SBI raises credit growth guidance to 21% for FY13

Revised from 18%; expects net profit in the range of Rs 14,000-15,000 cr

Witnessing a surprise surge in retail and small & medium enterprises (SME) loan growth in the fourth quarter, State Bank of India (SBI) today raised its forecast for credit growth in the current financial year to 21 per cent from the earlier estimate of 18 per cent. Chairman Pratip Chaudhuri said the sharp rise in advances (disbursements) was a combination of year-end rush and lag effect of substantial lending rate cuts.

The country’s largest lender had drastically cut lending rates by a little over 100 basis points during the second and third quarters on retail (auto and home), micro, and SME loans. It has also been aggressively taking over home loans from other banks. The bank had substantially cut lending rates for home, auto, micro, and small and medium enterprises.

Credit grew in line with the pace of loan offtake (16.04 per cent) for the banking sector. The bank’s credit grew 16.07 per cent, Rs 10,09,110 crore at the end of December 2012. Retail advances grew 13.98 per cent to Rs 1,99,824 core. Home loans grew 14.28 per cent from Rs 99,019 in December 2011 to Rs 1,13,163 crore in December 2012. On corporate loans, Chaudhuri said the increase was a mix of demand for working capital and some term loan investments. However, with the depressing shadow of the economic climate and demand slump, corporate demand (for loans) remains weak, said another SBI official.

Deposits might grow by 20 per cent but the bank will not get aggressive for bulk deposits, the SBI chief said. The bank recently raised the interest rate by 25 basis points on term deposits with a maturity of one year and above. Referring to the outlook for net profit and margins, he said SBI expects net profit of Rs 14,000-15,000 crore in 2012-13, backed by strong internal generation and robust demand for loans.

Net interest margins are expected at 3.70-3.75 per cent by end-March.

SBI had reported a marginal 4.08 per cent increase in net profit at Rs 3,396 crore for the third quarter ended December 31, 2012, mainly on account of higher provisioning for bad loans.