By Ashwin Manikandan and Nishit Navin
(Reuters) -State Bank of India is confident that corporate loan growth will quicken to double-digit percent despite U.S. tariff-related turmoil, its chairman said on Friday, after treasury profits helped the country’s top bank beat earnings estimates.
U.S. President Donald Trump on August 6 imposed an additional 25% tariff on Indian goods as punishment for Delhi’s purchases of Russian oil. That raised the total duty on Indian exports to 50% – among the highest of any U.S. trading partner.
While SBI will face limited direct business impact from U.S. tariffs, uncertainty stemming from the levies could slow businesses down, which could delay investment decisions, chairman CS Setty told reporters.
Better-rated companies in Asia’s third-largest economy are making a beeline for the corporate bond market, where they can often borrow at cheaper interest rates, posing a challenge for banks.
“When we look at our disbursement pipeline, it gives us confidence that 10% corporate growth is definitely a possibility this year,” Setty said.
Corporate loans make up a third of SBI’s total domestic loan book and grew 5.7% from a year earlier in the June quarter.
Earlier in the day, the state-run bank reported a net profit of 191.60 billion rupees (about $2.2 billion) for the quarter, driven by a near tripling of treasury profits and curtailed expenses.
The profit rose 12% from a year earlier and was higher than analysts’ average estimate of 175.52 billion rupees, as per data compiled by LSEG.
SBI’s net interest income, the difference between interest earned on loans and paid on deposits, declined by 0.1% year-on-year to 410.72 billion rupees.
Its operating expenses rose 8% year-on-year but fell 22% from the prior three months.
The bank’s domestic net interest margin declined to 3.02% in the quarter from 3.22% in the previous three months and 3.35% a year earlier.
The Reserve Bank of India kept its key repo rate unchanged earlier this week after cutting it by 100 basis points since February.
In a falling interest rate environment, lenders typically pass on the rate cuts to borrowers, but deposit rates fall with a lag, compressing margins.
SBI’s gross non-performing asset ratio rose slightly to 1.83% from 1.82% in the prior quarter but improved from 2.21% a year earlier.
($1 = 87.6975 Indian rupees)
(Reporting by Nishit Navin and Ashwin Manikandan; Editing by Mrigank Dhaniwala)
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