News

RBI may cut repo rate by 50 bps in coming months; SBI's margin outlook hinges on rate cycle: CS ShettyThe first 25 bps cut could come as early as the next Monetary Policy Committee (MPC) meeting, said CS Shetty, Managing Director at SBI, during the post-results call on Saturday (May 3).By Anshul   May 3, 2025, 5:09:51 PM IST (Published)3 Min ReadState Bank of India (SBI) expects the Reserve Bank of India (RBI) to cut policy rates by 50 basis points in the coming months. The first 25 bps cut could come as early as the next Monetary Policy Committee (MPC) meeting, said CS Shetty, Managing Director at SBI, during the post-results call on Saturday (May 3).

Shetty said that SBI’s margin outlook will largely depend on the interest rate cycle.

“There is a lag of 12-18 months for deposits to get repriced,” he pointed out. While the bank sees some pressure on margins ahead, Shetty said it cannot yet quantify the impact.

The lender has moderated its guidance, lowering margin estimates from 14-16% to 12-13%. Despite this, SBI aims to deliver a return on equity (RoE) of over 15% and a return on assets (RoA) of over 1% across cycles.

Shetty noted that term deposits continue to grow faster than savings deposits.

This shift could influence funding costs.

On credit growth, Shetty said SBI sees system-level growth at around 11%. Corporate loan growth has shown some moderation, partly due to prepayments.

“We have a ₹3.4 lakh crore corporate loan pipeline,” he added, stressing that the bank expects to outperform the system in credit growth.

The macro environment remains a concern. Shetty warned that tariff uncertainty and global economic challenges could weigh on domestic investment sentiment.

However, Shetty warned that falling rates may weigh on margins. “There’s typically a 12-18 month lag for deposit repricing,” he said, noting that term deposits have been outpacing savings deposits, further pushing up funding costs. As a result, SBI has moderated its margin guidance from 14-16% to 12-13%.

Despite the margin pressure, SBI remains confident in its underlying strength. The bank is sticking to its return on equity (RoE) guidance of over 15% and return on assets (RoA) of over 1%.

It also expects deposit growth of 9-10% in FY26 and plans to support ₹8 lakh crore of credit growth with adequate capital buffers.

On credit trends, Shetty highlighted that system-level growth is expected to slow to around 11%, and corporate loan growth has already seen some moderation due to prepayments. Yet SBI is well-positioned with a ₹3.4 lakh crore corporate loan pipeline and expects to outperform the broader industry in credit growth.

The bank’s asset quality remains a bright spot.

Gross non-performing assets (GNPA) are at a 14-year low, and SBI expects them to hold around 2% across cycles.

Slippages this quarter were ₹4,222 crore, mainly from SME and agri sectors, while recoveries stood at ₹570 crore.

Looking ahead, the bank plans to raise ₹25,000 crore via QIP or FPO to strengthen its CET-1 capital, with the timing aligned to market conditions.Continue ReadingCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsearningsRBIrepo rateSBI