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After record earnings, SBI confident of mirroring double-digit credit growth in banking system

After record earnings, SBI confident of mirroring double-digit credit growth in banking system

After record earnings, SBI confident of mirroring double-digit credit growth in banking system
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By CNBCTV18.com Nov 7, 2022 1:11:37 PM IST (Published)

SBI Chairman Dinesh Kumar Khara tells CNBC-TV18 that the lender will be able to meet credit growth in the economy and will calibrate interest rates in sync with what market expectations. India's largest bank by assets has staged a strong quarterly performance, sending its shares to a record high.

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State Bank of India (SBI) — the country's largest lender by assets — just staged a strong quarterly performance, sending its shares to a record high, and is eyeing double-digit credit growth in the entire banking system. The onset of the festive season and pent-up demand has kept growth impulses strong for India, SBI Chairman Dinesh Kumar Khara told CNBC-TV18.
"With economic activity gaining momentum, we expect this credit growth to continue in the near term... SBI will be able to meet the credit growth in the economy. Going forward, I still expect credit growth to be somewhere in the range of 14-16 percent," he said. 
Khara also said SBI is calibrating interest rates in sync with market expectations.
His remarks come days after SBI far exceeded Street estimates with a record quarterly net profit of Rs 13,264.5 crore boosted by strong loan growth and improvement in asset quality. The lender reported a 12.8 percent increase in net interest income — or the difference between interest earned and interest paid — to Rs 35,183.4 crore.
Analysts in a CNBC-TV18 poll had estimated SBI's quarterly net profit at Rs 9,803 crore and NII at Rs 33,099.6 crore.
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The SBI management said the lender has not only ridden through tough times but also grown robustly.
"Over the years, we have strengthened our underwriting processes quite a lot, which has helped us in mitigating credit risk; we should be in a position to maintain this kind of credit quality," said Khara.
SBI reported credit growth of 19.9 percent compared with the corresponding period a year ago, with domestic advances growing 18.2 percent.
Its improving asset quality — measured as a percentage of bad loans in total loans — is reflected in its lower credit costs, it said. 
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Its net bad loans ratio came down to 0.8 percent, down by 72 basis points on year.
The SBI Chairman believes the lender should have a "reasonably decent  opportunity to have decent margins".
SBI's global net interest margin — a key measure of profitability for financial institutions — improved by 30 bps sequentially to 3.32 percent in the July-September period.
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