On Wednesday, Dinesh Kumar Khara, chairman of State Bank of India, the country’s largest lender, retired. In his retirement speech, he set a new target for the bank’s new chairman CS Shetty. This target is about Rs one lakh crore. During his illustrious four-year tenure as India’s largest lender, SBI’s profits soared manifold and investors earned 325 per cent returns on blue-chip PSU stocks. Let us also tell you what the Rs 1 lakh crore deal given by Dinesh Khara is.
Target of one lakh crore profit
Veteran banker Dinesh Khara, who celebrates his 63rd birthday today, took over as SBI chairman from Rajnish Kumar on October 7, 2020, amid the Covid crisis. SBI’s annual profits rose 200 per cent from Rs 20,410 crore in FY21 to Rs 61,077 crore in FY24. He has now given the new chairman, CS Shetty, a target of taking profits to Rs 1 lakh crore in the current financial year. He is also known as the “Profit King” in the banking sector. SBI’s profits of Rs 1.63 lakh crore in the last four financial years have surpassed the cumulative figure of Rs 1.45 lakh crore in the previous 64 years. During his tenure, SBI’s net non-performing loans declined from 1.59 per cent in Q1FY21 to 0.57 per cent in Q1FY25.
What have been the statistics of the Khara era?
Lenders’ deposits rose by over 41 per cent to Rs 49,01,726 crore in Q1FY25, while it was Rs 34,70,462 crore in Q1FY21. The loan book grew 60 per cent to Rs 38,12,087 crore. Earlier this month, Khara had said that under his leadership, SBI has also improved on the productivity front, with profit per employee increasing nearly six-fold to Rs 30 lakh. “My ambition was for the bank to achieve a profit of Rs 1 trillion after tax,” a Delhi School of Economics alumnus had earlier told ET Now. “In my view, we are on the right track and I hope we will see this figure soon.” In the June quarter, SBI reported a PAT of Rs 17,035 crore, up 0.89 per cent year-on-year.
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Tremendous rise in stocks as well.
A similar surge has been seen in banking stocks as well. During Khara’s tenure, SBI shares rose 325 per cent from Rs 191.6 to Rs 815. But Khara is not happy with this alone. The SBI chief recently told reporters that he is not happy. How can I be happy? We are not getting our true value, other market players are in a better position than us in terms of share price.
SBI is currently India’s seventh-largest listed company in terms of market capitalisation and the bank’s valuation is around Rs 7.3 lakh crore. The PSU lender was India’s second-highest-earning company in FY24 after Reliance Industries (RIL). Dalal Street remains bullish on SBI as it is one of the leading PSU stocks in the banking sector. In the current calendar year, SBI has outperformed the benchmark index with a return of 27%.
