State Bank of India · risk themes across the available quarters.
Bear-case history
Fresh slippages rose to ₹7,000 crore from ₹5,500 crore in Q4; absolute GNPA/NPA increased for first time in several quarters; SMA-2 doubled. Management attributes Q1 pattern to seasonality but trend warrants monitoring.
Analyst specifically asked for credit cost run-rate impact; management deferred to Q2 results (August 18 IT implementation). Chairman gave qualitative 'no major impact' assurance but no specific basis points or rupee figure.
Express credit growth stuck at 8% as customers migrate to gold loans due to ~300bps interest rate arbitrage. Management acknowledges this is temporary but no timeline for normalization given gold loan demand remains strong at 100% retail growth.
Corporate growth muted as MCLR transition is 'work in progress' with customers renegotiating or moving to alternatives. Management sees this as acceptable trade-off for better yields but acknowledged sequential growth impact.
Small and marginal farmer segment represents 7.5% of portfolio and creating imbalance in PSL targets. Bank frontloaded PSLC purchases in Q2 and virtually avoided Q3 purchases to manage premium costs. New PSL guidelines being evaluated for impact.
Only 75-80% of RBI rate cuts have transmitted to deposit repricing. December rate cut has not resulted in deposit rate reduction; retail term deposit rates remain elevated. Full repricing will take another 6-8 months, limiting NIM expansion.
Gold loan portfolio grew 95% YoY to ₹2.30 lakh crore. While current LTVs are modest (51%) with only 20-30 auctions in large portfolio, gold price volatility represents a structural risk if prices correct significantly.
Analyst Chintan Joshi questioned why 3.2% LDR increase in Q3 did not result in NIM improvement. Management attributed this to working capital draws (low yield pickup) and corporate growth at maintained margins through ecosystem banking. RWA not significantly enhanced.