The Board of State Bank of India (SBI), the country's largest lender, on Friday said it plans to raise up to Rs 50,000 crore this financial year (FY24) by issuing debt instruments, as lenders look to meet rising demand for credit. The instruments could be long-term bonds, Basel-III compliant additional tier-1 bonds, or Basel-III compliant tier-2 bonds, the bank said in an exchange filing.

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"A memorandum on raising funds by issuance of debt instruments (including capital instruments) was placed before the Central Board of the Bank, today," the bank said.

SBI has received an approval to issue bonds through the private placement mode to Indian and/or overseas investors during FY24, subject to the government approval, whenever required.

SBI's loan growth outpaces growth in deposits

The fund-raising plans come as lenders' loan growth outpaces growth in deposits. Demand for bank loans has consistently stayed in double digits despite a 250-basis points increase in interest rates since May 2022.

The lender's loans grew about 16 percent year-on-year in the March 2023 quarter as against a 9.19 percent growth in deposits. SBI expects loans to grow 12-14 percent in fiscal 2024.

In April this year, the bank raised $750 million through five-year dollar-denominated bonds at a semi-annual coupon of 4.8750 percent through its London branch.

In March, the lender locally raised Rs 3,717 crore through Basel III-compliant AT-1 perpetual bonds at a coupon of 8.25 percent.

SBI Q4 numbers

The bank posted a 83 percent rise in standalone net profit at Rs 16,695 crore for the March quarter, as compared to Rs 9,113 crore in the same period a year ago. SBI's Board has declared a dividend of Rs 11.30 per equity share (1130 percent) for fiscal FY23. The date of payment is fixed on June 14.

Net interest income for the fourth quarter surged 29 percent to Rs 40,393 crore as against Rs 31,198 crore in the same quarter of last year. The bank's operating profit for the quarter under review grew 25 percent year-on-year to Rs 24,621 crore. The domestic net interest margin or NIM during the quarter rose 44 basis points year-on-year to 3.84 percent.

Shares of SBI were trading 1.71 percent lower at Rs 578.45 level during late noon deals today. The stock gained 24 percent in the last one year, while it fell 6 percent on a year-to-date basis.

First Published:Jun 9, 2023 3:29 PM IST