SBI chairman expects RBI to maintain rate hike pause in August

State Bank of India (SBI) chairman Dinesh Kumar Khara on Saturday said he expects Reserve Bank of India's Monetary Policy Committee to maintain rate hike pause at its August meet despite recent hike in vegetable prices.

RBI MPC will meet from August 8-10. The policy repo rate has been increased by 250 basis points since May 2022. In June, the MPC, which has three members from RBI and an equal number of external experts, voted unanimously to keep the repo rate unchanged at 6.5 per cent.

"Recent spike in vegetable prices is more of a one-off than the trendline, shouldn't have an impact on inflation trend. Lately, inflation numbers have been around 5% only and to that extent inflation seems to be under control. Our expectation at the upcoming RBI MPC meet is of a pause," Khara told BT TV managing director Siddharth Zarabi.

"By the next policy, the RBI MPC will have better visibility in terms of data to think about rate cut," Khara said.

The nation's largest lender on Friday reported its highest-ever quarterly profit at Rs 16,884 crore in the April-June quarter of 2023-24 -- a nearly three-fold jump over Rs 6,068 crore in the year-ago period -- buoyed by a steep fall in bad loans and higher interest income.

On a consolidated basis, the bank's net income soared more than two-fold to Rs 18,537 crore in the quarter from Rs 7,325 crore a year ago. Total income was Rs 1,32,333 crore in the period as against Rs 94,524 crore in the April-June quarter of 2022-23.

On a sequential basis, some of the key numbers such as margins and net interest income showed marginal deterioration while loan loss provisions more than doubled, leading to SBI shares tanking nearly 3 per cent on bourses.

Khara said that sequential numbers shouldn't be seen when it comes to first quarter results of lenders.

"For a bank, the first quarter is unique as most institutions hold back pay-outs or pay-ins to the last quarter of the fiscal year. In our case in the Q4 of FY23, we had Rs 830 crore of interest income from a tax refund plus there are various other one-off gains, while in the first quarter has none of them at all," he said.

The bank continued to improve the asset quality with a major improvement in the slippage ratio too which printed in at 0.94, up by 44 bps on-year and 53 bps quarter-on-quarter, or just about Rs 7,300 crore, down from Rs 9,300 crore a year ago.

Better asset quality had the bank making only Rs 2,652 crore in loan loss provisions which is as much as 37.87 per cent less than it had provided for in the year-ago quarter at Rs 4,268 crore, but 107.43 per cent higher than the March quarter when it was only Rs 1,278 crore. This had the bank's provision coverage ratio at 74.82 improved by 127 bps and stands at 91.41.