The results of State Bank of India (SBI), the largest bank in the country, were keenly awaited at a time when the broader banking sector has been grappling with difficulties on several operational parameters. The June 2025 quarter results of SBI were declared during Friday trading hours and the stock closed broadly flat at Rs 804.6. The stock is trading not too far from its 52-week high of Rs 875.5 that was reached on 6 December 2024.
Performance in the June 2025 quarter
For a key operational parameter net interest margin (NIM), for SBI its domestic NIM was 3.02% in the June 2025 quarter vis-a-vis 3.35 % a year earlier. For smaller rivals too, the pressure on NIMs was visible – for HDFC Bank, its NIM was 3.5 % on interest earning assets in the June 2025 quarter vis-à-vis 3.7 % a year earlier. And for Axis Bank, its NIM was 3.8 % in the June 2025 quarter vis-à-vis 4.05 % a year earlier. Axis Bank had tightened its bad loan recognition policy in the June 2025 quarter and it affected its various operational parameters.
The central bank had cut repo rates in its meeting in early June 2025, and while interest rates on bank loans / credit facilities have come down, interest rates on deposits with the bank come down with a lag.
Meanwhile, SBI’s total advances grew 11.6 % y-o-y to Rs 42.5 lakh crore in the June 2025 quarter led by improved demand conditions for credit from SME sector and retail sector. And HDFC Bank, the largest private sector bank, its advances grew by nearly 6.7 % y-o-y to Rs 26.28 lakh crore in the first quarter of FY26.
Kotak Mahindra Banks advances grew 14 % y-o-y to Rs 4.4 lakh crore in the June 2025 quarter, while Axis Bank’s advances grew by 8 % y-o-y to Rs 10.59 lakh crore in the first quarter of FY 26.
The asset quality of SBI has been fairly good – its % of net NPAs was 0.47 % in the June 2025 quarter vis-à-vis 0.57 % a year earlier.
For Kotak Mahindra Bank, its % of net NPAs to net advances was 0.34 % in the June 2025 quarter vis-à-vis 0.35 % a year earlier. Similarly for HDFC Bank, its % of net NPAs to net advances was 0.47 % in the June 2025 quarter vis-à-vis 0.39 % a year.
Meanwhile, SBI’s standalone net profit grew nearly 12.5 % y-o-y to Rs 19,160.4 crore in the June 2025 quarter. And HDFC Bank’s standalone net profit rose 12.2 % y-o-y to Rs 18,155 crore in the June 2025. In contrast, Axis Bank’s standalone net profit of Rs 5,806 crore in the June 2025 quarter fell nearly 4 % y-o-y. Axis Bank has highlighted stricter NPA recognition norms impacted its net profit by Rs 614 crore in the June 2025 quarter.
However, SBI has lagged HDFC Bank and Kotak Mahindra Bank on a key operational parameter – for both Kotak Mahindra Bank and HDFC Bank’s return on assets (average) not annualized was 0.48 % in the June 2025 quarter. On an annualized basis, it would be nearly 1.92 % for the full financial year compared to SBI’s return on average assets (annualized) was 1.14 % in the June 2025 quarter.
For Axis Bank, its return on average assets (annualized) was 1.47 % in the June 2025 quarter.
Outlook going forward
SBI had raised nearly Rs 25,000 crore via its recent QIP. The RBI has taken several steps to boost lending in the banking system. Investors will be closely monitoring SBI, HDFC Bank, Axis Bank and other leading banks for their ability to protect their NIMs as well as other operational parameters.
And SBI’s more than 22,000 branches across the country will play a key role in accessing low cost CASA deposits as well as growing its advances going forward.
Valuations
SBI trades at a P/E of nearly 9 times estimated standalone FY26 earnings. HDFC Bank trades at a P/E of more than 20 times estimated standalone FY 26 earnings, and Kotak Mahindra Bank trades at a P/E of more than 28 times estimated standalone FY 26 earnings
Given the current geopolitical and trade tensions, one needs to approach investing even more cautiously. Readers should track how banking stocks deliver in the quarters to come. Perhaps, add these stocks to the watchlist as well?
Disclaimer
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
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.