State Bank of India

Namaste and good evening, ladies and gentlemen. My name is Sanjay Kapoor, and I'm the general manager of performance planning and review department of the bank. On the occasion of the declaration of quarter two financial year 24 results of the bank, it gives me immense pleasure to welcome the analysts, investors, and our colleagues for an in-person meeting. I also extend a warm welcome to the analysts, investors, and colleagues who have joined this presentation through our live webcast. We have with us on the stage our Chairman, Sri Dinesh Khara, at the center. Our Managing Director, International Banking, Global Markets, and Technology, Sri C.S. Sethi. Our Managing Director, Risk Compliance and Stressed Assets Resolution Group, Sri Ashwini Kumar Tiwari. Our Managing Director, Retail, Business and Operations, Sri Alok Kumar Chaudhary. Our Deputy Managing Directors, our Deputy Managing Director of Finance, Srimati Saloni Narayan. Our Deputy Managing Directors heading various verticals and Managing Directors of our subsidiaries are seated in the first row of the hall. We are also joined by the Chief General Managers of different verticals, business groups. To carry forward the proceedings, I request Chairman Sir to give a brief summary of the BAG's Q2 FY24 performance and the strategic initiatives undertaken. We shall thereafter straightaway go to the questions and answers session. However, before I hand it over to the Chairman Sir, I would like to read out the safe harbor statement. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcomes may differ materially from those included in these statements due to a variety of factors. Thank you. Now I would request Chairman Sir to make his opening remarks.

Thank you very much. Good evening, friends. Thank you for joining this analyst meet post announcement of quarter two financial year 24 results of the bank. Let me first and foremost start with a brief description of the present global economic scenario. Global growth remains weighed on by tight financial conditions, uncertainty about the policy trajectory, high debt distress, and geopolitical tensions, which have been further accentuated by the conflict in the Middle East, labor markets and major advanced economies continue to remain tight, prompting central banks to maintain higher for longer stance. The International Monetary Fund, in its October 23 update of the World Economic Outlook, kept the global growth forecast unchanged at 3%. in the year 2023, same as in its July 23 update. Growth in 2024 is, however, projected to moderate to 2.9%. As a stronger than expected momentum in the U.S. is likely to be more than offset by a weaker than expected growth in the Euro area and China. Against this backdrop, the outlook for domestic activity is brightening on account of the sustained buoyancy in services, consumer and business optimism, public spending on infrastructure, and the underlying strength of the financial sector's balance sheet, even as corporations deleverage and post strong bottom lines. Consumer confidence has improved with uptick in most of the macroeconomic conditions and Overall credit ratio of ICRA assigned ratings was 2.0 in April-August 23, indicating improved credit quality of India Inc. Rating upgrades were strong in the hotels, auto components, financials and transport and infrastructure sector. Growth is expected to gain momentum through the rest of the year, especially from the impetus of festival spending. High frequency indicators indicated showing acceleration increase in quarter ending September 23. GST revenue remains robust as monthly GST threshold has now increased to 1.66 trillion in April-October 23 as compared to 1.5 trillion in financial year 23. On the external front, the current account deficit is modest with sufficient foreign exchange reserves, providing a strong buffer that is insulating the economy from global spillovers as well as from the slowdown in external demand. While recognizing global risk and the volatility in financial markets that they entail, real GDP growth is expected at 6.5% and financially at 24%. On the banking front, the bank credit growth remained strong in the first half of financial year 2024 in tandem with the economic activity. Credit extended by the scheduled commercial banks rose by 19.3% by YOY as on 6th of October 2023, over and above the growth of 16.7% a year ago. As demand for credit continues, we expect credit and deposit may grow by 16-17% in 2024. In the above economic backdrop, let me now highlight a few key aspects of the bank's performance in the half year and the second quarter of 2024. I am pleased to announce that we have posted quarterly net profit of 14,330 crores, which has increased by 8.03% by OIE. Operating profit for the second quarter of financial year 2024 is at 19,417 crores. which has moderated by about 8.07% YOY. ROA for the first half of financial year 2024 stands at 1.10% and has improved by 34 basis points over the corresponding period last year. However, the ROA for the second quarter of financial year 2024 has moderated by 3 basis points on YOY basis to 1.01%, ROE for the first half of financial year 2024 has improved by 649 basis points to 22.57% by OI and perhaps it is the highest ROE in the industry. Most other core profitability metrics have also improved during the current year. Net interest income for the second quarter financial year 24 increased by 12.27%. YOY on the back of improvement in yield and the continuing credit offtake. Domestic NIM for the first half of financial year 24 is at 3.45% and it has increased by 6 basis points on a YOY basis. Domestic NIM for the second quarter of financial year 24 is at 3.43% and it has declined by 12 basis points by OI on account of increase in cost of deposit during the quarter. We expect NIMs to be stable around this level by the year end. Non-interest income has increased by 21.59% by OI mainly due to increase in fee income by 10% and profit on sale of investment during the quarter. Operating expenses have increased by 34.60%. Why? Mainly on account of additional poison made for the ensuing wage revision. Earlier, the poison for wage revision were made at the rate of 10% with effect from November 22, which we have now increased to 14% with backdated effect from November 22, due to which additional poison of 3,417 crores have been made in the second quarter. As a result, the operating profit has been impacted and has come down. On the business front, the credit growth has been robust across all segments. Domestic advances grew by 13.21%, mainly driven by SME advances which grew by 22.75%, retail personal advances which grew by 15.68% and agri-advances which grew by 14.76%. Corporate segment advances grew only by 6.62%. Recently, there have been concerns on the growth of unsecured loan portfolio in the banking industry. However, I wish to state that excess credit has been one of the safest product lines of the bank as it is given to corporate salary account customers whose salaries are visible to us. Out of the total portfolio of Ex-West Credit, nearly 82.6% of the customers are either employed in armed forces or are government employees and nearly 12% are employed with reputed corporate including public sector entities etc. The portfolio of Ex-West Credit stands at 3.2 trillion as on September 23 with a gross NPA ratio of 0.69%. It is actually constituting 25% of the total retail personal portfolio of 12.43 trillion. We also have a strong analytics-driven collection mechanism using contact centers for the pre-delinquency outbound voice recording. calls and also loan account management system for calling by the branches. As a result, as I mentioned that the gross NP of the portfolio is only at 0.69%, indicating the resilience of the portfolio in terms of the asset quality. Under deposits, domestic deposit grew by 11.80%, driven by growth in current account deposits and term deposits. Savings bank deposit have shown a growth of 4.34% by OI. Our foreign offices have continued to perform well with the growth in advances of 8.11% by OI, as well as deposit at 14.57% by OI. Foreign office advances have crossed an important milestone of 5 lakh crore. With regard to the asset quality, our gross NPA ratio has improved by 97 basis points by OI and stands at 2.55% and continues to be at its lowest level in more than 10 years. Our net NPA ratio has also improved by 16 basis points and stands at 0.64%. Slippage ratio for the first half of financial year 24 has improved by 16 basis points YOY and stands at 0.70%. The consistently improving asset quality is also reflected in our credit cost which stands at 0.22% and it has improved by 6 basis point YOY. PCR including OCA improved by 39 basis point and stands at 91.93%. PCR for quarter 2 of financial year 24 has declined by 248 basis point to 75.45%. Herein I would like to mention that our PCR for the corporate book has gone to 99.55%. On the restructuring front, our total exposure under COVID resolution plan 1 and 2 stands at 20,854 crores as at the end of the second quarter of financial year 24. Restructuring book has behaved well with 20% of the current exposure falling under SMA 1 and SMA 2 category. We are holding sufficient additional provision against the restructured accounts. If you recall, we had kept the provision at about 30% and we have got about 20,000 crore of book and we are holding sufficient provision for this book. The bank remains very well capitalized and we have sufficient headroom to take care of the normal business growth requirements. Our capital adequacy ratio has improved by 77 basis point. YOY and NOIT stands at 14.28%. CET 1 ratio has also improved by 41 basis point to 9.94% and both the ratios are well above the regulatory requirement. Herein I would like to mention that we have not reckoned the profit which we have earned till now and if at all we will add that also then our Capital adequacy ratio will be at around 15.32%. Digital continues to be an important customer acquisition engine for the bank across asset as well as the liability products. During the quarter, we have sourced 61% of the savings account digitally through UNO. We are seeing increased traction in cross-selling business through UNO. This quarter, we have already earned about 190 crore worth of fee income through UNO on account of sale of third-party product, our subsidiary products. We are seeing increased traction in cross-selling business through UNO. We have recently launched UNO for every Indian in which customers of other banks can now access and experience the seamless UPI journey on UNO. Nearly 25 lakh registrations have been done during Q2 of financial year 24 since its launch on 1st of July 23. Advances business through analytical leads has grown 38% by OI in the first half of financial year 24. Our subsidies are also continuing to perform well and continue to create significant value for all the stakeholders and most importantly for the customers. Most of our subsidies are leaders in their respective segments. We will continue to nurture them and see that they continue to create value for their own shareholders as well as the shareholders of SBI. To conclude, I thank you all for your continuous support to the bank. Being proxy to the Indian economy, we consider it as a privilege to be able to contribute towards the growth of our economy. We remain committed to rewarding your trust in us with sustainable returns over the long term. I wish everyone here the best of health and happiness in this festive season. My team and I are now open to taking questions.

Thank you very much. We now invite questions from the audience. For the benefit of all, we request you kindly mention your name and company. For the benefit of all, we request you to kindly... For the benefit of all, we request you to kindly mention your name and company before posing the questions. To accommodate all the questions, I apologize. Sorry. So to accommodate all the questions, we request you to restrict your questions to maximum two at a time. Also kindly restrict your questions to the financial results only, and no questions to be asked about specific accounts, please. In case you have additional questions, the same can be asked at the end. We now proceed with the question and answer session. And the first question is from here. Can you?