SBI Chairman Reveals Record Profits, But Investors Aren’t Impressed

Outgoing SBI chairman Dinesh Kumar Khara announced on Saturday that the bank’s net profits in the past four years have surpassed the total profits from the previous 64 years. Despite this impressive performance, Khara feels the bank’s stock isn’t valued correctly by investors.

“In the last four years, we earned a net profit of Rs 1.63 lakh crore, compared to Rs 1.45 lakh crore in the 64 years before that,” Khara said in his final post-earnings meeting before his term ends this month.

When Khara took over, the bank’s annual profit was Rs 14,000 crore, which has now increased to Rs 17,000 crore per quarter. He also noted that productivity has improved significantly, with profit per employee growing nearly six times to Rs 30 lakh.

Khara is confident that the bank, which saw less than 1% profit growth in the June quarter, will achieve over 16% growth, aiming for a profit after tax (PAT) of Rs 1 lakh crore in FY25. He assured that his successor would not disrupt profits with higher provisions, as the managing directors have jointly prepared the balance sheet.

Despite these achievements, Khara lamented that investors do not fully appreciate SBI’s value. The bank’s market capitalisation increased to Rs 1.92 lakh crore from Rs 0.84 lakh crore in the last five years. However, Khara said, “I am not happy. We are not getting our right value, look at the other players in the market.”

SBI’s strengths include its extensive network of over 22,000 branches, strong brand recognition, and solid liquidity buffers. The average balance in a savings account is three times higher than the nearest competitor, with the average savings account balance growing to Rs 17 lakh crore in June 2024 from Rs 12 lakh crore in March 2020.

When asked if he had any regrets, Khara said there were none.