SBI Performs Slower Vs Peers

The credit growth picture does not look rosy for the banking sector. For the State Bank of India (SBI), it looks worse.

Data from the Reserve Bank of India (RBI) show average credit growth in the July-September quarter was 20%.

For SBI? 16.93%.

Peers such as ICICI Bank and HDFC Bank saw loan disbursements rise at 20.47% and 20%, respectively, in the second quarter.

“In the festive season, we have seen some demand for loans
to buy consumer durables. But that is not much even if you finance a large number of people,” Pratip Chaudhuri, chairman, SBI, said at a press conference on Wednesday.

Chaudhuri is optimistic that there will be some pick-up in the second half of the fiscal.

But analysts are on a different page.

Vaibhav Agrawal, vice-president (research), at Angel Broking, was categorical that SBI’s credit growth will not improve.

“That’s because SBI currently has low capital adequacy ratio. Due to insufficient capital, it will be forced to go slow on lending. The growth in the second half will be lower in the range of 14-16%,” bets Agrawal.

If one factors in the Basel II norms, SBI’s capital adequacy stands at 11.40% at September-end compared with 12.48% at September-end of 2010.

Capital adequacy ratio mandates setting aside a certain percentage of capital for every rupee lent.

State-owned SBI’s retail loans are also trailing. They grew 12.86% year on year,whereas the industry average for the July-September period stood at 15% .

If that was not enough, in the home loans segment, SBI’s immediate competitor, the Housing and Development Finance Corporation has been notching up a higher growth in the last two quarters.

In the July-September quarter, India’s largest lender managed to increase its home loan portfolio 16.53%, while HDFC grew 17.6%.
Similarly, in the April-June quarter, HDFC’s retail loan portfolio jumped up 21.4%, while SBI’s was 20.4%.