SBI Chairman Says Q1 NPA Rise Is Seasonal, Not a Sign of Stress
SBI's chairman attributes the sequential rise in Q1 NPAs to seasonal factors, dismissing concerns over asset quality and private capex slowdown.
State Bank of India (SBI) Chairman CS Setty has pushed back against concerns over a sequential deterioration in asset quality, attributing the first-quarter uptick in bad loans to seasonal factors rather than underlying stress.
Speaking at the bank's Q1FY27 earnings press conference in Mumbai, Setty addressed queries on the rise in Gross Non-Performing Assets (GNPAs) to Rs 74,273 crore and slippages of 0.57%. He cautioned against drawing conclusions from quarter-on-quarter comparisons, noting that Q1 is typically an outlier for business volumes, yields, and credit growth.
"Q1 tends to be an outlier quarter from many aspects... Q2, Q3, and Q4 pick up substantially," Setty said, adding that recoveries and upgrades of around Rs 4,900 crore during the quarter further cushioned the impact. He emphasised that year-on-year metrics show significant improvement across all aggregates.
The Chairman also addressed the rapid growth in agricultural advances (up 25.43%) and SME loans (up 22.33%), reassuring that the expansion is driven by high-quality portfolios. He clarified that SME growth is predominantly supported by the Emergency Credit Line Guarantee Scheme (ECLGS), while agriculture growth is led by institutional finance and investment credit.
On the bank's outlook, SBI maintained its full-year credit growth guidance of 14-15%, backed by broad-based demand. Deposit growth is projected at 10-11%, with headroom to push the Credit-to-Deposit (CD) ratio up to 80%. To optimise funding costs, the bank has raised $1 billion via commercial paper and plans to tap up to $10 billion in FCNR(B) deposits, supported by an excess SLR buffer exceeding Rs 4 lakh crore.
SBI reported a 10.23% year-on-year rise in standalone net profit to Rs 21,121 crore for the quarter. Net Interest Income grew 14.88% to Rs 46,992 crore, while gross advances crossed Rs 50 lakh crore. The Gross NPA ratio improved by 36 basis points annually to 1.47%, and total business crossed the Rs 110 lakh crore milestone.