SBI's quarterly net profit surges by 12.5% year-on-year, reaching INR 19,160 crores.
State Bank of India Targets NIM Recovery in Q4FY26
State Bank of India (SBI), the country's largest lender, has set a target for its Net Interest Margin (NIM) to recover and stabilize in the range of 2.85% to 3.0% by the end of the fourth quarter of the financial year 2025-26 (Q4FY26). This recovery comes after a decline in NIM in previous periods.
The bank's optimistic outlook for NIM is supported by its recovery target of over 100 billion INR for FY26 and an expansion of its branch network. These moves indicate growth and improving operational metrics, which may positively impact NIM.
Despite macroeconomic factors like inflation and RBI policy remaining stable, SBI's NIM guidance reflects the bank's outlook for maintaining spreads despite external uncertainties.
In the first quarter of the financial year 2022-23 (Q1), SBI's NIM fell 32 basis points year-on-year (y-o-y) and 10 basis points quarter-on-quarter (q-o-q) to 2.90%. However, the bank expects a recovery to 3% by Q4FY26, aided by lower deposit costs and easing CRR requirements.
SBI's Q1 performance shows a 12.5% y-o-y and 3% q-o-q increase in net profit, amounting to ₹19,160 crore. The bank also reported a rise in its overall advances and deposits by 12% y-o-y each.
The bank aims to grow the personal loans segment and expects festival demand to drive growth in this sector. However, SBI's fresh slippages rose slightly to ₹7,945 crore in Q1, primarily due to non-performing assets (NPAs) from the agriculture and Small and Medium Enterprises (SME) segment.
The bank's asset quality improved in Q1, with the Gross Non-Performing Asset (GNPA) ratio falling by 38 basis points y-o-y to 1.83% and the Net Non-Performing Asset (NNPA) ratio falling by 10 basis points y-o-y to 0.47%.
SBI's chairman, CS Setty, expects auto loans to remain stagnant in Q2 but anticipates growth in the auto sales sector during the festive season. The bank also has around ₹7 lakh crore of corporate loans in the pipeline.
The bank expects its GNPA ratio to be below 2% in the current fiscal year. Additionally, SBI's non-interest income, including treasury gains and fees from third-party services, rose 55% y-o-y to ₹17,346 crore.
Other notable financial performances include a 34% increase in Grasim's Q1 net profit due to higher realisation, and a widened Q1 net loss for Wockhardt to ₹108 crore.
The Reserve Bank of India's (RBI) August policy pause was viewed as a 'technical move' by SBI, with limited scope for a cut in 2025.
Equitas Small Finance Bank's losses were pushed up to ₹224 crore due to one-time payments. Despite this, SBI remains optimistic about its financial performance and growth prospects in the coming quarters.
- State Bank of India (SBI) aims to recover and stabilize its Net Interest Margin (NIM) in the range of 2.85% to 3.0% by the end of Q4FY26, as stated by the country's largest lender.
- SBI's target for NIM recovery of over 100 billion INR for FY26 and expansion of its branch network indicate growth and improving operational metrics.
- Despite stable macroeconomic factors like inflation and RBI policy, SBI's NIM guidance reflects the bank's outlook for maintaining spreads despite external uncertainties.
- In Q1, SBI's NIM fell 32 basis points year-on-year (y-o-y) and 10 basis points quarter-on-quarter (q-o-q) to 2.90%, but the bank expects a recovery to 3% by Q4FY26.
- The bank's Q1 performance showed a 12.5% y-o-y and 3% q-o-q increase in net profit, amounting to ₹19,160 crore, with a rise in overall advances and deposits by 12% y-o-y each.
- SBI aims to grow the personal loans segment, anticipating festival demand to drive growth, but fresh slippages rose slightly in Q1 due to non-performing assets (NPAs) from the agriculture and Small and Medium Enterprises (SME) segment.
- The bank's asset quality improved in Q1, with the Gross Non-Performing Asset (GNPA) ratio falling by 38 basis points y-o-y to 1.83% and the Net Non-Performing Asset (NNPA) ratio falling by 10 basis points y-o-y to 0.47%.
- SBI remains optimistic about its financial performance and growth prospects in the coming quarters, despite challenges such as losses at Equitas Small Finance Bank due to one-time payments and limited scope for a rate cut in 2025 as per the RBI's August policy pause.
