SBI's retail loans nudge past corporate loanbook; gold loans grow 465%

State Bank of India (SBI), India’s largest lender, has reported a whopping 465% year-on-year growth in personal gold loans in 2020-21 while SBI’s exposure to gold loans stood at Rs 20,987 crore as of March 2021,

The personal retail loans reported a 16.5% year-on-year growth, helping the bank nudge past its total exposure to the corporate sector by a big margin, according to a recent analyst presentation by SBI.

Personal retail loans as a segment accounted for 39.9% (Rs 8,70,711 crore) of the total domestic advances. It has overtaken the corporate loan book that accounted for 37.5% (Rs 8,18,705 crore) as of March 2021. The two other segments — SME and agri — accounted for 12.8% and 9.8% respectively. SBI’s total domestic advances stood at Rs 21,82,516 crore as on March 2021, a year-on-year growth of 5.7%.

Loan book

As of March 2020, the personal loan book at 39.2% was way below its bulky corporate loan book that accounted for 40.9%.

Apart from the gold loans, SBI’s Xpress Credit, another retail loan segment, showed a 36.5% growth (Rs 1,92,780 crore). This is a quick personal loan facility for up to Rs 20 lakh loan for any unplanned emergency or planned purchase, with the features of instant disbursal with minimal documentation, interest on daily reducing balance, and low processing charges.

The mainstay of SBI’s retail segment, home loans grew 10.5% to Rs 5,03,779 crore. This segment currently accounts for 23% of the lender’s domestic loan book.

During the fiscal, auto loans reported a 5% growth to Rs 76,322 crore while other personal loans showed a 3.7% growth to Rs 76,843 crore.

According to the bank, its rapid scale-up in new products and efforts to gain higher market share in traditional products has helped it report a faster growth. The growth was driven by home loans, Xpress credit and gold loans, it said.

SBI Chairman Dinesh Khara is optimistic of the much better growth in the current fiscal. The lender hopes to ride on the retail growth in the current financial year, and grow its loan book by 10%, higher than the 5.7% growth reported in 2020-21. The optimism stems from the performance of the retail segment.

Q4FY21 performance

On May 21, SBI reported a record quarterly profit, helped by higher net interest income and lower provisions to cover loan losses. Net profit jumped 80% year-on-year to Rs6,451 crore in the fourth quarter, well above the market expectations. Net interest income, or the difference between interest earned and expended, reported a 12.9% jump in 2020-21, up from 11% in the previous year. Its operating profit grew to Rs 71,554 crore in the fiscal, up from Rs 68,133 crore a year ago. Fresh slippages during 2020-21 fell to Rs 28,564 crore, down from Rs 49,647 crore in the previous fiscal.

The lender’s corporate loan book fell 3% in 2020-21. Including purchases of commercial papers and corporate bonds, SBI’s corporate exposure grew a marginal 2.6% year-on-year.

Analysts believe that the retail credit growth, driven by mortgages/car/Xpress credit, will continue to grow. The asset quality has also held up well given the higher share of salaried class and PSU employees. They believe SBI has entered the new fiscal on a position of strength, with better asset-quality and provisions/capital buffers.