Well, State Bank of India has reported a strong quarter supported by broad-based loan growth, a healthy NII growth, sequential improvement in margins that surprise, and stable asset quality with a seasonal rise in slippages. Credit growth is the best in 15 quarters at least, but that far outpaces deposit growth, and that resulted in a slightly higher credit deposit ratio. Let's bring in Mr. Challa Sreenivasulu Setty, the chairman of State Bank of India for more on the quarterly performance. Mr. Setty, always a pleasure to have you here on CNBC-TV18, and it's a solid set of numbers from SBI. But if I really had to just nitpick on some of the headline numbers, treasury income looks lower, forex was lower, I believe on account of the NOP. Operating expenses is better, largely from that sharp fall in overheads, which you could call a one-off. Can you assure the street that this stellar performance we saw in the first quarter can be sustained through the rest of the year?
Thank you, Latha, for giving me this opportunity. The sustainability and consistency of performance is something what we always look for, and the numbers what you see now are a conscious effort in that direction. And whatever numbers you mentioned in terms of outliers, I think they're not outliers at all. The overheads uptick sequentially will always be there, and on the year-on-year, I think the overheads are contained. And what are the standing out numbers are in terms of our proactive adjustment in our cost of resources. I think we focused on containing the cost. It's almost seven basis point reduction. That really helped us in terms of ensuring that in very difficult market conditions, margins are protected. And we also have a fair idea in terms of what is going to be our FCNR B trajectory in the Q2. So we have proactively reduced our bulk deposit, which has also contributed to the cost of resources coming down. So with the availability of liquidity and the capital what we have, we are very confident that these numbers will be maintained.
All right. So, let's talk about the advances. They've grown very healthily, but almost double the pace of deposits. Is that something that concerns you? The CD ratio inching up to about 74%. Are you comfortable at those levels, or would you look to bring that down?
Ritu, I think we also mentioned that our ability to fund this credit growth, apart from the deposits, also comes from the excess liquidity we have in the form of excess SLR. As we speak, we have almost 4 lakh crore excess SLR, which gives an ability to look out beyond the high-cost deposits. We believe that any bulk deposits the system, wholesale deposits what banks resort to, is a treasury activity, which means that the treasury has an option either to access the bulk or go to the market and borrow because we have adequate securities on offer. So combining the liquidity which is available, excess liquidity which is available in the system within our system, as well as around 10-11% growth rate in deposits what we are seeing with FCNR B flows what we have, I'm sure we comfortably can provide the funding capacity.
Let me pick up on that 10 to 11% deposit growth, sir. I mean this 10 billion dollar FCNR raised target that you have. Will that then continue to lower your reliance on bulk deposits and put the number look even better, you know, if the FCNR flows are better?
FCNR, I think there's only so much you can reduce on the bulk because some of the bulk deposits are also relationship deposits, right? So long-term relationship also we give a better rate for them in the form of bulk deposits. But broadly speaking, yes, I agree with you that a dominant portion of this FCNR B deposit, not only for us but for the major banks which are raising FCNR B, would be reducing the competition for the bulk deposits. So obviously that would overall cost be reduced. But if the credit growth continues to be robust, some of the banks probably would still have to access the bulk deposit market.
You know, related question then, sir, because your margin guidance for the year, one, you've surprised us in the quarter with improvement, expansion in margins. Now you're targeting a 3% NIM for the full year. But this large FCNR raise that you're factoring in, could that impact your margins from here, or is that already baked into your guidance?
It is baked into our guidance. We have given a 12-month, the full year guidance at 3% NIM. I think we are still standing by that.
All right, sir. Even your credit growth guidance, you've raised it. It was earlier I think 13-14%, now you're talking about 14 to 15%. What is the visibility that you have on the pipeline? Will a lot of this come from the corporate book which is seeing some strong growth, or exactly where are you seeing more credit demand?
