India's largest bank to raise US$3bil in share sale
MUMBAI: State Bank of India (SBI) plans to raise 250 billion rupees (US$3bil) 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% to 186.4 billion rupees in the three months through March, from a year earlier, according to a statement last Saturday.
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 Ltd last month unveiled plans to raise US$6.4bil, while IDFC First Bank Ltd is raising capital from Warburg Pincus and Abu Dhabi Investment Authority.
Mumbai-based SBI will raise this sum via a share sale in the year ending March 2026 in one or more trances, it said in the statement. The bank declared a dividend of 15.9 rupees per share.
Peers including HDFC Bank Ltd and ICICI Bank Ltd 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.
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% this year and system level growth could be lower at 10% to 11%,' he said.
SBI's loan advances rose 12% to 42.2 trillion rupees though March from a year earlier, while deposit base climbed 9.5% to 53.82 trillion rupees. Its gross non-performing assets decreased to 1.82% from the year-ago period and was lower than the estimate of 1.98%.
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. — Bloomberg
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