State Bank of India

Good evening, everyone, 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 behalf of State Bank of India, I am delighted to welcome the analysts, the investors, colleagues, and everyone present here today on the occasion of the declaration of the results of the bank for the financial year ending 2024. I also extend a very warm welcome to all the people who are accessing the event through our live webcast. We have with us on this stage our Chairman, Shri Dinesh Khara, at the center, our Managing Director, International Banking, Global Markets and Technology, Shri CS80, our Managing Director, Corporate Banking and Subsidiaries, Shri Ashwini Kumar Tiwari, our Managing Director, Risk Compliance and Stressed Assets Resolution Group, Shri Alok Kumar Chaudhary, Our Managing Director, Retail Business and Operations, Sri Vinay M. Tonse. Our Deputy Managing Director, Finance, Srimati Saloni Narayan. Our Deputy Managing Directors, heading various verticals and Managing Directors of our subsidiaries are seated in the front rows of this hall. We are also joined by the Chief General Managers of different verticals and business groups. To carry forward the proceedings, I request the Chairman, sir, to give a brief summary of the Bank's financial year 24 performance and the strategic initiatives that have been undertaken in this regard. We shall thereafter straightaway go to questions and answers session. However, before I hand over to the Chairman, sir, I would like to read out the safe harbor statement. Certain statements in today's presentation may be 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 Slater to make his opening remarks.

Thank you. Thank you very much. Good evening, friends. Thank you for joining this analyst meet. I would like to start by thanking all of you. and all our stakeholders, including our customers, shareholders, employees, and the broader ecosystem for their support and helping us in creating the sustainable value for the economy. Let me first start with a brief description of the present global and domestic economic scenario. Global growth remains resilient with easing inflationary pressures and tight employment conditions in spite of geopolitical and extreme weather event risk. IMF, in its latest April 24 World Economic Outlook, raised the global growth forecast for 24 to 3.2%, 10 basis points higher than in its January 24 update, and expect the global economy to grow at the same pace in the year 25. Global headline inflation is expected to fall from an annual average of 6.8% in 2023, to 5.9% in 2024 and further to 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging markets and developing economies. Commodities and energy prices can drag the economic and growth prospect by infusing sudden shocks on the supply side, a collateral impact of escalating geopolitical tensions at multiple fronts. In India, the conditions are, however, shaping up for an upshift in the real GDP growth, backed by strong investment demand and upbeat business and consumer sentiments. CPA inflation has gravitated to 4.9% in March after averaging to 5.1% in preceding two months. CPA inflation is expected to moderate in ensuing months and is estimated to taper to 4.5% and financially 25%. compared to 5.4% average in FY24. In FY24, credit off-take of all scheduled commercial banks recorded a growth of almost 20%, while deposit grew by about 13.5%. And the momentum, with some moderation, is expected to continue in FY25 too. I'll now discuss the bank's performance. Once again, we have delivered excellent numbers. I'm happy to share that our net profit for financial year 24 is the highest ever at Rs. 61,077 crores, showing an increase of 21.59%. Our net profit for the quarter 4 of the financial year 24 also stands at Rs. 20,698 crores, which has increased by 125% sequentially. This is despite incurring wage revision expenses of Rs. 13,387 crore during the current year period as per the bipartite wage settlement and after absorbing the additional liability to the tune of Rs. 7,100 crores relating to pension liabilities and the DR neutralization in the third quarter as a one-time exceptional item. Our ability to absorb the above liabilities without significantly impacting the long-term profitability is Outcomes of the bank demonstrate the strength of our balance sheet. ROE of the bank is now at 1.04% for the whole of the financial year 24. It has improved by 8 basis points over financial year 23. The ROE for the financial year 24 is at 20.32%, which has improved by 89 basis points over financial year 23. We have been consistently delivering ROE in excess of 15% for last 7 quarters. Our aspiration from our current position of strength is to sustainably deliver the ROE of more than 15% through the business cycles. The cost-to-income ratio of the bank is at 55.66%, including the wages and expenses, and excluding the impact of the one-time exceptional item of pension liabilities and dearness relief neutralization in Q3 of FY24. Excluding the wage revision and one-time exceptional item, the cost-to-income ratio is actually at 49.34%, which is an improvement of 315 basis points over financial year 23. Non-interest income has shown a growth of 41% plus in financial year 24 over financial year 23. We believe sustaining our profitability at this level highlights the resilience of the underlying value drivers of the bank. The underlying drivers for the sustainable step-up in profitability profile of the bank has been the unmatched size and reach of the bank, with 50 crore plus customers comprising nearly 35% of the India's population. This is a testament of the continuous trust reposed in us by our valued customers. Our customer-centric approach, the process-oriented culture of the bank, strengthened underwriting processes and correct pricing of the risk have all contributed to the sustainable profitability. Our deposits have grown by 11% by OI and term deposits have grown more than 16% by OI. We are mindful of our liability profile as it provides us a stable stream of resources for We continuously monitor the concentration of our deposit profile daily, ensuring that dependency on the wholesale funding is contained within the prescribed levels. We retain reasonable reserve resources in the form of liquid assets over and above the CRR-SLR requirements to meet the future contingent demands and broad-basing the deposit mix. Unencumbered excess SLR was to the tune of about 3.7 trillion as of 31st March 2014. And the liquidity coverage ratio stood at 124% as of 31-3-24. All this is above the regulatory benchmark. I am happy to highlight that the credit growth has been robust across all the segments. Our retail, agri and SME advances have crossed 20 trillion. Out of the above, retail personal advances itself constitute almost 13.5 trillion dollars. Agri advances are more than 3 trillion and MSME advances are more than 4.33 trillion. They are all growing at a pace of 14.68%, 17.92% and 20% YOY respectively. The corporate segment is also showing healthy growth at more than 16% growth on a YOY basis. I am glad to share the progress we are making in the digital banking sector. 61% of our savings bank accounts were opened through Yono in the financial year 2024. And we are also leveraging analytics to its hilt, which has led to the significant business growth. And now that number stands at 1.37 trillion. All this is sourced through analytical leads showing growth of almost 32% on a YOY basis. As far as the asset quality is concerned, our gross NPA ratio has improved by 54 basis point YOY and stands at 2.24% as at March 24 and continues to be its lowest in more than 10 years. Our net NPA ratio has also improved by 10 basis point and stands at 0.57%. Slippage ratio for financial year 24 has improved by 3 basis point YOY and stands at 0.62%. The consistently improving asset quality is also reflected in our credit cost for financial year 24 which stands at 0.29%. It has improved 3 basis points on a YY basis. We are well provided for our loan book with PCR including OCA standing at 91.89% and PCR excluding OCA standing at 75%. Our employees are recruited from the best talent in the country and are trained to handle the scale, complexity and the compliance requirements of the bank. SBA is the employer for life and most of our employees really believe in this. The attrition rate for the bank is only 1.43%. We take great pride in the process-oriented culture of the bank. While we are glad about the outcomes in the current quarter, We are also conscious of our areas of further improvement. On the liability side, we continue to focus on increasing our share in current account while maintaining our leadership in the savings bank deposits. The cost base of the bank is high. However, the same also reflects our focus on compliance and establishment costs. We aim to lower our cost-to-income ratio by focusing on the income side. Our CET ratio is CET1 ratio stands at 10.36, which is the highest ever since the implementation of the Basel III norms. Additionally, the current ROE profile of the bank remains above the credit growth trends, and hence we foresee CET1 acquisition going ahead. However, the bank is open to evaluate the options of raising equity if at all the growth trend so warrants. Our subsidiaries are also consistently performing well and continue to create significant value for all stakeholders, and most importantly, for the customers of the bank. To conclude, I once again would like to thank you for the support which you have extended. The bank, while pursuing its own progress, contributes to the progress and growth of the economy and its countrymen. We remain committed to rewarding your trust in us with superior sustainable returns over the long term. My team and I are now open for taking questions from all of you. Thank you very much.

Sir, compliments to you, sir. One of the most, I think, outstanding and fantastic results for the State Bank of India. And when we are going in the range of almost about 110 lakh crores of the operating profit on the yearly basis, I mean, going more than 1 lakh annualized basis, maybe 1 lakh 10,000 or 15,000 crores. So, all this net NPA and these figures look very small as compared to our profit generating capacity. Having said that, sir, my first question is on the recent RBI guidelines on the provisioning. Now, Our total, I think, infra and the project which are under implementation as well as might have been completed also, total loan including CRE altogether may be about 4,50,000 crores. Out of that, how much amount do you feel will come under the purview of these guidelines if it is implemented? And what is the ballpark figure by which we will require to increase our Capital adequacy, because otherwise also our capital adequacy as compared to some of the peer, I would not call peer bank, but smaller public sector banks, is much higher than our, and this has always been a concern. Though with this profit added for this year already in the CRAR, we are still at around 14.28%. So going forward and if this particular guidelines gets implemented, where do we stand?