Hello and welcome to NDTV Profit. You're joining us in this special broadcast where we're sitting right outside State Bank of India's towers and we're discussing the bank's Q2 results. State Bank of India has come out with its Q2 net profit of about 20,159 odd crore. That's a significant jump on a year-on-year basis considering the base, of course. Net interest income, the core income of the bank, has also grown about 3%. You've got the gross NPA figures coming in at 1.73. It's close to industry best, I would say. And a surprise number of 100 lakh crore on the balance sheet. I have with me Mr. Setty, the chairman of the bank — the 100 lakh crore balance sheet. What does this display about SBI and the broader banking system for India?
So it's basically 100 lakh crore deposits plus loans business levels balance sheet. We are a little far away from 100 lakh crore but we will reach, I think, soon. It's a great milestone. 55-56 lakh crore deposit base and almost 44 lakh crore above loans. Diversified across the segments — home loans, car loans, MSMEs, agricultural farmers, 1.6 crore farmers, 1.6 crore MSME customers, millions of home loan buyers. I mean, this is an amazing story, right? And 53 crore depositor customers. I look at this number as a milestone, as a reflection of our commitment to our customers.
A couple of other numbers also you mentioned in terms of profit, in terms of the net interest margin, in terms of the asset quality — operating at this scale and maintaining the asset quality with a 39 basis point credit cost shows the investments which we made in our technology, in underwriting process, and more importantly our manpower quality — in terms of our training system, in terms of investment, what we do in our HR processes. I believe this is all culmination of this number, and this is only a beginning. This bank and this economy has so much potential. I think we should look forward to that.
Fair enough. Let me quickly come to the internals a little bit. You know, the net interest income — we're still seeing that interest rate movement happening through the balance sheet. You're seeing depositary pricing still happening. Still, you've got an 8% growth on the CASA basis, which at 39 odd percent — 39.6% CASA ratio — at a bank of your size, it's massive, right? It's practically the deposit base of most banks out there. So I'm just trying to understand from you — at what point in time do you think you've seen your net interest margin move up sequentially, but at what point of time will you say it's stabilized and it's done — for now, now we're only moving up?
So our guidance is 3% NIM for the year. Through the cycle, I think this is what we are looking at, which means that you need to keep on rebalancing your liability side — that is deposit side, resources side — and as well as on your asset side. So, and we are, I hope that we are getting it right in terms of maintaining this balance. For example, when we have 100 basis point rate cut and EBLR — significant EBLR book is there with every bank — you need to manage your deposit side very well.
So a lot of people asked us in terms of the saving bank rate cut. I said saving bank account has become more of an operational account, it is no more a savings account, right? So we have recalibrated the rate of interest and the whole industry, of course, has done that. But neither daily average balances nor the number of accounts which are getting opened every day has come down, which means that our approach towards our customers in terms of providing quality service is one thing which gives me confidence that we will be able to manage on the resources side, still providing good interest rate on the asset side while maintaining 3% NIM through the cycle.
Okay. You've got 7 lakh crore of a pipeline for your corporate credit — that's there on the bank's decision-making table at this point in time. Part of it is sanctioned, part of it is still in the process of discussions. Is that private capex back on the table?
Private capex is happening but not secular in all the sectors. Still a challenge. Steel, cement, some of the core sector investments — even if they happen, they may not get reflected in the corporate credit books because they all have cash. If you see, one of the large conglomerates announced that even if they are adding capacities in the cement, it would not result in any borrowing, which means that most of the large corporates have cash balances. 13 to 14 trillion rupees cash balances are available. So the steel, cement and all will not probably lead to much of credit growth. Mid-corpus and renewables — central PSUs are spending in a significant manner on the refinery side. So these are going to contribute. Data centers is also a big opportunity for us to fund. Even the conventional power — some of this thermal power is coming back. So these are the sectors probably would be capital-consuming sectors.
The other sector which many a time we don't play out while the private capital expenditure — we keep talking about the services sector, that is NBFC, which provides the last-mile connectivity, is also one of the large borrowers from the banking system.
So then does the RBI opening up mergers and acquisitions — I mean, they've come up with some stringent sort of guardrails as part of the draft guidelines — but is that going to open up opportunities for you to then lend more towards corporates?
Yeah, it would definitely be opening up opportunities, though the guardrails are a little stringent. It's a good beginning, right? It's a faith which the regulator has reposed on the Indian banking system. Not necessarily that we've been kept away for so many years, but the whole universe of mergers and acquisitions is not as big as people think. The idea is that how do we be part of this journey, and if corporates have cash, obviously they will also be looking for opportunities of inorganic growth. Whether we can be part of that journey is something what we are looking at, and I believe that Indian banks will collaborate with some of the MNC banks which have been doing this. And Indian banks like us, who have been doing outbound acquisition financing for so many years, are in a good position to take care of this opportunity.
