The country’s largest lender, State Bank of India (SBI), plans to raise up to Rs 10,000 crore through additional tier – 1 (AT1) bonds until March 2024, to support business growth.
SBI in a filing with the BSE said the central board of the bank at its meeting on Wednesday green-lit the fundraise via the Basel III-compliant debt instrument in rupee and/or any other convertible currency up to FY24. This fundraising would be subject to the Government of India’s concurrence, SBI said.
According to SBI executives, the bank would look to raise this capital before March and the issuance would be in tranches based on the appetite of the market.
Bank’s capital adequacy ratio (CAR) at 13.51 per cent in September 2022 was comfortably above regulatory requirement but it would still look to build a base to support growth in this and the next financial year. Its loan book rose by 19.83 per cent year-on-year to Rs 30.35 trillion as of September 30, 2022.
The capital adequacy has not factored in a net profit of Rs 19,333 crore in the April-September period. The retained earnings for FY23 would enhance the common equity tier I ratio from the level of 9.53 per cent in September 2022, the executives said.
Capital bonds worth Rs 7,000 crore would mature in the next financial year. There is a separate board-approved plan to replace them, executives said.
SBI already raised over Rs 10,800 crore in debt capital – tier I bonds (Rs 6,872 crore) and tier II bonds (Rs 4,000 crore) — in September 2022. It issued AT1 bonds at a cut-off of 7.75 per cent. The bank notified an amount of Rs 7,000 crore to be raised through a single tranche of AT1 bonds in order to augment capital.
The coupon for tier II bonds was set at 7.57 per cent. Investors had placed bids worth Rs 9,647 crore for tier II bonds. It was oversubscribed by about 5 times against the base issue size of Rs 2,000 crore. These bonds have a tenure of 15 years with a call option after 10 years.