Bulletin: State Bank of India Can Fend Off Rising Risks In Personal Loans

SINGAPORE (S&P Global Ratings) Nov. 6, 2023--State Bank of India (SBI) is likely to sustain the improving trend in profitability. The bank will benefit from strong economic and employment conditions in India. We believe SBI will continue to have low credit costs amid a benign credit cycle in India, mitigating pressure on margins from higher cost of deposits. The bank reported return on assets of 1.1% annualized for the six months ended Sept. 30, 2023 (0.96% for fiscal 2023). The asset quality of SBI (BBB-/Stable/A-3) is likely to stay stable amid rising stress in small-ticket personal loans (i.e. less than Indian rupee [INR] 50,000) in India's financial sector. The bank has sizable exposure to unsecured retail loans, at about 13%

...November 6, 2023 SINGAPORE (S&P Global Ratings) Nov. 6, 2023--State Bank of India (SBI) is likely to sustain the improving trend in profitability. The bank will benefit from strong economic and employment conditions in India. We believe SBI will continue to have low credit costs amid a benign credit cycle in India, mitigating pressure on margins from higher cost of deposits. The bank reported return on assets of 1.1% annualized for the six months ended Sept. 30, 2023 (0.96% for fiscal 2023). The asset quality of SBI (###-/Stable/A-3) is likely to stay stable amid rising stress in small-ticket personal loans (i.e. less than Indian rupee [INR] 50,000) in India's financial sector. The bank has sizable exposure to unsecured retail loans, at about 13% of total loans, of which 9% are personal loans. Exposure to small-ticket personal loans is limited. SBI's personal loans are growing faster than the rest of its portfolio. However, the bank's customer selection mitigates the associated risks. About...

Bulletin