By Siddhi Nayak and Nishit Navin
MUMBAI/BENGALURU (Reuters) -State Bank of India on Thursday reported record fourth-quarter profit that beat estimates on strong loan demand, and forecast credit growth for the current fiscal year to keep the same pace as in the last 12 months.
The state-run bank’s net profit rose 24% to 206.98 billion rupees ($2.48 billion) in the quarter ended March 31, beating analysts’ expectation of 135.65 billion rupees, as per LSEG data.
Shares of the lender rose as much as 3.6% to a record high after the results before closing 1.1% higher in a weak market.
SBI expects to maintain credit growth of 14%-16% in the current fiscal year, SBI chairman Dinesh Khara said in a post-results conference. The bank reported domestic loan growth of 16.26% and overall growth of 15.24% at the end of March.
Growth in the loan book of SBI, India’s largest lender, is seen as an indicator of broader economic trends in the country.
SBI’s retail loans — its biggest segment — grew 14.68%.
“Overall it is a strong performance with asset quality too improving. Credit growth is strong on such a large balance sheet, even better than some large private banks,” said Anand Dama, who heads Banking, Financial Services and Insurance at brokerage firm Emkay Global.
Indian banks have reported strong loan growth over the past few quarters, boosted by consumer spending amid firm economic growth.
SBI’s deposits growth slowed sequentially to about 11%, and the bank expects deposits to grow 12-13% this fiscal year.
Net interest income, the difference between interest earned and paid, grew just 3% to 416.55 billion rupees, as interest expenses rose due to excess liquidity and as the bank raised funds through infrastructure bonds in the quarter.
The bank’s net interest margin fell 37 basis points year-on-year, but was up 13 bps from the previous quarter. Current margin levels will be “sustainable” going forward, SBI added.
Indian lenders have been grappling with tighter liquidity condition in the banking system leading to pressure on key margins, but SBI said deposit costs have plateaued.
($1 = 83.4876 Indian rupees)
(Reporting by Nishit Navin in Bengaluru, additional reporting by Rama Venkat and Dimpal Gulwani; Editing by Rashmi Aich and Nivedita Bhattacharjee)
