SBI, BoB look to raise more current, savings deposits

Mumbai: Large public sector banks such as the State Bank of India and Bank of Baroda are working to boost their current and savings accounts ratio (CASA), following the decline in the share of low-cost deposits across the board.

For instance, SBI is concentrating on opening more current accounts. Dinesh Khara, chairman, SBI, said at the second quarter earnings that the bank is not looking to revise its savings deposit rates to improve CASA.

“There are many other players (who) increased rates. They witnessed a drop in CASA by 600-700 basis points. During inflationary condition, the tendency of people is to look for products which give inflation-adjusted returns,” Khara added.

SBI is looking to increase current accounts and is seeing 8% growth in current accounts from a year earlier.“This has to be seen in the context of peers seeing a drop in CASA.”

Khara said six months ago, SBI started transaction banking hubs across India that led to growth in current accounts.

Like some of its peers, SBI also saw a drop in overall CASA ratio in the September quarter. SBI’s CASA was at 41.8% at the end of September, compared to 44.63% a year ago.

SBI posted 8% y-o-y growth in net profit in the September quarter to ₹14,330 crore. However, net profit and operating profit fell 15% and 23% sequentially, respectively.

This fall in profit was on account of one-offs like increased provisioning for wage revision, which is expected to be 14% compared to its earlier projection of 10%, lower mark-to-market writeback and higher provision on pension liability.

Khara said the bank is comfortable with unsecured lending as it is mostly aimed at salaried employees. SBI is looking at 15-16% growth in unsecured loans. Currently, this portfolio is worth ₹3.2 trillion.For SBI, credit growth during the quarter was at 12.4% from a year ago with domestic loan growth at 13%. Its net interest margin moderated to 3.43%, from 3.47% in the previous quarter.

BoB is looking at improving its CASA to 41% from 39.6%, by offering incentive schemes. “We are offering many incentives on CASA. The structural change on retail liability is that we will have more relationship managers,” Debdatta Chand, chief executive, BoB, said.

BoB posted 28.4% year-on-year rise in net profit to ₹4,253 crore in the September quarter driven by fee income, and a recovery of bad assets. BoB posted better-than-expected profit despite seeing a 27 basis points fall in net interest margins to 3.07%. It is looking at a lower margin of 3.15% for this fiscal year. Its personal loan book stands at ₹25,618 crore and is looking at moderating growth to 35%, from 60-70% earlier.