The March 2026 quarter results of government-controlled State Bank of India (SBI) were keenly awaited by investors on Dalal Street in a bid to understand the impact of the ‘soft’ interest rate environment on the various parameters of the largest bank; loan and deposit growth, and net interest margin (NIM) amongst others.
The RBI had last cut repo rates in early December 2025, in a bid to expand / grow lending in the broader banking system.
In addition, investors were are also keen to understand the local impact of the Middle East crisis on SBI, in terms of any rise in NPA levels or increase in voluntary additional provisions.
Several leading private sector banks like HDFC Bank, Axis Bank and Kotak Mahindra Bank have already declared their Q4FY26 results, and asset quality of these banks has remained fairly strong, despite the Middle East war. However, Axis Bank had made a voluntary, additional, one-time provision of Rs 2,001 crore in Q4FY26.
To get a better understanding of SBI’s performance in the March 2026 quarter, we looked at various operational parameters that are closely tracked.
Core operational performance of SBI in Q4FY26
| Loan growth (% y-o-y) | Deposit growth (% y-o-y) | NIM (%) | |
| March 2026 quarter | 17.2% | 11% | 2.93% |
| December 2025 quarter | 15.7% | 9% | 3.1% |
SBI has once again demonstrated the advantage it enjoys with the largest branch network in the country with 23,265branches at the end of Q4FY26 pan India, with regard to expanding its core banking operations.
With regard to an important operational parameter – growth in advances, SBI grew its advances by 17.2% y-o-y to Rs 48.77 lakh crore in the March 2026 quarter. To the largest bank’s credit, it had grown its SME loans by 21% y-o-y in Q4FY26 while agri loans grew 19.7%.
The March quarter is typically a ‘busy’ season for credit, with individuals, small and large companies borrowing funds heavily before the close of the financial year.
And SBI grew its advances by 15.7% y-o-y to Rs 46.27 lakh crore in the December 2025 quarter. To the largest bank’s credit, it had grown its retail advances by 15% y-o-y in Q3FY26 while SME loans grew 21%.
The third quarter is also a ‘busy’ season for loans /advances.
Of equal importance, is that SBI’s deposits grew 11% y-o-y to Rs 59.75 lakh crore in Q4FY26, with the bank reporting strong growth in time deposits, largely fixed deposits.
Deposits form the basis of extending credit for a bank, short and long-term to clients
SBI’s deposits grew 9% y-o-y to Rs 57.01 lakh crore in the December 2025 quarter, led by a 10.3% y-o-y growth in low-cost current accounts.
Managing ‘soft’ NIM
For a key operational parameter, net interest margin (NIM), for SBI in its key domestic operations was 2.93% in the March 2026 quarter as against 3.14% a year earlier.
Retail loans and loans to smaller enterprises enable banks to earn a higher rate of interest on loans / credit as against loans to top-rated corporates, and help them manage the pressure on NIMs.
The RBI has taken several steps to boost lending in the broader banking system and this includes the cut in repo rates in early December 2025. This in turn has put temporary pressure on NIMs of banks, like SBI.
Its domestic NIM was 3.12% in the December 2025 quarter as against 3.15% a year earlier.
Sharp fall in other Income
SBI has seen its other income weaken to Rs 17,314.1 crore in the March 2026 quarter from Rs 24, 366.7 crore a year earlier.
The largest bank in its results presentation has highlighted its forex / derivative income was Rs 1,258 crore in the March 2026 quarter as against Rs 2,859 crore.
Also, it incurred a loss on sale / revaluation of investments of Rs 1,471 crore in Q4FY26 as compared to a profit of Rs 6,879 crore a year earlier.
The above loss could be partly attributed to rising 10-year government bond yields, given the Gulf War and rising interest rates globally. Rising government bond yields result in losses for banks, like SBI.
Strong asset quality
SBI’s asset quality has continued to remained stable and no visible local impact of the Middle East crisis– its % of net NPAs was 0.39% in the March 2026 quarter as compared to 0.47% a year earlier.
SBI’s provisions for non-performing assets was Rs 3,140.5 crore in the March 2026 quarter as against Rs 3,964.2 crore a year earlier. The largest bank in the country has highlighted that its provision coverage ratio was 74.4 % at the end of the Q4FY26, broadly in tune with a year earlier.
SBI’s provisioning is well above regulatory requirements.
A sharp decline in other income of SBI resulted in its standalone net profit rising by just 5.6% y-o-y to Rs 19,683.8 crore in Q4FY26.
Even in the December 2025 quarter, its asset quality was stable – its % of net NPAs was 0.39% in the December 2025 quarter as compared to 0.5% a year earlier.
However, SBI’s provisions for non-performing assets was Rs 3,215.7 crore in the December 2025 quarter as against Rs 2,305 crore a year earlier. The largest bank in the country has highlighted that its provision coverage ratio was 75.5% at the end of the Q3FY26, higher than 74.6% reported a year earlier.
Strong growth in retail and SME loans helped SBI’s standalone net profit rise by 24.5% to Rs 21,028 crore in Q3FY26.
SBI’s core banking operations are reflected in its standalone results.
Return on Assets (ROA) – which bank has best capital utilisation levels
SBI has highlighted its return on assets (net asset basis – annualised) was 1.07% in Q4FY26, and it was 1.12% for FY26.
Smaller rival, HDFC Bank’s return on assets (average) – not annualized was 0.48% in the March 2026 quarter, and for FY26 it was 1.94%.
HDFC Bank along with smaller rival, Kotak Mahindra Bank, have one of the highest Return on Assets (ROA) in the banking industry, over the past several quarters.
Growth plans
SBI plans to raise $2 billion (nearly Rs 18,000 crore) from international markets, and this comes at a time when the central government has been urging industries across sectors including cement, steel, auto and engineering, amongst others to expand their capacities. The SBI board will meet on May 12 to finalise the details of the above fund raising plan.
Investors continue to keep an eye on the local fallout of the Middle East crisis.
Also, various domestic and international bodies have lowered the growth forecast for the Indian economy to 6% to 6.5% for FY27. Investors will be watching the implications from the above forecast on the various operational parameters of SBI Bank and other leading banks, including loan growth, NIM, NPAs and RoA.
SBI v/s leading bank valuations – A comparison
| Bank name | Price-to-(standalone) book value |
| SBI | 1.7 times |
| PNB | 0.9 times |
| HDFC Bank | 2.2 times |
The lacklustre profit growth in Q4FY26 resulted in SBI stock dropping 6.8% to Rs 1,017.9 on Friday. The stock had reached a 52-week high of Rs 1,234.8 on 24 February, 2026.
On the preferred valuation matrix, price to (standalone) book value, SBI trades at 1.7 times, according to Screener.in.
Over the past five years, it has traded on the above valuation matrix between 1.3 and 2.3 times.
Punjab National Bank (PNB), the second-largest PSU bank, on the above valuation metric, trades at 0.9 times. Over the past five years, PNB has traded between 0.3 times and 1.5 times.
HDFC Bank trades on the above valuation matrix of nearly 2.2 times. Over the past 5 years, the HDFC Bank stock has traded at a price to (standalone) book value between 2.1 times and 4.8 times.
SBI trades at valuations lower than its nearest rival, HDFC Bank. SBI is attempting to continue the growth momentum in loans during FY27. However, investors will need to track rising bond yields and its impact on SBI. Investors could add SBI to their watch list of stocks for 2026, and see if its performance matches expectations.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.