India's largest bank plans to raise 250 billion rupees in share sale
[MUMBAI] State Bank of India, or SBI, plans to raise 250 billion rupees (S$3.8 billion) through new shares and this fiscal year, marking the first equity raising by the state lender in seven years.
Net income at the country's biggest lender fell 9.9 per cent to 186.4 billion rupees in the three months to March, from a year earlier, according to a statement on Saturday (May 3). It managed to beat the 179.9 billion rupees average estimate of 18 analysts.
The fundraising plan comes as local bank shares are trading at record highs, with the sector seen as relatively shielded from tariff-related turmoil. Private sector lender Axis Bank last month unveiled plans to raise US$6.4 billion, while IDFC First Bank is raising capital from Warburg Pincus and Abu Dhabi Investment Authority.
Mumbai-based State Bank of India will raise this sum via a share sale in the year ending March 2026 in one or more trances, it said. The bank declared a dividend of 15.9 rupees per share.
Peers including HDFC Bank and ICICI Bank beat quarterly profit estimates last month, driven by higher interest income.
The capital raising would be based on business needs and the market conditions, SBI chairman Challa Sreenivasulu Setty in a post-earnings briefing. 'The bank has adequate capital to support growth at the current capital adequacy levels,' he said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
The bank will continue accessing debt capital through additional Tier-1 and infrastructure bonds.
Setty also expects India's central bank to cut its policy repo rate by another 50 basis points by March 2026, which could squeeze the bank's margins as deposits and loans are repriced. 'We have moderated our credit growth to 12 to 13 per cent this year and system level growth could be lower at 10-11 per cent,' he said.
SBI's loan advances rose 12 per cent to 42.2 trillion rupees to March from a year earlier, while deposit base climbed 9.5 per cent to 53.82 trillion rupees.
Its gross non-performing assets decreased to 1.82 per cent from the year-ago period and was lower than the estimate of 1.98 per cent.
Loan growth for housing and business loans to small-medium enterprises will remain strong this year, while corporates are assessing the impact of the tariff wars, according to Setty.
'We have around 3.4 trillion rupees in corporate loans in the pipeline,' he said. 'From what we are seeing, companies are not stepping away from their investment plans.' BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
39 minutes ago
- Business Times
Can US ports handle a freight spike or will they be overwhelmed?
ARE Los Angeles and Long Beach heading for another port congestion crisis? Since the United States put tariffs on hold for a 90-day trade war truce with China on May 14, the market has expected a shipping surge driven by Chinese exports. Ocean carriers have re-instated suspended services, restarted vessels lying idle, and introduced new routes – revitalising transpacific lanes. But how much capacity has actually returned to the US-bound trade? Estimates vary. According to maritime consultancy eeSea, total capacity from Asia to North America will reach 2.4 million twenty-foot equivalent units (TEUs) in June – 400,000 TEUs more than May. That figure is projected to climb further in July to 2.8 million TEUs. The majority of this added capacity targets the US West Coast, particularly the ports of Los Angeles and Long Beach. Data provider Sea-Intelligence reports similar trends. Its latest weekly update shows a 17 per cent year-on-year rise in Asia-US West Coast capacity in June, with a projected 19 per cent jump in July. Meanwhile, East Coast capacity is growing more modestly – up only 7 per cent in June but expected to match the West Coast's 19 per cent rise in July. These figures are based on carriers' existing schedules, which remain subject to change. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The big question is whether Los Angeles and Long Beach can handle this influx. Will the port congestion seen in the pandemic era re-appear? Preliminary forecasts indicate that container volumes at both ports will begin rising in the second week of June, topping 100,000 TEUs a week. Volumes will continue climbing in the third week. While fourth-week data is not yet available, estimates suggest traffic will remain elevated. Many extra sailings are scheduled to arrive in late June and early July, suggesting persistently high throughput at least into mid-July. Historically, both ports handled their highest Asian import volumes in 2021 during the Covid-19 pandemic – about 10 million TEUs for the year. The Port of Los Angeles alone processed a record 520,000 TEUs in May 2021, while the Port of Long Beach reached its single-month peak of 400,000 TEUs the same month. Will the same influx appear again this time? Industry opinion is divided. Senior executives at leading carriers and terminals suggest the tariff deferral may not trigger a pandemic-style shipping boom. While June volumes are likely to exceed May's, early expectations may have overshot. Much of the inventory that had been sitting in warehouses shipped out quickly after the May 14 tariff suspension. And even if buyers place new orders, lead times mean many shipments will not depart until late June or July. Moreover, despite the suspension of a 125 per cent reciprocal tariff, the 30 per cent levy added this year – on top of 2018's Section 301 duties – means US-China trade has not returned to normal. The truce may offer temporary relief, but it is unlikely to generate a prolonged surge. Freight rates on transpacific routes have spiked in recent weeks. But does that signal true demand strength? A key indicator is the balance between cargo booked under negotiated contract (NAC) rates versus freight-all-kinds spot rates. At present, many freight forwarders are still able to secure lower-priced NAC slots — suggesting excess capacity remains. While sentiment may push prices upward temporarily, ultimate rate direction hinges on ship utilisation. If vessels sail full, rates will hold firm. If not, the rally will fade. So, will there be port congestion? A sudden and sustained spike in volume could strain operations. However, if elevated cargo volumes last only two to three weeks, the ports can manage. If imports climb more than 20 per cent above normal and stay high through July, congestion risks increase sharply. The bottom line is that Los Angeles and Long Beach are entering a high-alert phase. If disruption comes, it will probably begin to show in late July. CAIXIN GLOBAL Zhang Huafeng is the chief operating officer of Duke Shipping Agency
Business Times
an hour ago
- Business Times
Meta in talks for scale AI investment that could top US$10 billion
[NEW YORK] Meta Platforms is in talks to make a multibillion-dollar investment into artificial intelligence startup Scale AI, according to people familiar with the matter. The financing could exceed US$10 billion in value, some of the people said, making it one of the largest private company funding events of all time. The terms of the deal are not finalised and could still change, according to the people, who asked not to be identified discussing private information. A representative for Scale did not immediately respond to requests for comment. Meta declined to comment. Scale AI, whose customers include Microsoft and OpenAI, provides data labelling services to help companies train machine-learning models and has become a key beneficiary of the generative AI boom. The startup was last valued at about US$14 billion in 2024, in a funding round that included backing from Meta and Microsoft. Earlier this year, Bloomberg reported that Scale was in talks for a tender offer that would value it at US$25 billion. This would be Meta's biggest ever external AI investment, and a rare move for the company. The social media giant has before now mostly depended on its in-house research, plus a more open development strategy, to make improvements in its AI technology. Meanwhile, Big Tech peers have invested heavily: Microsoft has put more than US$13 billion into OpenAI while both and Alphabet have put billions into rival Anthropic. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Part of those companies' investments have been through credits to use their computing power. Meta does not have a cloud business, and it is unclear what format Meta's investment will take. Chief executive officer Mark Zuckerberg has made AI Meta's top priority, and said in January that the company would spend as much as US$65 billion on related projects this year. The company's push includes an effort to make Llama the industry standard worldwide. Meta's AI chatbot – already available on Facebook, Instagram and WhatsApp – is used by one billion people per month. Scale, co-founded in 2016 by CEO Alexandr Wang, has been growing quickly: The startup generated revenue of US$870 million last year and expects sales to more than double to US$2 billion in 2025, Bloomberg previously reported. Scale plays a key role in making AI data available for companies. Because AI is only as good as the data that goes into it, Scale uses scads of contract workers to tidy up and tag images, text and other data that can then be used for AI training. Scale and Meta share an interest in defence tech. Last week, Meta announced a new partnership with defence contractor Anduril Industries to develop products for the US military, including an AI-powered helmet with virtual and augmented reality features. Meta has also granted approval for US government agencies and defence contractors to use its AI models. The company is already partnering with Scale on a programme called Defense Llama – a version of Meta's Llama large language model intended for military use. Scale has increasingly been working with the US government to develop AI for defence purposes. Earlier this year the startup said it won a contract with the Defense Department to work on AI agent technology. The company called the contract 'a significant milestone in military advancement.' BLOOMBERG
Business Times
2 hours ago
- Business Times
Global funds bet on South Korean stocks' big break on reform tailwinds
After years of frustration with South Korea's underperforming stock market, investors are growing more optimistic that the new president's push for shareholder-friendly policies will finally deliver stronger returns. Global money managers, including Aberdeen Investments, Pictet Wealth Management, and Franklin Templeton, have recently added positions or upgraded their outlook on local stocks. They are encouraged by newly-elected Lee Jae-myung's vows to boost corporate governance and nearly double the market's return, after months of political chaos in the nation triggered by his predecessor's short-lived martial law imposition. Foreigners are returning to the stock market, helping to push the benchmark Kospi Index into a bull market on Lee's first day in office. The early euphoria suggests investors are confident that Lee will accelerate efforts to boost shareholder returns – reminiscent of a similar drive that unleashed a stock rally in Japan – and succeed in the passage of a commercial law revision aimed at improving corporate governance. 'We are starting to see early signs of change,' said Pruksa Iamthongthong, deputy head of Apac equities at Aberdeen Investments, whose US$1.2 billion Asian ex-Japan fund turned overweight on South Korean stocks in May. 'We believe that such a collective effort on the part of the government and domestic companies will go a long way in boosting trust in Korea's capital markets and creating a culture of a greater heed to shareholder value.' Agitated investors South Korea's economy is dominated by family-controlled conglomerates, known as chaebols, which have come under criticism for failing to protect the rights of minority shareholders. That's resulted in investors often pricing local stocks below their book value and lower than overseas rivals, a phenomenon known as the 'Korea discount'. Shareholders are getting increasingly agitated, with activism campaigns targeting companies rising by seven-fold between 2020 and 2024, according to Bloomberg Intelligence. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'That link between what a company earns and what minority shareholders get back was broken,' said Jon Jhun, managing director at Management HK Advisors in Hong Kong. It's 'about to be fixed by the Democratic Party and their legislation'. One of Lee's early priorities is to root out rubber-stamping directors by revising the commercial code to broaden board fiduciary duty to shareholders – and not just to the company itself. The ruling party's officials are proposing new revisions, which include enhancing the nomination process for audit committee members and adopting electronic voting systems. Such revisions largely target chaebol conglomerates and their founding families, who wield outsized influence in the economy and at listed companies' management and boards. The new political leadership will likely look to further galvanise a wave of changes that were put in motion more than a year ago, in a programme called the 'Corporate Value-up'. Modelled after Japan's 'name and shame' initiatives, the programme urges companies to self-start a range of measures to boost shareholder returns. A total of 160 companies have unveiled Value-up plans, though many lacked details, said John Cho, South Korea equity portfolio manager at JPMorgan Asset Management. 'We anticipate that future iterations of medium-term planning should lead to more refined Value Up plans,' Cho said. 'Korea is only in its second year of the Value Up plan, compared to Japan's decade-long governance journey.' Signs are emerging that companies are taking proactive measures. Kospi members' total dividend payouts rose 12 per cent in 2024 to 44 trillion won (S$42 billion), according to Korea Exchange's data. Share buybacks more than doubled to 18.7 trillion won in 2024. 'These chaebols are actually changing their plans due to the pressure from the government and from the market,' said Yiping Liao, a portfolio manager at Franklin Templeton Emerging Markets Equity, which has been selectively adding South Korean stocks before the election. Earlier this year, arms maker Hanwha Aerospace also cut the size of a share offering after backlash from investors who were concerned about value dilution. Even with the legislature largely in his corner, Lee is not taking on his agenda without challenges. Some investors and activists have called for revising taxes on inheritance and dividends to help lift stocks, but that would require broader public support. The new president will also have to juggle a host of issues that darken the country's outlook, such as the prospect of higher tariffs from the US, an economy in contraction, and a deep-seated polarisation. Still, a corporate culture shift is underway, said Jonathan Pines, lead portfolio manager and head of Asia ex-Japan at Federated Hermes. 'We are significantly overweight Korean equities because of low valuations, and in the hope that the landscape continues to improve,' he said. BLOOMBERG
