State Bank of India’s net interest margins were above the annual guidance of 3.75 per cent in the first two months of the current quarter, as the country’s largest lender was able to manage the cost of funds by focussing on low-cost deposits.
“3.75 per cent is our guidance and as per two months’ indication, we are outperforming,” said SBI Chairman Pratip Chaudhuri on the sidelines of an event on Saturday.
He said the bank was not taking bulk deposits that had helped it keep the cost of funds under check. As on March, SBI’s NIMs were at 4.17 per cent. Chaudhuri had projected NIMs to be around 3.75 per cent for the current financial year.
He said there weren’t any significant pressures on the margins in the current quarter and the bank was focussed on improving its retail business. He said a 50bps cut in the cash reserve ratio at the upcoming mid-quarter policy review would release Rs 400 crore of lendable funds for SBI. “We will pass on this benefit to the customers, but the extent of it may not be the same,” he added.
The largest state-run lender recently cut its lending rates in specific segments like SME agriculture and corporate loans. However, the base rate was kept unchanged at 10 per cent.
Chaudhuri said SBI was undergoing an exercise of improving customer satisfaction in order to grow in the retail segment. The bank has deployed special manager at each of its branches dealing with deposits of more than Rs 100 crore, so that the customer gets special attention from a senior level. Also, in three months, all branches would be air-conditioned irrespective of location.
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The bank has 14,000 branches in India. It will add 700 more branches this financial year.
To keep a tab on bad assets and restructured loans, Chaudhuri said the bank had redeployed business and operations officers. “We found that the span of control had become too big for a general manager and the supervision and quality of direction at that level had deteriorated,” he said.