations. It's been a bit of a milestone quarter for State Bank of India, crossing 100 lakh crore rupees. How do you see growth trends shaping up for the rest of the year, and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, a lot of efforts are being made both on the fiscal side as well as the regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. We have seen sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. In corporate credit also we have seen a turnaround. In the last quarter we had an almost negative growth rate in corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very confident. I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain, or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, below 50 basis points, is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality, and there are no concerns in any of the segments.
Okay. Mr. Setty, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground increased credit demand, and going ahead, how much of a boost will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of the home loan segment, in terms of the SME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have a very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to the 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe it's too early to talk about sustained consumption demand, we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel or cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates, and some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth, and if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter, which is eminently feasible to take to 10%. So this is what we are expecting. In terms of pipeline, more than 7 lakh crore pipeline is available. This is a combination of working capital under-utilization and term loans sanctioned but under disbursement, and term loans in the process of sanction. I think this is a good pipeline to have. The first credit demand obviously will come from the higher working capital utilization, followed by the draws from the term loans which are already sanctioned, and of course the ones which are going to be sanctioned. So there's good visibility; it's only a matter of how they're spaced out which contributes to the growth rates.
Well, Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement, 2.97%. With the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down, and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired. CASA has witnessed a good growth rate, and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh crore is a remarkable one, and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources, while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back-of-the-envelope calculation on what the impact could look like, and will you start to make some additional provisions in the coming quarters to meet the requirements?
One is the long roadmap which is proposed almost five years from now, and once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the roadmap. It's not that we are going to frontload any of the provisions. At this moment we are thinking that the four to five year period which is given for implementation roadmap, we will definitely be using it, which means that the impact on the balance sheet would be limited.
Well, Mr. Setty, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that they have a long-term strategic investor, how long will you expect to hold on to the stake, or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, that's a call which our board will take at the appropriate time. So till that time, we still have a board seat on Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path, and we are not in a hurry to exit, neither we have any compulsion to stay back.
All right. Mr. Setty, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker M&M surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins today at 14.5% expanded more than expected. Sudashan Kumar is here with more. Sudashan, take on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved, fresh slippages came down sharply, and advances growth was above the industry average. For more on the numbers, I have with me the man of the moment, Chairman of State Bank of India, Mr. Challa Setty. Mr. Setty, first up, congratulations. It's been a bit of a milestone quarter for State Bank of India, crossing 100 lakh crore rupees. How do you see growth trends shaping up for the rest of the year, and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, a lot of efforts are being made both on the fiscal side as well as the regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. We have seen sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. In corporate credit also we have seen a turnaround. In the last quarter we had an almost negative growth rate in corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very confident. I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain, or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, below 50 basis points, is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality, and there are no concerns in any of the segments.
Okay. Mr. Setty, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground increased credit demand, and going ahead, how much of a boost will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of the home loan segment, in terms of the SME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have a very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to the 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe it's too early to talk about sustained consumption demand, we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel or cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates, and some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe it's too early to talk about sustained consumption demand, we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates, and some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth, and if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter.
Which is eminently feasible to take to 10%.
So this is what we are expecting and in terms of pipeline more than 7 lakh cr pipeline is available. This is a combination of working capital under utilization and term loans sanctioned but under disbursement and term loans in the process of sanction. I think this is a good pipeline to have. You know the first credit demand obviously will come from the higher working capital utilization followed by the draws from the term loans which are already sanctioned and of course the ones which are going to be sanctioned. So there's a good visibility it's only a matter of you know how they're spaced out which contributes to the growth rates.
Well, you know Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement to 2.97%. You know, with the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired and CASA has witnessed a good growth rate and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh cr is a remarkable one and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back of the envelope calculation on what the impact could look like and will you start to make some additional provisions in the coming quarters to meet the requirements?
One is the long road map which is proposed almost 5 years now from now. Once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the road map; it's not that we are going to frontload any of the provisions. We will at this moment, we are thinking that the four to five year period which is given for implementation road map, we will definitely be using it. Which means that the impact on the balance sheet would be limited.
Well, Mr. Setty, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that you know they have a long-term strategic investor, how long will you expect to hold on to the stake or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, you know that's a call which our board will take at the appropriate time. So till that time we will, we still have a board seat on the Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path and we are not in a hurry to exit. Neither we have any compulsion to stay back.
All right. Mr. Setty, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker Eminem surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins today at 14.5% expanded more than expected. Sudashan Kumar is here with more. Sudashan, take on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved, fresh slippages came down sharply and advances growth was above the industry average. For more on the numbers I have with me the man of the moment, chairman of State Bank of India, Mr. CS Setty. Mr. Setty, first up, congratulations. It's been a bit of a milestone quarter for State Bank of India crossing 100 lakh crore rupees. You know, how do you see growth trends shaping up for the rest of the year and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, you know, lot of efforts being made both in terms of fiscal side as well as regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space and the GST 2.0 and income tax benefit which was given earlier, all are paying playing out now and we have seen the sustained consumption demand coming back and we have seen double-digit growth across the business segments except corporate credit. And the corporate credit also we have seen a turnaround in last quarter we had an almost negative growth rate in the corporate credit but we have seen 7% corporate credit growth and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very very confident that I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, you know, below 50 basis point is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality and there are no concerns in any of the segments.
Okay Mr. Setty, like you said credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground you know increased credit demand and going ahead how much of a boost you know will you expect from something like M&A financing the easier capital market financing norms announced by RBI, how much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned I think the real economy, whether it is in terms of you know home loan segment in terms of the theme in terms of you know agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2 14 to 17% growth rates across these segments, I think this is very important and we have very large portfolio of these segments which means that a double-digit growth rate here will itself contribute to 12 to 14% credit guidance what I've given and we also have a very significant pipeline on the corporate credit side and this pipeline a part of which is converted into real sanctions and disbursement is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe you know it's too early to talk about sustained consumption demand we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments and if that sustained consumption demand is visible the private capital expenditure in certain sectors which we have not been seeing, either steel cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment may not be coming from the large corporates and some of the central PSUs spending on the capex for example refineries and all is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth and you know if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter which is eminently feasible to take to 10%. So this is what we are expecting and in terms of pipeline more than 7 lakh cr pipeline is available. This is a combination of working capital under utilization and term loans sanctioned but under disbursement and term loans in the process of sanction. I think this is a good pipeline to have. You know the first credit demand obviously will come from the higher working capital utilization followed by the draws from the term loans which are already sanctioned and of course the ones which are going to be sanctioned. So there's a good visibility it's only a matter of you know how they're spaced out which contributes to the growth rates.
Well, you know Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement to 2.97%. You know, with the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired and CASA has witnessed a good growth rate and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh cr is a remarkable one and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back of the envelope calculation on what the impact could look like and will you start to make some additional provisions in the coming quarters to meet the requirements?
One is the long road map which is proposed almost 5 years now from now. Once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the road map; it's not that we are going to frontload any of the provisions. We will at this moment, we are thinking that the four to five year period which is given for implementation road map, we will definitely be using it. Which means that the impact on the balance sheet would be limited.
Well, Mr. Setty, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that you know they have a long-term strategic investor, how long will you expect to hold on to the stake or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, you know that's a call which our board will take at the appropriate time. So till that time we will, we still have a board seat on the Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path and we are not in a hurry to exit. Neither we have any compulsion to stay back.
All right. Mr. Setty, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker Eminem surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins today at 14.5% expanded more than expected. Sudashan Kumar is here with more. Sudashan, take on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved, fresh slippages came down sharply and advances growth was above the industry average. For more on the numbers I have with me the man of the moment, chairman of State Bank of India, Mr. CS Setty. Mr. Setty, first up, congratulations. It's been a bit of a milestone quarter for State Bank of India crossing 100 lakh crore rupees. You know, how do you see growth trends shaping up for the rest of the year and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, you know, lot of efforts being made both in terms of fiscal side as well as regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space and the GST 2.0 and income tax benefit which was given earlier, all are paying playing out now and we have seen the sustained consumption demand coming back and we have seen double-digit growth across the business segments except corporate credit. And the corporate credit also we have seen a turnaround in last quarter we had an almost negative growth rate in the corporate credit but we have seen 7% corporate credit growth and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very very confident that I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, you know, below 50 basis point is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality and there are no concerns in any of the segments.
Okay. Mr. Setty, like you said credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground you know increased credit demand and going ahead how much of a boost you know will you expect from something like M&A financing the easier capital market financing norms announced by RBI, how much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned I think the real economy, whether it is in terms of you know home loan segment in terms of the theme in terms of you know agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2 14 to 17% growth rates across these segments, I think this is very important and we have very large portfolio of these segments which means that a double-digit growth rate here will itself contribute to 12 to 14% credit guidance what I've given and we also have a very significant pipeline on the corporate credit side and this pipeline a part of which is converted into real sanctions and disbursement is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe you know it's too early to talk about sustained consumption demand we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments and if that sustained consumption demand is visible the private capital expenditure in certain sectors which we have not been seeing, either steel cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment may not be coming from the large corporates and some of the central PSUs spending on the capex for example refineries and all is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth and you know if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter which is eminently feasible to take to 10%. So this is what we are expecting and in terms of pipeline more than 7 lakh cr pipeline is available. This is a combination of working capital under utilization and term loans sanctioned but under disbursement and term loans in the process of sanction. I think this is a good pipeline to have. You know the first credit demand obviously will come from the higher working capital utilization followed by the draws from the term loans which are already sanctioned and of course the ones which are going to be sanctioned. So there's a good visibility it's only a matter of you know how they're spaced out which contributes to the growth rates.
Well, you know Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement to 2.97%. You know, with the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired and CASA has witnessed a good growth rate and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh cr is a remarkable one and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back of the envelope calculation on what the impact could look like and will you start to make some additional provisions in the coming quarters to meet the requirements?
One is the long road map which is proposed almost 5 years now from now. Once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the road map; it's not that we are going to frontload any of the provisions. We will at this moment, we are thinking that the four to five year period which is given for implementation road map, we will definitely be using it. Which means that the impact on the balance sheet would be limited.
Well, Mr. Setty, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that you know they have a long-term strategic investor, how long will you expect to hold on to the stake or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, you know that's a call which our board will take at the appropriate time. So till that time we will, we still have a board seat on the Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path and we are not in a hurry to exit. Neither we have any compulsion to stay back.
All right. Mr. Setty, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker Eminem surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins today at 14.5% expanded more than expected. Sudashan Kumar is here with more. Sudashan, take rise in profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved, fresh slippages came down sharply and advances growth was above the industry average. For more on the numbers I have with me the man of the moment, chairman of State Bank of India, Mr. CS Setty. Mr. Setty, first up, congratulations. It's been a bit of a milestone quarter for State Bank of India crossing 100 lakh crore rupees. You know, how do you see growth trends shaping up for the rest of the year and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, you know, lot of efforts being made both in terms of fiscal side as well as regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space and the GST 2.0 and income tax benefit which was given earlier, all are paying playing out now and we have seen the sustained consumption demand coming back and we have seen double-digit growth across the business segments except corporate credit. And the corporate credit also we have seen a turnaround in last quarter we had an almost negative growth rate in the corporate credit but we have seen 7% corporate credit growth and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very very confident that I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, you know, below 50 basis point is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality and there are no concerns in any of the segments.
Okay. Mr. Setty, like you said credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground you know increased credit demand and going ahead how much of a boost you know will you expect from something like M&A financing the easier capital market financing norms announced by RBI, how much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned I think the real economy, whether it is in terms of you know home loan segment in terms of the theme in terms of you know agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2 14 to 17% growth rates across these segments, I think this is very important and we have very large portfolio of these segments which means that a double-digit growth rate here will itself contribute to 12 to 14% credit guidance what I've given and we also have a very significant pipeline on the corporate credit side and this pipeline a part of which is converted into real sanctions and disbursement is constantly getting replenished both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe you know it's too early to talk about sustained consumption demand we will wait for another couple of months. October has been a good month in terms of the credit growth across the segments and if that sustained consumption demand is visible the private capital expenditure in certain sectors which we have not been seeing, either steel cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment may not be coming from the large corporates and some of the central PSUs spending on the capex for example refineries and all is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of pipeline, what do you have for corporate credit growth and you know if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter which is eminently feasible to take to 10%. So this is what we are expecting and in terms of pipeline more than 7 lakh cr pipeline is available. This is a combination of working capital under utilization and term loans sanctioned but under disbursement and term loans in the process of sanction. I think this is a good pipeline to have. You know the first credit demand obviously will come from the higher working capital utilization followed by the draws from the term loans which are already sanctioned and of course the ones which are going to be sanctioned. So there's a good visibility it's only a matter of you know how they're spaced out which contributes to the growth rates.
Well, you know Mr. Setty, your NIMs surprised the street. There was an expectation of decline. You've shown a bit of an improvement to 2.97%. You know, with the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen, the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired and CASA has witnessed a good growth rate and in fact 6 to 7% savings account balances increase on a base of 17.5 lakh cr is a remarkable one and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources while the rate cut is something which we need to be looking at because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Setty, very briefly on the expected credit loss guidelines. Is there a back of the envelope calculation on what the impact could look like and will you start to make some additional provisions in the coming quarters to meet the requirements?
Will you start to make some additional provisions in the coming quarters, you know, to meet the requirements?
One is the long roadmap which is proposed almost five years now from now, and once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the roadmap. It's not that we are going to frontload any of the provisions. We will, at this moment, we are thinking that the four to five year period which is given for implementation roadmap, we will definitely be using it. Which means that the impact on the balance sheet would be limited.
Well, Mr. Seti, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that you know they have a long-term strategic investor, how long will you expect to hold on to the stake or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, you know, that's a call which our board will take at the appropriate time. So till that time, we will, we still have a board seat on the Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path, and we are not in a hurry to exit. Neither we have any compulsion to stay back.
All right, Mr. Seti, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker M&M surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins stood at 14.5%, expanded more than expected. Sudashan Kumar is here with more. Sudashan. Take rise on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved. Fresh slippages came down sharply and advances growth was above the industry average. For more on the numbers, I have with me the man of the moment, chairman of State Bank of India, Mr. CS Seti. Mr. Seti, first up, congratulations. It's been a bit of a milestone quarter. Business for State Bank of India crossing 100 lakh crore rupees. You know, how do you see growth trends shaping up for the rest of the year and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, you know, lot of efforts being made in both in terms of fiscal side as well as regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. And we have seen the sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. And corporate credit also we have seen a turnaround. In last quarter we had an almost negative growth rate in the corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very very confident that I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, you know, below 50 basis point is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality and there are no concerns in any of the segments.
Okay. Mr. Seti, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground, you know, increased credit demand? And going ahead, how much of a boost, you know, will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of, you know, home loan segment, in terms of MSME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished, both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe, you know, it's too early to talk about sustained consumption demand. We will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel, cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates. And some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of a pipeline, what do you have for corporate credit growth? And, you know, if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter, which is eminently feasible to take to 10%. So this is what we are expecting. And in terms of pipeline, more than 7 lakh crore pipeline is available. This is a combination of working capital under utilization and term loans sanctioned but under disbursement, and term loans in the process of sanction. I think this is a good pipeline to have. You know, the first credit demand obviously will come from the higher working capital utilization, followed by the draws from the term loans which are already sanctioned, and of course the ones which are going to be sanctioned. So there's a good visibility. It's only a matter of how they're spaced out, which contributes to the growth rates.
Well, you know, Mr. Seti, your NIMs surprised the street. There was, you know, expectation of decline. You've shown a bit of an improvement, 2.97%. You know, with the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down, and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired, and CASA has witnessed a good growth rate. And in fact 6 to 7% savings account balances increase on a base of 17.5 lakh crore is a remarkable one, and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources. While the rate cut is something which we need to be looking at, because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Seti, very briefly on the expected credit loss guidelines. Is there a back of the envelope calculation on what the impact could look like, and will you start to make some additional provisions in the coming quarters, you know, to meet the requirements?
One is the long roadmap which is proposed almost five years now from now, and once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the roadmap. It's not that we are going to frontload any of the provisions. We will, at this moment, we are thinking that the four to five year period which is given for implementation roadmap, we will definitely be using it. Which means that the impact on the balance sheet would be limited.
Well, Mr. Seti, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that you know they have a long-term strategic investor, how long will you expect to hold on to the stake or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, you know, that's a call which our board will take at the appropriate time. So till that time, we will, we still have a board seat on the Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path, and we are not in a hurry to exit. Neither we have any compulsion to stay back.
All right, Mr. Seti, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker M&M surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins stood at 14.5%, expanded more than expected. Sudashan Kumar is here with more. Sudashan. Take rise on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved. Fresh slippages came down sharply and advances growth was above the industry average. For more on the numbers, I have with me the man of the moment, chairman of State Bank of India, Mr. CS Seti. Mr. Seti, first up, congratulations. It's been a bit of a milestone quarter. Business for State Bank of India crossing 100 lakh crore rupees. You know, how do you see growth trends shaping up for the rest of the year and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, you know, lot of efforts being made in both in terms of fiscal side as well as regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. And we have seen the sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. And corporate credit also we have seen a turnaround. In last quarter we had an almost negative growth rate in the corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very very confident that I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, you know, below 50 basis point is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality and there are no concerns in any of the segments.
Okay. Mr. Seti, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground, you know, increased credit demand? And going ahead, how much of a boost, you know, will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of, you know, home loan segment, in terms of MSME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished, both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe, you know, it's too early to talk about sustained consumption demand. We will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel, cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates. And some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of a pipeline, what do you have for corporate credit growth? And, you know, if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter, which is eminently feasible to take to 10%. So this is what we are expecting. And in terms of pipeline, more than 7 lakh crore pipeline is available. This is a combination of working capital under utilization and term loans sanctioned but under disbursement, and term loans in the process of sanction. I think this is a good pipeline to have. You know, the first credit demand obviously will come from the higher working capital utilization, followed by the draws from the term loans which are already sanctioned, and of course the ones which are going to be sanctioned. So there's a good visibility. It's only a matter of how they're spaced out, which contributes to the growth rates.
Well, you know, Mr. Seti, your NIMs surprised the street. There was, you know, expectation of decline. You've shown a bit of an improvement, 2.97%. You know, with the expected rate trajectory from RBI, can we expect you to hold on to these levels or marginally improve them from here on?
So our effort, if you have seen the margin improvement essentially came because of better liability management on the deposit side and also on the resources side. Overall resource cost has come down, and we have also significantly stayed away from the wholesale deposits, which means that high-cost deposits are not acquired and the retail deposits are acquired, and CASA has witnessed a good growth rate. And in fact 6 to 7% savings account balances increase on a base of 17.5 lakh crore is a remarkable one, and we are also seeing good current account balances. So this is likely to further help us in reducing the cost of resources. While the rate cut is something which we need to be looking at, because the rate cut will essentially impact the EBLR book. As I mentioned, the exit NIM will be more than 3% for March 26. We are still holding on to that guidance.
All right. Mr. Seti, very briefly on the expected credit loss guidelines. Is there a back of the envelope calculation on what the impact could look like, and will you start to make some additional provisions in the coming quarters, you know, to meet the requirements?
One is the long roadmap which is proposed almost five years now from now, and once the final guidelines are released, draft guidelines are available, we would definitely look at it. We would definitely use the roadmap. It's not that we are going to frontload any of the provisions. We will, at this moment, we are thinking that the four to five year period which is given for implementation roadmap, we will definitely be using it. Which means that the impact on the balance sheet would be limited.
Well, Mr. Seti, finally, SBI has had a big role to play in Yes Bank's turnaround. The stake sale in this quarter also has boosted your profitability, but you continue to hold that balanced 10% stake in Yes Bank. Now that you know they have a long-term strategic investor, how long will you expect to hold on to the stake or how quickly will you look to divest this remaining stake?
See, there's no compulsion either to exit or stay on. Obviously, you know, that's a call which our board will take at the appropriate time. So till that time, we will, we still have a board seat on the Yes Bank. We will help the strategic partner to settle down and ensure that the bank is on the growth path, and we are not in a hurry to exit. Neither we have any compulsion to stay back.
All right, Mr. Seti, we'll leave it at that. Thank you so much for speaking to CNBC TV18. Always a pleasure to have you.
Welcome back. You're watching Business 360. Shares of automaker M&M surged after the company's strong second quarter performance beat estimates on most parameters. Net profit rose nearly 18% while margins stood at 14.5%, expanded more than expected. Sudashan Kumar is here with more. Sudashan. Take rise on profits aided by exceptional items and a 3.3% rise in net interest income. Asset quality improved. Fresh slippages came down sharply and advances growth was above the industry average. For more on the numbers, I have with me the man of the moment, chairman of State Bank of India, Mr. CS Seti. Mr. Seti, first up, congratulations. It's been a bit of a milestone quarter. Business for State Bank of India crossing 100 lakh crore rupees. You know, how do you see growth trends shaping up for the rest of the year and where do you expect to close the year in terms of overall business and profitability?
Thank you, Ritu. We see a robust credit demand coming back. As I mentioned, you know, lot of efforts being made in both in terms of fiscal side as well as regulatory side. Announcements which have been made in terms of simplifying various activities in the banking space, and the GST 2.0 and income tax benefit which was given earlier, all are playing out now. And we have seen the sustained consumption demand coming back, and we have seen double-digit growth across the business segments except corporate credit. And corporate credit also we have seen a turnaround. In last quarter we had an almost negative growth rate in the corporate credit, but we have seen 7% corporate credit growth, and we expect that this corporate credit growth will be double digit in the next two quarters. So I'm very very confident that I did mention on your channel when the banking announcements were made that at least 1% additional credit growth is feasible, and I'm sticking to that.
Well, you are sticking to a higher credit growth guidance, but let's start with the asset quality. A marked improvement in this quarter, slippages are down 40%, credit cost at 43%. Is this trend going to sustain or are there any areas of concern you'd want to point out? And in terms of guidance for the full year, what will the slippages and credit costs look like?
Our credit cost guidance, you know, below 50 basis point is something what we mentioned. Even the slippage ratio would be 0.5% through the cycle is what we have guided, which means that we expect the asset quality to be robust going forward also. So we have no concern in any segment. Currently almost all the segments are displaying high credit quality and there are no concerns in any of the segments.
Okay. Mr. Seti, like you said, credit growth guidance now has been raised to 12 to 14%. Where are you seeing on the ground, you know, increased credit demand? And going ahead, how much of a boost, you know, will you expect from something like M&A financing, the easier capital market financing norms announced by RBI? How much will that add to your credit growth going ahead in future, of course?
So more than these two what you mentioned, I think the real economy, whether it is in terms of, you know, home loan segment, in terms of MSME, in terms of agriculture, they're all witnessing good growth rates. If you see in our portfolio in Q2, 14 to 17% growth rates across these segments. I think this is very important, and we have very large portfolio of these segments, which means that a double-digit growth rate here will itself contribute to 12 to 14% credit guidance what I've given. And we also have a very significant pipeline on the corporate credit side, and this pipeline, a part of which is converted into real sanctions and disbursement, is constantly getting replenished, both in terms of the discussions which we've been having with the corporates. I assume that earlier also I mentioned that the sustained consumption demand which we are witnessing at this moment, maybe, you know, it's too early to talk about sustained consumption demand. We will wait for another couple of months. October has been a good month in terms of the credit growth across the segments, and if that sustained consumption demand is visible, the private capital expenditure in certain sectors which we have not been seeing, either steel, cement, is likely to come back. There still will be a challenge because the large corporates have their cash balances with them, significant cash balances. They will be consuming that cash balance first. So the corporate credit essentially will come from the mid-corporate segment, may not be coming from the large corporates. And some of the central PSUs spending on the capex, for example refineries and all, is also contributing to the corporate credit growth.
Okay. So corporate credit growth will be led by the mid-corporate segment more than the large corporates. In terms of a pipeline, what do you have for corporate credit growth? And, you know, if you could tell us more about when you say you expect a double-digit growth in the second half of the year in corporate advances, what would that look like?
So we posted a credit growth of 7.1% in the current quarter, which is eminently feasible to take to 10%. So this is what we are expecting. And in terms of pipeline, more than 7 lakh crore pipeline is available. This is a combination of working capital under utilization and term loans sanctioned but under disbursement, and term loans in the process of sanction. I think this is a good pipeline to have. You know, the first credit demand obviously will come from the higher working capital utilization, followed by the draws from the term loans which are already sanctioned, and of course the ones which are going to be sanctioned. So there's a good visibility. It's only a matter of how they're spaced out, which contributes to the growth rates.
