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Informist, Friday, Aug. 7, 2026

 

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--SBI Setty: Global econ remains in heightened uncertainty 
--CONTEXT: SBI Chairman CS Setty speaking at post earnings press conference 
--SBI Setty: Witnessing moderation in margins across banks 
--SBI Setty: Indian econ remains resilient in face of geopolitical headwinds 
--SBI Setty: Adopting AI across all facets of banking 
--SBI Setty: Maintain 3% guidance for NIM in FY27 
--SBI Setty: Will continue to strengthen deposit franchise 
--SBI Setty: Aim to raise $10 bln via FCNR(B) deposits till Sept 
--SBI Setty: Raised around $6 bln via FCNR(B) deposits Jun-Jul 
--SBI Setty: Aim for credit growth of 14-15% in FY27 
--SBI Setty: Aim for deposit growth of 10-11% in FY27 
--SBI Setty: Aim for return on assets ratio of 1% in FY27 
--SBI Setty: El Nino remains a key monitorable for rural consumption 
--SBI Setty: Don't intend to raise rates on FCNR(B) deposits any further 
--SBI Setty: Have potential to go up to 80? ratio 
--SBI Setty: Guide for cost to income ratio of below 50% in FY27 
--SBI Setty: Will not be aggressive in raising tier-II capital in FY27 
--SBI Setty: Will not be aggressive in raising tier-II capital in FY27 
--SBI Setty: Have excess SLR bonds worth INR 3.09 tln as of Jun 30 
--SBI Setty: Will have around INR 4 tln excess SLR post FCNR(B) deposit flows 
--SBI Setty: Don't see significant impact on NIMs due to FCNR(B) deposits 
--SBI Setty: Have corporate credit pipeline of INR 3.58 tln 
--SBI Setty: Remain concious on auto loan pricing 
--SBI Setty: Won't dilute any further stake in SBI Funds Mgmt 
--SBI Setty: No plans to list any other subisdiaries 
--SBI Setty: Credit growth may moderate in Q3, Q4 
--SBI Setty: Have sanctioned INR 325.7 bln loans under govt credit line 
--SBI Setty: Will re-look at our strategy on auto loans 
--SBI Setty: Don't see a repo rate hike in 2026 
--SBI Setty: Don't see a hike in deposit rates going forward

 

MUMBAI – State Bank of India expects its credit and deposit growth of 14-15% and 10-11%, respectively, in 2026-27 (Apr-Mar), Chairman C. S. Setty said Friday. The bank reported credit growth of nearly 19% on year and deposit growth of nearly 10% on year in the June quarter 

 

The robust credit growth in the June quarter was mainly due to a low base, Setty said at a post-earnings press conference Friday. "... what we are seeing is the traction in terms of credit growth which is likely to be continued into Q2 (Jul-Sept)," Setty said. However, credit growth is expected to moderate on year in the December and March quarters because of a high base effect.

 

Setty said current inflows through Foreign Currency Non-Resident (Bank) deposits would help keep credit growth in line with management's target despite deposit growth of only 10-11% in FY27. India's largest lender reported a net profit of INR 211.21 billion for the June quarter, up over 10% on year. 

 

The banking behemoth has raised $6 billion since Jun. 8 through Foreign Currency Non-Resident (Bank) deposits and aims to raise up to $10 billion by the end of September. The state-owned lender has introduced a special scheme and offers 5.25-5.50% on deposits between three to four years, 5.50-5.75% on deposits between four to five years, and 5.75-6.00% on deposits for five years. 

 

"We do not intend to do anything on interest rate on FCNR(B). I think we have mobilised a good number and also we have good visibility of the mobilisation going forward," Setty said when asked whether the bank 

plans to raise the rates offered on FCNR(B) deposits. The bank received most traction on the deposits from the United Arab Emirates. 

 

On the bank's target of 3% net interest margin for FY27, the chairman said he expects the bank to maintain it despite FCNR(B) deposits. "I personally believe that it would not have either a significant positive impact or a significant negative impact on the NIM. That is the reason we said that our NIM guidance remains at 3%," Setty said. The bank's net interest margin for the June quarter was 3%, as against 2.93% a quarter ago and 3.01% a year ago. 

 

Inflows through FCNR(B) deposits will also help the lender keep rates on bulk deposits lower as these deposits will help the bank meet credit demand. "So, essentially as long as these flows are adequate to cover the credit growth, SBI will not be aggressively pricing the bulk DIR (deposit interest rates)," Setty said. He said large banks which are able to mobilise FCNR(B) deposits will reduce their interest rate on bulk deposits.

 

SBI is not planning to raise funds through Additional Tier-I or Tier-II capital in FY27 as current deposits are enough to meet the credit growth. "With our excess liquidity, what we have in our balance sheet at this moment, I think 10–11% positive growth rate will comfortably provide adequate funding," Setty said. The bank's excess statutory liquidity ratio-eligible securities were worth INR 3.09 trillion as on Jun. 30 and Setty expects it to grow to INR 4 trillion post-FCNR(B) flows.  

 

SBI raised INR 46.91 billion through perpetual bonds in July at 7.75%. As of now, the bank has no plan to raise funds through external commercial borrowing, Setty said.  

 

Under the government's Emergency Credit Line Guarantee Scheme 5.0, which provides emergency working capital support to businesses affected by the West Asia conflict, the bank has sanctioned loans worth INR 325.70 billion and disbursed INR 254.40 billion, Setty said.

 

The lender has a corporate credit pipeline of INR 3.58 trillion, Setty said, adding that the corporate credit growth continues to be robust. The lender remains conscious of auto loan pricing due to muted loan growth, Setty said. "I think we were not too happy with our pricing on these auto loans," Setty said. "Many people are aggressively pricing and we will be re-looking at our strategy in terms of what we need to do on auto loans."

 

Setty said the bank has the potential to go up to 80% when it comes to the credit-deposit ratio without having any stress on our funding ability. The bank aims to keep the cost-to-income ratio below 50% in FY27. In the June quarter, the bank's cost-to-income ratio was 46.71%, against 47.71% a year ago.    

 

The bank aims for a return on assets ratio of 1% and a return on equity ratio of 15% for FY27, Setty said. The bank's return on assets ratio was 1.11% in the June quarter, down from 1.07% a quarter ago. Its return on equity ratio was 17.87% in the June quarter, against 19.70% in the year-ago quarter. 

Asked whether the bank has any plans to dilute its stake further in SBI Funds Management Ltd., Setty said the bank has already sold a 10% stake and has no further plans to sell more. Setty said the bank has no plans to list any other subsidiaries.  

 

The country's largest lender reported a net profit of INR 211.21 billion for the June quarter, up over 10% on year and over 7% on quarter. Its net interest income rose almost 15% on year and 6% on quarter to INR 469.92 billion in the June quarter. Friday, the bank's shares ended at INR 1,097.20 on the National Stock Exchange, up 1.1% from the previous close.

 

MACRO ECONOMY

Setty said the bank does not expect a rate hike by the Reserve Bank of India in 2026. He said the bank's management does not see a hike in deposit rates going forward. The chairman said the banking industry witnessed some moderation in margins while the liquidity and asset quality in the banking system continue to remain comfortable.

 

"The global economy continues to operate in an environment of heightened uncertainty... Against this backdrop, India's economic resilience continues to stand out," Setty said. "With respect to the banking sector, credit growth has accelerated across key sectors, supported by healthy demand from retail, MSME (micro, small and medium enterprises), agriculture and industries." 

The bank is adopting artificial intelligence across all facets of banking. Setty said the bank will continue to strengthen its deposit franchise. Going forward, El Nio remains a key monitorable for rural consumption, Setty said. "Currently it is too early to say what could be the impact and definitely may not be a great concern in terms of the asset quality," Setty said.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by J. Navya Sruthi and Kabir Sharma

Edited by Saji George Titus

 

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