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After witnessing more than 20 per cent year-on-year (YoY) growth in its international loan books till December 2022, State Bank of India (SBI) expects it to moderate to 9-10 per cent.
Its overseas books cover India-linked loans, local loans in foreign offices, and trade finance.
The country’s largest bank is focusing more on yields than just growing its books, and earning more in international operations, C S Setty, managing director (international banking, global markets and technology), told Business Standard.
Foreign office advances were up by 21.47 per cent to ~4.86 trillion in December 2022 from ~4 trillion in December 2021.
Deposits grew 27.94 per cent to ~1.65 trillion in December 2022 from ~1.29 trillion a year ago.
Much of the growth in international credit is contributed by the dollar-exchange rate. It has to be adjusted for rupees when the Indian currency moved from ~74 to ~82. Adjusted for it, growth in advances would about 9.5 per cent.
Growth in loans would be in this range, he said.
The yield on advances would also moderate in the days ahead. The secured overnight financing rate (SOFR), a benchmark that financial institutions use to price loans for businesses and consumers, for three months was about 0.3 per cent in December 2021 and now it is about 4.6 per cent.
The yield on advances moved up sharply to 3.26 per cent in December 2022 from 1.43 per cent a year ago. The rise in deposits has not been that steep. It rose to 1.75 per cent in December 2022 from 0.95 per cent in December 2021.
Besides deposits, the bank also raises money from the market. It, however, did not provide the data on market borrowings.
Setty said the cost of deposits had stabilised at current levels and that of resources was coming down because the benchmark rate was moderating in tune with US treasury yields. The net interest margin (NIM) on overseas books moved up from 1.06 per cent in December 2021 to 1.67 per cent in December 2022.
The NIMs are expected to stay stable at around the same level.
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