State Bank of India (SBI), reported a standalone 12.5% year-on-year (YoY) rise in net profit to Rs 19,160 crore (Rs 17,035 crore) – the highest in five quarters – for the first quarter of FY26 on Friday, driven mainly by rise in treasury income.
It outperformed street estimates that had expected a fall in net profit to Rs 16,938 crore, according to Bloomberg. On a quarter-on-quarter (QoQ) basis, the net profit rose 3% from 18,643 crore in Q4FY25.
“The Q1 FY26 results reflect SBI’s ability to operate profitably at scale, even amid margin compression and macro uncertainty, underscoring strategic agility and disciplined execution,” said CS Setty, chairman, State Bank of India. With Rs 6,326 crore in treasury gains and Rs 1,632 crore from forex income, the bank’s non-interest income surged 55% YoY, boosting SBI’s profitability. The total non-interest income for Q1FY26 stood at Rs 17,346 crore (Rs 11,162 crore Q1FY25).
Margins Under Pressure, Asset Quality Improves
The net interest income (NII), a key revenue metric, remained flat in Q1FY26 at Rs 41,072 crore, compared to Rs 41,125 crore in the same period last year. QoQ, the NII declined by 4% from Rs 42,775 crore in Q4FY25. The quarter’s domestic net interest margin (NIM) fell to 3.02%, down 33 basis points from 3.35% in Q1FY25 and down 13 basis points from 3.15% in Q4FY25, respectively.
“The NIM trajectory will be U-shaped. We have seen moderation in Q1 and expect some pressure in Q2 as deposit costs have peaked. But with benefits from the cash reserve ratio (CRR) cut and deposit repricing, margins should recover by Q4. We remain committed to our annual guidance of above 3%,” explained Setty.
For the first quarter ended June 2025, the bank’s operating profit increased by 15.5% to Rs 30,544 crore from Rs 26,449 crore in the same quarter of the preceding fiscal year. Additionally, asset quality improved significantly, with gross NPAs falling to 1.83% from 2.21% a year ago, and net NPAs dropping to 0.47% from 0.57%.
Credit Momentum in Retail; Corporate Growth Muted
“We are seeing strong credit momentum in SME, agriculture, and retail personal loans, posting double-digit growth of 19.1%, 12.67% and 12.56%, respectively. However, corporate lending remains muted at 5.7%, with segments like infrastructure witnessing delayed disbursements and refinancing due to rate shifts and market competition,” said Setty.
Corporate growth remained muted at 5.7% at Rs 12 lakh crore (Rs 11.38 lakh crore) due to the shift toward market instruments with working capital utilisation dropping from 62% to 58%, and many large corporates accessing the commercial paper (CP) market where mutual funds offered more affordable rates.
The bank stated that it has a robust pipeline of proposals of over Rs 7 lakh crore, of which Rs 3.89 crore is pending sanction and Rs 3.41 lakh crore is disbursed, a mix of project loans and balance sheet funding. However, disbursements are taking time as there’s been significant prepayment activity due to refinancing and market access. Despite this, Setty said, “We are still hopeful that corporate loan growth will return to double digits by next quarter.” He added that broader global uncertainties have been the reason for the slowdown in corporate loan growth, and once domestic consumption visibility improves, it expects investment cycles to resume. “Our pipeline and expected disbursement patterns give us confidence… With ample liquidity and with CRR cuts and rate stabilisation, we are targeting around 10% growth in corporate lending,” said Setty.
SBI is seeing demand emerging from sectors such as renewables, highways, data centres, and refinery projects. However, sectors like steel and cement are witnessing consolidation and capacity stabilisation, which is why large-scale capex hasn’t yet translated into credit demand. The bank continues to remain engaged with customers, but growth will be more gradual.
The bank’s capital adequacy remained relatively strong at 14.63% (13.86%), with common equity at 11.10% (10.25%).
SBI recorded a 12% YoY growth in advances, with total advances reaching Rs 42.5 lakh crore (Rs 38 lakh crore) as of June 2025. Deposits grew 12 per cent YoY to Rs 54.7 lakh crore (Rs 49 lakh crore). The provision coverage ratio (PCR) witnessed a marginal improvement to 74.49% from 74.41%, an improvement of 8 bps.