In this quarter, but for the exceptional item of Yes Bank sale of shares of 4593 crores, we are down in our operating profit and net profit substantially. The exceptional income in standalone is 4593 crores, in consolidated it is only 3000 crores - what explains the difference? Also, any progress on RBI guidelines for funding corporates for M&A activities? Recovery and upgradation numbers are 40-45% lower than last quarter - some colour on recoveries. Treasury profit has gone down by almost 50% from 8082 crores to 4011 crores - outlook for next two quarters. Credit growth is only 3.88% in first six months - how do we plan to achieve 12% for the year?
The net profit on the transaction is not 4593, it is lower than that - post tax. As far as the M&A activity is concerned, more than the opportunity in the M&A transactions, it is a confidence which the regulators have reposed in us as Indian banking system. Indian banks were not allowed to fund the local M&A transactions for so long. And the current guidelines are a matter of trust in the banking system. And as far as what SBI, obviously SBI has been doing outbound M&A activity financing for quite some time, this is not new to us. And we will definitely take up the suitable transactions. But current guidelines are basically draft guidelines, we have to get the final guidelines and to take up any transaction. But in the meantime, we are setting up our teams to ensure that they are ready when the guidelines are released. As far as recovery numbers are concerned, AUCA recovery, Chairman's guidance was 2000 crores per quarter, we have done 2400 crores and the guidance continues. On treasury: Q2, the trading profit is almost 50% of Q1. But we need to be reminded that Q1 has that OMO operations from RBI and switch operations were also there, which is available to the entire industry and we have made use of, which was not available in Q2. We are taking larger positions in trading portfolio and we do have certain investments, which are like depending on the opportunity, depending on the price that is available, we will continue to offload. So, that way, we are reasonably confident that a large portion of this, whatever we have performed in Q2, we will be able to repeat in Q3 as well. We do not have any losses. Rather, our AFS reserve has increased actually quarter on quarter. There is no MTM loss. The credit growth is secular, if you see from the Q1 itself, we have had almost 1 to 2 percentage point increase across the business segment, whether you take retail personal, agriculture, SME, corporate for the first quarter after March '25, we have reversed the trend and have posted a good 7.1% credit growth and with the pipeline what we have the visibility of at least reaching 10% corporate credit growth in the next two quarters. The pipeline is 7 lakh crores, 7 trillion, which is a consistent number across quarters, half of it is already sanctioned and awaiting disbursement and half is in the discussions.
Recovery from written-off accounts was almost double quarter on quarter. How much of that would be parked into interest income this quarter versus last quarter? And on ECL - would we see an inch up in credit cost on a sustainable basis after ECL guidelines implementation?
Not much. Most of that is gone into the P&L directly. So, I think on the ECL front, we need to be a little patient. I did mention earlier that the impact on our balance sheet would be limited for two reasons. One is the long road map which is given while we have to assess overall expected credit loss requirement on the 1st of April '27, we will have time up to 31st March '31 to take that, and we want to utilize that road map which is going to be given to us. So, which means that the impact is going to be not significant. And we will wait for the final guidelines, to come to you what would be the impact and how we would like to handle it. As I mentioned, whatever is the impact, we are going to take that 4-year road map which is given to us and to ensure that the balance sheet is not impacted in one go. And the second thing is, yes, the major impact would come from the SMA 1 and 2 which are not significantly provided now. We do have some buffers as shown here on the excess provisioning on the standard assets. What we believe that the impact can be reduced by strengthening our collection mechanism. Today, the rollbacks in SMA 1 and 2 are significant for us. They are temporarily SMA 1 and SMA 2. So, while we are presenting to the regulator that in terms of the rollback, frequent rollbacks of this category does not require such high flow rates on the ECL, but there are so many other things which we need to present to them. So, I do not want to comment at this juncture, but structurally what we are focusing is strengthen our collection mechanism. Today, in our retail side, 70% of the collections happen automatically. It is just sweeping from savings account to the loan account. Over the years, we have focused on this rest of the 30% where the delays happen. The delay is not necessarily that the customer is delaying, it is also because salaries get delayed. We are trying to see how do we address this category. Structurally, we will be strengthening our collection mechanism intensely so that you know we will not have SMA 1 and 2 situations. They are not bad assets except that they just roll forward and roll backward frequently. We need to address that issue. So, ECL I think is too premature to talk about the impact at this juncture.
On Xpress credit - last quarter you said we will see growth coming back incrementally. Are we on track? Will we see further acceleration in H2? Are you more comfortable on asset quality there? And on mortgages - growing faster than peers, can we see further acceleration to fuel the growth target of 12% to 14%?
So, the 12% to 14% guidance is across the segments, not necessarily Home Loans. Home loans 15% is a good growth, while we may have potential. See, in case of Home Loans, our catchment is fairly large. We have set up more than 425 Home Loan centres across the country processing only the specialized sales only for Home Loan processing. And our acquiring the customer is also robust. So, that is contributing to the Home loan growth, But I think 15%-16% growth, I would place that, as the portfolio grows, 14%-15% stability will be achieved there. And Xpress credit is one segment we would like to further grow. Currently, we expected this Xpress credit to reach double digit. We were wishing for that but the Gold loans, I think, some movement is there from Xpress credit kind of customers. Unsecured Personal loan is moving to secured Gold loan because the amount of Gold loan is higher now because of the value and the lower rate of interest, I think contributing to that. As the gold prices moderate, we hope that Xpress credit will grow. But our sanctions and disbursements have been very significant in the Xpress credit. It is a high churning product, you need to constantly acquire the customer.
On new RBI capital market funding and M&A guidelines - can we build a ₹40,000-₹50,000 crore book overnight? Share advance can yield 10% in current conditions. And YONO 2 can plug in.
I think the draft guidelines put some cap on that, 10% of capital. Capital market, yes. I think we have done one product, which is a loan against mutual funds. We have never been active on loan against shares. While we have adequate room on the capital market exposure, there is underutilized, room available there. We will see. I think we need to assess our own risk appetite for this kind of activities. And also, I think most of these activities also have to be end-to-end digital. Unless we get that right, we will not be moving there. On the Capital Market broker side, I think we have significantly scaled up that. Yes. So, we will develop that product mostly on the self-consuming platform.
On Project SARAL - how do we measure outcomes and what are the timelines? And on current account ratio - steady improvement for 4-5 quarters, growing faster than overall deposits. Are we gaining market share in accounts or higher wallet share of existing customers?
The second one, I think, I did mention in terms of what we are doing on the CASA side. One is, you are all very familiar that when we open Savings Bank account we do not have minimum balance requirement. That is USP of SBI and we were the first bank not to charge on the minimum balance not being maintained, which also means that the customers who have the ability to fund the account also many a time do not fund. So, we have started a large-scale campaign to educate our staff who are opening the account that you politely ask the customer that whether you can fund the account. Today, the simple nudge has ensured that 70%-75% of such account get funded within 45 days, which means that your balances are going up. And on the Current Account side, I think our focus on Business Current Account and focus on ensuring that you give the different variants of Current Account to business customers based on the balance maintained. And this has helped us and we have opened lot of, you know, a few transaction banking hubs which were primary owners of opening the Current Accounts and ensuring that a solution is given not merely opening an account. That is also contributing to CASA daily average balances going up. And we did acquire market share in the current account. 185 bps. So, it is a significant market share acquisition there. And on the Project SARAL, I think the primary aim of Project SARAL is to reduce the drudgery at our branches. Whatever we talk about technology, digitalization, this is a bank which we would like to position as Digital First, Consumer First or Customer First, which means that we would like to leverage our large physical presence and large employee base to provide that human touch. But many a time the branches are overcrowded, you know, people are not able to spend enough time with the customers. We would like to focus on reducing that drudgery. So, the outcomes could be taking some time. Ultimately, of course, it has to be measured in terms of whether it is adding to my productivity, reducing my cost. Definite outcomes are defined there but we will not be discussing them at this juncture. Probably, the first drop from this Project SARAL is 1st of April'2026, I think April quarter we would talk more about what are those benefits we are getting out of this project.
Fee growth in this quarter has been phenomenal - 20% plus numbers on a big number. Can you elaborate what helped and is this the start of a new run rate? Maybe not 20% but double digit?
So, most of the lines of other income seem to be good ones like either in the government business or cross sell. I believe they are stable, even loan processing charges. Much of the loan processing charges is not one-off or bulky one, they're all widespread across the retail segments. The only thing which I mentioned is on the debit card interchange fee. I don't know how it is going to play out. But, otherwise, I think other income streams are seem to be stable.
What has been the interest on tax refunds this quarter? Can you give the breakdown of miscellaneous operating expenses for Q2FY26, Q1FY26 and Q2FY25? And average CASA growth numbers?
In terms of margins, interest on tax refund is miniscule, some 200-300 crores or something, that is not a big - 340 crores. So, that is not contributing significantly to the margins. The major head in miscellaneous expenses is actually GST on expenses, which was 662 crores in Q2 of FY25. It is 1180 this year, this quarter. Last quarter also it was 588. So, there is a large difference there. Apart from that, actually software expenses for software. And the next is the mobile banking. GST on expense, that we have, we recover and pay, that is taken on both sides. You also get input tax credit. Daily average balance we will give separately.
Borrowings are up 12% quarter on quarter and interest expense on borrowings has come down sharply from 6,000 to 4,000 over the last year. Any insights on borrowings - was the 60,000 crores of incremental borrowings back-ended?
The interest on borrowings is a market function. As the liquidity improved and the rates have moderated, I think the costs have come down. Throughout the quarter, the liquidity was in surplus. So, borrowings were very few. Only in the last week of September we had to do some borrowing. That is why the price is low. And interest on borrowing has also gone down by 26% this year. While we have borrowed less, the cost has also gone down.
On NIM trajectory - this quarter was supposed to be tough due to residual impact of 50 bps rate cut but you have done well and margins are up. Going ahead, would MCLR deceleration be more than offset by TD repricing and CRR benefit? Can NIM inch up from here, assuming no further rate cut?
Yes, that is the last one which you mentioned. The caveat is that if there is no rate cut in December, we believe that. I did mention about the U-shaped curve of the recovery of NIM and slightly front loaded on the Q2 because of our liability management, better liability management, both on cost of deposits coming down and cost of borrowings come down. Yes, there are some definite tailwinds, how much it plays out, we will have to see. Obviously, the CRR full cut benefit will be available by the end of November. So, that will give some pickup on the net interest margin side. We will continue to focus on the CASA. CASA is very critical component in terms of bringing down the cost. Fixed deposit repricing generally takes about 12 to 14 months. That means, you know, we are, we have completed 6 to 8 months, another one or two quarters. The repricing will continue to be there on the stock. The flow is not getting too much repriced because I do not think any of us would be relooking at adjusting the fixed deposit rate of interest unless there is a rate action by the RBI. So, our guidance still stands good that we will be above 3% in Q3 and Q4.
On core fee - up 25% with decent 30-31% growth in remittance and processing fee. Is this volume-driven only or has there been a fee structure change?
It is purely volume. I think it is mainly coming from the debit card spends and interchange fee which we got on the debit cards, very significant amount. Uptick, I do not know whether it is sustainable or not. One is the cards issuance itself has gone up. But that is a function of how many savings accounts we open. But I think the spends have gone up and the interchange fee on the debit cards has gone up. It is not about fee structure being changed. It is just volumes have contributed.
On YES Bank transaction - other banks which sold their stake routed it through reserves but SBI showed it in P&L. Any insights? And on the residual stake - the unrealized MTM, could it have been routed through reserves or is that still pending?
Unrealized, we will not do because we have a significant control by having a board seat there, which means that we do not have to. We are not using the MTM on the residual portion. We were holding this as an investment in associate, and stake sale which was sold is Mark-to-market. As per RBI guidelines we have done. So, we followed the same regulatory process. The one which is actually realized is routed through the P&L and unrealized we continue to not to a Mark-to-market because of our control which is still there by way of board seat.
Do the new guidelines create less quality/volatility in P&L? If there is MTM loss on G-Sec bond it will not be part of P&L, but if realized it will come in P&L - making P&L less volatile especially during hardening of yields. Is that a right understanding?
That was the purpose of that, Yes.
On overseas credit - that book is growing pretty fast. You said you are focused on RoRWA-based lending. How does the overseas corporate book lending stack up versus domestic credit in terms of RoRWA? Is it dilutive?
Foreign book growth rate in dollar terms is just about 8.7%. What you see 15% growth rate because of the rupee depreciation, when we convert into rupees. So, our IBG, our International book growth, is opportunistic. If we see the good value, we will do that. Otherwise, we'll just ramp down. In the past also we have demonstrated. In quarters where we feel that pricing is not attractive, we just ramp down that. So, we will be comfortable. I think the IBG book constitutes about 15% of our credit portfolio, I think that is the level which we would like to maintain.
You highlighted ₹550 crore spend on human resource training. How does this enable the bank going forward considering cybersecurity and future readiness including AI?
So, this spend on training is significant for us because most of the people who join SBI are not bankers to start with. We take mainly from the people who are writing exam and joining the bank, whether it is a clerical position or officer position, but their career path are defined and we prepare them for various assignments. We have one of the largest physical training systems in the country - almost 55 training colleges and centres are available. The second important element is SPARK - a digital platform that provides online training for across the section. We are creating a skill inventory and based on the skill inventory the job profile is defined. We are using AI extensively to offer what they are looking for and they can build their own training module. So, a combination of physical training, on the job training and online training aided by the AI is going to be the way forward. We have for the first time had undertaken the largest technical recruitment of 1500 people and these are the people who have not come from the market, they are from colleges and people who first time are entering the technical jobs and we have completely created a training module for them internally and these are some of the investments which we are making so that we have the industry best attrition rate. I think we have less than 0.5 % attrition rate because of our investment in human resources.
YONO 2.0 is coming up, and you have set up a global capability centre. How are you transforming from current state to future with these digital initiatives? The 24/7 working structure and back-office centralization - how does that shape up?
Absolutely. I think, today we made a big beginning. I do not know whether I have mentioned to you, we had 17 trade finance processing centres in the country, 17 of them. We have moved to 2 global trade finance centres, one in Calcutta and Hyderabad, which is completely digital. And across the country the global trade finance is handled by these centres. This is a beginning of our centralization aspect. And the project SARAL, which I mentioned in my speech, the simplification project has 4 elements - 1. One is you identify a process and simplify it. 2. After simplification if it is possible, automate it. 3. And if possible centralize it and 4. Fourth element is that if it can be outsourced, you outsource it. This is the new paradigm. When you are looking for doubling your balance sheet every 6 years, the scale what we have, this scale requires out-of-the box thinking and this is what we are going to do through the project SARAL. And if Project SARAL believes that a centralization by way of global capability centre is the need, we will definitely look at it.
SBI has formidable subsidiaries. When will we see those milestones - SBI MF being largest, SBI Cards concerns, SBI Capital Markets, Insurance being under-penetrated. With CASA customers, fees could be 5x. How to improve these areas and get to consolidated performance comparable to private banks?
So, in case of subsidiaries, as you see, SBI Life Insurance today is the largest private insurance company. And in case of SBI Card, as a standalone card company, the performance is always under the focus. We are working on that in terms of addressing the asset quality issues, in terms of the spends, in terms of the new card issuance. AMC, as you mentioned, is the largest AMC in the country. And General Insurance is moving up the ladder and has a great potential in terms of the Non-Life Insurance Company. But among these four major subsidiaries, we definitely would be looking at, as I mentioned several times, SBI AMC and SBI General are right candidates for listing in our stable. It also provides some value unlocking and, more importantly, value recognition for the industry. We would soon be working on that. It is also important that SBI conglomerate is leveraging One SBI value, One SBI in the sense that if any customer walking into SBI branch, he is provided the gamut of services which manufactured by the conglomerate itself. And that has been successful, yes. If you see our cross sell income but more important than income, we are trying to provide one-stop-solution for our customers. So, we will continue to do that. Yes, we can do better, we can do more and we will definitely work on them. So, our PPC at this juncture is about 3.5. We can definitely move to 5.
Deposit rates have stabilized as per RBI. How do you see the environment for the current year? Also Rupee is volatile and G-Secs are volatile - outlook on next 6 months?
I think the deposit rates have stabilized. Further deposit repricing or recalibration will only happen if there is any monetary, I mean, Repo rate action. Otherwise, I think more or less the deposit rates are stabilized. On G-Sec: I think we have seen lot of volatility and also specific actions from RBI where they convey to market that they are not comfortable at certain yields. So, that messaging happened by way of cancelling some auctions. So, that was taken out by the market on that particular day when the yields came down by around 4-5 basis points. I think it is now range bound. We feel like the range can be 6.2-6.65 kind of range for the 10-year G-Sec. It is just an internal house view.
Government and private side - are we getting any sense for next year of a pipeline of larger infrastructure proposals coming up? New nuclear, hydrogen, solar - these are 10,000-20,000 crore proposals. Is there positivity on private CapEx?
Private side I think we have a very robust pipeline. Our aggregate corporate credit pipeline is around ₹7 lakh crores. So, this is a mix of working capital underutilized and term loans under disbursement. The new projects which are being discussed, so both in the public sector and private sector, but predominantly private sector. So, that pipeline is very strong. And this pipeline, a part of it will get converted into reality this year and there will be a spillover to the next year in some of the projects. Yes. Not necessarily across the sectors but most of the sectors, yes.
Standard asset provisioning of ₹1,200 odd crores - is there any accelerated provisioning done towards standard assets during the quarter? After some release from restructured accounts of ₹1,100 odd crores against ₹1,65,000 crores increase in loan book.
There is no accelerated provisioning. For 2 accounts, actually, we have done some DCCO extension. This is basically whenever there is an extension of Date of Commercial Production, there is a requirement of making provision. And some of the reversals what you see also were related to the DCCO. The moment DCCO is achieved, the provision gets written back. So, there has been some write back and there is an additional provision which is made where the DCCO dates are extended. ₹200 crores was write back, so net was ₹550 odd crores.
On subsidiaries monetization - SBI Mutual Fund and SBI General. What would actually trigger that decision? The capital market environment is conducive, should we expect it sooner? Or would you wait after the recent QIP fundraise?
We are not waiting because we have done the QIP. I think we need to just look at, see, one is, as I mentioned earlier also, that these two companies do not require capital at this juncture. Neither the parent requires because we just raised ₹25,000 crores. But we are serious about listing them and respective boards will take a call in terms of the timing, quantum. The reasons whatever you mentioned, all of them are applicable.
The extraordinary gains because of YES Bank stake sale, gross of tax was around ₹4,500 crores, what is this amount net of tax?
₹3,386 crores.