By Nishit Navin and Siddhi Nayak
(Reuters) -State Bank of India, the country’s largest lender by assets, lowered its deposit growth forecast on Friday amid rising competition among banks.
“Guidance holds for double-digit (deposit) growth. We are endeavouring towards 12%-13% but will probably not be able to reach that by FY25. The effort is to have at least 10%-11% deposit growth,” its chairman CS Setty told reporters.
Loans given by Indian banks have been growing at double-digit percentages since April 2022, boosted by a spike in consumer spending, but the rise in deposits has lagged for the most part.
This has pushed lenders to raise interest rates or to slow loan growth, hurting margins.
SBI’s domestic net interest margin shrunk to 3.27% in the three months to Sept. 30 from 3.43% a year earlier and 3.35% in the previous quarter.
CS Setty said SBI’s deposit rates have peaked and he expects lending margins to remain stable going forward.
The state-run bank’s gross loans grew 14.9% on-year in the September quarter while deposits rose 9.1%.
The lender expects a loan growth of 14%-16% for the fiscal year, Setty said.
Earlier in the day, SBI reported a bigger-than-expected 28% rise in second-quarter profit, boosted by higher non-interest income and lower expenditure.
Profit rose to 183.31 billion rupees ($2.17 billion), beating analysts’ expectation of 161.89 billion rupees, as per data compiled by LSEG.
SBI’s non-interest income, which includes earnings from investments, jumped 41.5% to 152.7 billion rupees.
Its net interest income, or the difference between interest earned on loans and paid on deposits, rose 5.4% to 416.20 billion rupees.
Gross bad loans as a proportion of total loans fell to 2.13% from 2.21% at the end of June.
Provisions and contingencies rose sharply to 45.06 billion rupees from 1.15 billion rupees a year ago, while provisions for bad loans doubled.
($1 = 84.3490 Indian rupees)
(Reporting by Nishit Navin and Siddhi Nayak; Editing by Mrigank Dhaniwala)
