Data from the Reserve Bank of India (RBI) show average credit growth in the July-September quarter was 20%.

For SBI? 16.93%.

Peers such as ICICI Bank and HDFC Bank saw loan disbursements rise at 20.47% and 20%, respectively, in the second quarter.

Their first quarter had nearly the same traction,as credit growth rose 19.70% and 20.1%, respectively, compared with SBI’s 18.73%.

What ails the behemoth?
Manish Chowdhary, Aditya Narain and Pooja Kapur of Citigroup Global Markets blame the shift in focus to protect net interest margins (NIM).

NIM is the difference between interest earned and interest paid as a percentage of the bank’s assets.

SBI’s NIM touched an all-time high of 3.79% compared with 3.43% in the same quarter of last fiscal.

And the festive season has not worked to reverse the bank’s fortunes.

“In the festive season, we have seen some demand for loans
to buy consumer durables. But that is not much even if you finance a large number of people,” Pratip Chaudhuri, chairman, SBI, said at a press conference on Wednesday.

Chaudhuri is optimistic that there will be some pick-up in the second half of the fiscal.

In the July-September quarter, India’s largest lender managed to increase its home loan portfolio 16.53%, while HDFC grew 17.6%.
Similarly, in the April-June quarter, HDFC’s retail loan portfolio jumped up 21.4%, while SBI’s was 20.4%.

“That’s because SBI currently has low capital adequacy ratio. Due to insufficient capital, it will be forced to go slow on lending. The growth in the second half will be lower in the range of 14-16%,”.

If one factors in the Basel II norms, SBI’s capital adequacy stands at 11.40% at September-end compared with 12.48% at September-end of 2010.

Capital adequacy ratio mandates setting aside a certain percentage of capital for every rupee lent.

State-owned SBI’s retail loans are also trailing. They grew 12.86% year on year,whereas the industry average for the July-September period stood at 15% .

If that was not enough, in the SBI home loan segment immediate competitor, the Housing and Development Finance Corporation has been notching up a higher growth in the last two quarters.