50 bps repo hike may moderate consumption credit: CS Setty

Despite reporting credit growth that is running ahead of its full-year guidance, CS Setty, Chairman, State Bank of India (SBI) has retained its loan and deposit growth targets for FY27. Setty also shared updates on the suspected data breach, ECL provisioning, gold loans, rural demand and FCNR(B) mobilisation. Edited Excerpts:

Your credit growth is significantly more than your full year guidance of 14-15 per cent. Are you planning to revise your guidance upwards for the rest of the year and on deposit as well?

On the credit and deposit growth guidance, we are retaining our guidance of 14-15 per cent credit growth and around 10-11 per cent deposit growth. On the credit growth side, if nominal GDP growth is around 12-12.5 per cent, normally SBI's growth rate is 3-4 percentage points higher, and that is where the full-year guidance comes from.

What are the updates on the suspected data breach at SBI?

The root cause analysis is still underway and will take some time to conclude. We have also undertaken a comprehensive cybersecurity drill, including API sweeps and vulnerability assessments, which remain an ongoing process. We are also working under the guidance of the Indian Banks' Association (IBA) to create a framework for information sharing between entities, in addition to sharing information with the regulator.

We are not using any frontier models so far. I don't think any institution in the BFSI sector has adopted frontier models yet. The IBA plans to test frontier models through an industry-level mechanism, where a sandbox environment can be created for the entire banking system and the models can be tested in a regulated and controlled environment.

Will repo hikes have an impact on credit growth?

There could be a situation where another 50-basis-point increase in interest rates may slightly moderate consumer credit growth.

What is the ECL provisioning for FY27?.

The ECL impact, net of taxes, will be ₹19,500 crore, but it is not a closed matter. The RBI is planning to hold a CEO-level meeting to review the industry's preparedness for implementation, which shows that serious work is underway on the ECL front.

Leading NBFCs have flagged stress in the stage one and stage two levels of gold loans. What's happening within the gold loan segment?

There are various ticket sizes of the gold loans. I think we are in the ₹2 to ₹2.5 five lakh rupees ticket size. The portfolio LTV is less than 60 per cent. Even for the industry also, the LTVs indicate that they are not going overboard in terms of maintaining the loan to value. There could be some distress in terms of small value loans, but that segment is not with us.

What is the agri loan and rural loan outlook like for the next quarter and for the full year keeping in mind intensifying Super El Nino?

The rabi crop is to be watched and rabi sowing has also slowed down compared to the last year. We need to be cautious about food inflation. But on the portfolio level, we need not really worry about because this crop season, one crop season is not really going to affect the quality of the portfolio. But what we have to watch out for is the rural consumption pattern. If the annual loan becomes serious and how rabi is going to play out. So these are the monitorable points in our view, more than the quality of the assets.

Lot of your peer banks have more from FCNR(b) but you collected $10.9 billion despite your heavy international presence. Any reason behind that?

We realizsed that the mobilizsation has been robust and we don't need so much deposit mobilizsation for ourselves, so we felt that ten to eleven billion dollars should be okay. Your credit growth is significantly more than your full year guidance of 14-15 per cent. Are you planning to revise your guidance upwards for the rest of the year and on deposit as well? On the credit and deposit growth guidance, we are retaining our guidance of 14-15 per cent credit growth and around 10-11 per cent deposit growth. On the credit growth side, if nominal GDP growth is around 12-12.5 per cent, normally SBI's growth rate is 3-4 percentage points higher, and that is where the full-year guidance comes from.

What are the updates on the suspected data breach at SBI? The root cause analysis is still underway and will take some time to conclude. We have also undertaken a comprehensive cybersecurity drill, including API sweeps and vulnerability assessments, which remain an ongoing process. We are also working under the guidance of the Indian Banks' Association (IBA) to create a framework for information sharing between entities, in addition to sharing information with the regulator. We are not using any frontier models so far. I don't think any institution in the BFSI sector has adopted frontier models yet.

The IBA plans to test frontier models through an industry-level mechanism, where a sandbox environment can be created for the entire banking system and the models can be tested in a regulated and controlled environment. Will repo hikes have an impact on credit growth? There could be a situation where another 50-basis-point increase in interest rates may slightly moderate consumer credit growth. What is the ECL provisioning for FY27?. The ECL impact, net of taxes, will be ₹19,500 crore, but it is not a closed matter. The RBI is planning to hold a CEO-level meeting to review the industry's preparedness for implementation, which shows that serious work is underway on the ECL front.

Leading NBFCs have flagged stress in the stage one and stage two levels of gold loans. What's happening within the gold loan segment? There are various ticket sizes of the gold loans. I think we are in the ₹2 to ₹2.5 five lakh rupees ticket size. The portfolio LTV is less than 60 per cent. Even for the industry also, the LTVs indicate that they are not going overboard in terms of maintaining the loan to value. There could be some distress in terms of small value loans, but that segment is not with us. What is the agri loan and rural loan outlook like for the next quarter and for the full year keeping in mind intensifying Super El Nino?

The rabi crop is to be watched and rabi sowing has also slowed down compared to the last year. We need to be cautious about food inflation. But on the portfolio level, we need not really worry about because this crop season, one crop season is not really going to affect the quality of the portfolio. But what we have to watch out for is the rural consumption pattern. If the annual loan becomes serious and how rabi is going to play out. So these are the monitorable points in our view, more than the quality of the assets. Lot of your peer banks have more from FCNR(b) but you collected $10.9 billion despite your heavy international presence.

Any reason behind that? We realizsed that the mobilizsation has been robust and we don't need so much deposit mobilizsation for ourselves, so we felt that ten to eleven billion dollars should be okay.