SBI's CS Setty on Banking Boom & Core Sector Challenges, Impact Of Tariffs, And More

Thanks for having me with you today. We've crossed one milestone of operating profit of one lakh crores. We posted about one lakh ten thousand crores. Our conversion rate from operating profit to net profit is about 64%. So if that rate continues, assuming that there are no great provision requirements going forward, we need to reach around one lakh sixty thousand crores operating profit to have this one lakh net profit. So maybe two to three years is something what we believe. If our growth rate of 10 to 12% continues on the loan side and the overall balance sheet side, it's quite possible to reach in the next two to three years. But more than anything, I think we never pursue this bottom line number. Our effort has always been that, you know, how do we strengthen our balance sheet? How do we ensure that the quality book is maintained? I think that focus will continue.

This is too early to say anything because April generally, you know, most of the times audits go on and people also have exams and many things impact the economic activity overall. But what we still believe is that the growth rate what we have seen in the last quarter — around 12% on the loan side and around 10% on the deposit side — is quite achievable in the current financial year also. And we also believe that loan growth is a function of macros. If the nominal GDP, as expected, reaches 10%, I think the growth rate will be around 12 to 13% for SBI and 11 to 12% generally for the industry.

No, you're right. I think the benign asset quality is likely to continue for some more time. We haven't seen any major headwinds. From time to time we keep talking about unsecured personal loans, microfinance loans, but in the overall scheme of things they do not constitute a fairly large segment. It may impact one or two lending institutions who are actively having that kind of book. But as you mentioned, the broader banking sector is witnessing one of the best asset quality cycles currently. And despite the challenges on the global scenario, I think India story continues to be there even at the growth rate of 6.3%. I think we are well positioned. Number two is that we are also confident on maintaining the asset quality both at the industry level as well as on the bank level, because today the underwriting is much more robust in terms of data-based underwriting. We know fairly well the customer profile, both on the business side as well as individual side. So these enablers will help us to ensure that the asset quality is maintained. And most of us also have strengthened our collection mechanisms, which were not there earlier in a big way. So the collection efficiencies also have gone up. So the mainstream banks are much better positioned to maintain the quality now.