Detailed Narrative
State Bank of India concluded FY25 with a robust financial performance, reporting a net profit of ₹70,901 crores, marking a significant 16.08% increase year-over-year. The bank's total deposits grew by 9.48% YoY to ₹53.82 trillion, while whole bank credit expanded by 12% YoY, with domestic credit growth at 11.56%. This growth was broadly diversified, with SME advances growing by 16.86%, agriculture by 14.29%, corporate by 9%, and retail personal by 11.4%. Foreign offices also contributed with a 14.84% YoY advance growth, primarily from US markets and External Commercial Borrowings.
Asset quality remained a key strength, with the slippage ratio for FY25 at a low 0.55% and the retail personal slippage ratio even lower at 0.48%. The credit cost stood at 0.38%, and the provision coverage ratio (PCR) was healthy at 74.42%. The bank's capital adequacy ratio was 14.25%, with a CET 1 ratio of 10.81%, both well above regulatory requirements, providing sufficient headroom for future business growth. Management highlighted the consistent achievement of RoA greater than 1% and RoE greater than 19% for FY25, underscoring the bank's operational efficiency and scale.
Strategic initiatives included continued focus on digital banking, with over 8.77 crore customers registered on YONO, and 64% of new savings accounts opened digitally. The board also approved an enabling resolution to raise equity capital up to ₹25,000 crores over the next 12 months, though the timing would be contingent on market conditions. Explanations were provided for Q4 movements, including a significant increase in miscellaneous expenses due to a ₹1,300 crore PLI provision for higher-grade employees and a boost in operating profit from government-backed SR provision reversals, amounting to ₹3,875 crores gross and ₹2,900 crores net profit increase.
Looking ahead, management provided guidance on several key metrics. While the previous credit growth target of 14-16% was moderated, the bank now expects overall credit growth of 12-13%, with corporate loan growth specifically targeted at 12%. The Chairman reiterated the goal to consistently achieve RoE over 15% and maintain RoA at 1%. Despite anticipated pressure on Net Interest Margins (NIMs) due to potential rate cuts, the bank aims to protect NIMs at the 3% level, leveraging its predominantly MCLR-linked and fixed-rate loan book. The cost-to-income ratio is targeted to remain below 50-51%.
Concerns raised during the Q&A included the sequential increase in Q4 employee expenses and overheads, which management clarified were due to annual PLI provisions and other staff-related adjustments. The impact of a large account recovery and SR revaluation was also discussed, with specific figures provided for their contribution to NPA reduction and treasury income. The bank remains focused on strengthening its liability franchise, particularly current accounts, and leveraging digital adoption and AI technologies to drive operational efficiencies and sustained growth.