SBI outperforms street expectations; posts its highest-ever quarterly profit of Rs 21,028 crore

State Bank of India (SBI), the country’s largest lender, delivered its highest‑ever quarterly profit, supported by strong credit demand, healthy deposit mobilisation and continued improvement in asset quality.  SBI beat street expectations in the December 2026 quarter, reporting a 24.5% year‑on‑year rise in net profit to Rs 21,028 crore (Rs 16,891 crore Q3FY25), sharply ahead of Bloomberg’s estimate of Rs 17,800 crore. On a sequential basis (Q-o-Q), the bank posted a profit growth of 4.3% from Rs 20,160 crore as on the quarter ended September (Q2FY26).

“Our performance this quarter is the outcome of multiple levers firing together—healthy NII growth, strong fee income, disciplined cost management and a resilient asset quality profile. Even without the one‑off dividend, the core engine of the bank is performing consistently, and that gives us confidence in the sustainability of our earnings,” said C S Setty, Chairman, SBI. The bank received a one-time dividend of Rs 2,200 crore from SBI Mutual Fund.

Setty added that its mutual fund subsidiary will get listed ahead of the stipulated time of September 2026. This saw other income surge by 66% to Rs 18,358 crore (Rs 11041 crore). The rise in other income also included treasury income and recoveries from written-off accounts. For Q3FY26, the public sector bank recorded a 9% growth in net interest income (NII) to Rs 45,190 crore, compared to Rs 41,446 crore in Q3FY24. The NII also beat Bloomberg’s estimates of Rs 44,970 crore. For Q2FY26, NII rose by 5% from Rs 42,984 crore.

Operating profit rose 39.5% to Rs 32,862 crore, while total business crossed Rs 103 lakh crore. For Q3FY26, SBI posted a NIM of 2.99%, with domestic NIM at 3.12%. Deposits grew 9% year‑on‑year to Rs 57 lakh crore, led by a 14.5% jump in retail term deposits and a 10.3% rise in current account balances, keeping the CASA ratio at 39.13% despite a competitive market.

“We remain comfortable with our NIM trajectory and continue to hold to our 3% guidance. Despite deposit repricing pressures across the system, our disciplined risk‑based pricing, strong CASA franchise and balanced asset mix give us confidence that margins will stay strong.”

Setty highlighted structural shifts in household savings towards market‑linked instruments but said it is strengthening current account growth, deepening digital engagement and enhancing product innovation to sustain momentum. “The financialisation of household savings is a structural shift, not a quarterly phenomenon. We recognised this early and reoriented our branches from being transaction‑led to deposit‑mobilisation‑led.

Our strong retail franchise continues to deliver, and we remain comfortable on liquidity and capital to support growth,” Setty said. He believes that, going ahead, the next phase of credit growth will not be supported solely by deposits. “As the bond market deepens, banks will increasingly access market instruments at competitive pricing. As long as solvency and liquidity remain strong, the mix of liabilities will evolve in line with global best practices,” he added.

Domestic advances expanded 15.4%, with the retail, agriculture and MSME portfolio crossing Rs 26 lakh crore, up 16.5% year‑on‑year, and corporate credit rebounding with 13.4% growth. SBI chairman said, “The environment is extremely supportive—trade deals, budget measures and broad‑based economic momentum give us confidence to revise our credit growth outlook to 13–15% (from 12-14%). RAM will remain a strong driver, but corporate credit is also rebounding meaningfully across sectors.”

Digital Dominance

The bank is seeing a clear rebound in corporate credit, led by power, large NBFCs, metals, infrastructure and oil & gas. These are sectors where demand visibility is strong, and utilisation levels are rising, and the bank is well‑positioned to support this momentum.

Corporate Rebound

“Our corporate pipeline remains robust at around Rs 3.5 lakh crore, with sanctioned but undisbursed loans of roughly Rs 4.5 lakh crore. Together, this gives us visibility of nearly Rs7-8 lakh crore of credit demand, reflecting broad‑based investment activity across the economy,” said Ashwini Kumar, managing director, SBI.

Adding further, Setty added, “Corporate credit will continue to grow in double digits. Working capital utilisation has improved by 300–400 basis points, long‑term project demand is healthy, and with trade deals and policy support, we expect sustained traction across both large corporates and MSMEs.”

Asset quality remained at a two‑decade best, with gross NPAs improving to 1.57%, at its multi-decade low (beating Bloomberg’s estimate of 1.66%) and net NPAs declining to 0.39%, while credit cost stayed benign at 0.29%. 

Meanwhile, SBI said its digital transformation continues to be a key profitability driver, with 9.65 crore customers on YONO and over 3 crore on the new YONO platform launched in December 2025; 98.6% of all transactions in the nine months were routed through alternate channels.