State Bank of India (SBI), the largest bank in the country, reported its results on Saturday. Investors were keen to analyse the performance of this key bank on various operational parameters.
SBI closed 0.7% lower at Rs 1,066.4 on Friday, and not too far from its 52-week high of Rs 1,090 that was reached on 3 February, 2026.
Let’s dig in to find out how SBI performed on various parameters and compare its performance to key rivals
Q3FY26 – Managing NIM pressure with strong growth in retail and SME loans
Performance in the December 2025 quarter
| Bank | Net Interest Margin (%) | Loan Growth (%) | Net Profit Growth (%) | Standalone ROA (Annualized %) |
| SBI | 3.12% | 15.7% | 24.5% | 1.19% |
| PNB | 2.65% | 11.9% | 13.1% | 1.06% |
| HDFC Bank | 3.5% | 12.0% | 11.5% | 1.92% |
| Kotak Mahindra Bank | 4.5% | 16.2% | 4.0% | 1.92% |
For a key operational parameter, net interest margin (NIM), for SBI in its key domestic operations was stable. The NIM came in at 3.12% in the December 2025 quarter as against 3.15% a year earlier.
With regard to another important operational parameter – growth in advances, 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%.
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.
Earlier, Punjab National Bank (PNB), the second largest PSU bank, saw its NIM for domestic operations at 2.65% in the December 2025 quarter as compared to 3.09% a year earlier.
The New Delhi-based bank grew its advances by nearly 11.9% y-o-y to Rs 11.96 lakh crore in Q3FY26, and that was also driven by a 19.1% y-o-y growth in its retail loans to Rs 2.43 lakh crore.
For HDFC Bank, the largest private sector bank, reported net interest margin (NIM) was 3.5% based on interest earnings assets in the December 2025 quarter as compared to 3.6% a year earlier.
Its advances were Rs 28.21 lakh crore at the end of Q3FY26, a growth of 12% y-o-y. HDFC Bank, since its merger, has been quite cautious in growing its loan book, given its loan-to-deposit ratio is well above 90%.
For Kotak Mahindra Bank net interest margin (NIM) was 4.5% in the December 2025 quarter vis-a-vis 4.9% a year earlier.
Asset quality, provisioning and impact on net profit
SBI’s provisions for non-performing assets was Rs 3,215.7 crore in the December 2025 quarter vis-a-vis 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.
SBI’s provisioning is well above regulatory requirements. 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.
Strong growth in retail and SME loans helped SBI’s standalone net profit rise by 24.5% to Rs 21,028 crore in Q3FY26. The bank has highlighted its highest ever quarterly profit declared.
SBI’s core banking operations are reflected in its standalone results.
Earlier, PNB also saw a sharp jump in its provisions for non-performing assets, which were Rs 1,341.4 crore in the December 2025 quarter as against Rs 317.5 crore a year earlier.
The bank has highlighted its provision coverage ratio of 90.25% in the December 2025 quarter and broadly in tune with a year earlier. The provisioning made by PNB is well above regulatory requirements related to NPAs.
PNB’s % of net NPAs was 0.32% in the December 2025 quarter as compared to 0.41% a year earlier.
A strong growth in retail loans helped PNB’s standalone’s net profit rise 13.1% y-o-y to Rs 5,100 crore in the December 2025 quarter.
Meanwhile, HDFC Bank and Kotak Mahindra Bank have one of the lowest NPA ratios in the domestic banking industry and set benchmarks for other banks.
Earlier, HDFC Bank highlighted its % of net NPAs to net advances was 0.42% in the December 2025 quarter vis-a-vis 0.46%.
Its provisions had also come down by nearly 10% y-o-y to Rs 2,837 crore in the December 2025 quarter, and it helped HDFC Bank’s standalone net profit rise 11.5% y-o-y to Rs 18,635.8 crore in the quarter under review.
Efficiency kings – Return on Assets (ROA)
SBI has highlighted its return on assets (net asset basis – annualised) was 1.19% in Q3FY26.
PNB’s return on Assets (annualised) was 1.06 % in the December 2025 quarter.
Meanwhile, Kotak Mahindra Bank and HDFC Bank enjoyed identical return on assets (RoA) in the third quarter of FY26.
The return on average assets (not annualised) was 0.48% in the December 2025 quarter for both banks, and on annualising it for FY26 it would be nearly 1.92%.
HDFC Bank and Kotak Mahindra Bank have had one of the highest RoA in the banking industry, over the past several quarters.
Growth outlook
The RBI had not changed repo rate in its policy meeting on Friday, however, it had earlier taken several steps to lower rates and boost lending in the broader banking systems.
Investors will be closely monitoring SBI, PNB, HDFC Bank and Kotak Mahindra Bank along with other leading banks to grow their loan book over the next few quarters as well as manage the pressure on NIMs and other key operational parameters.
Also, with the Indian government reaching a trade deal with the Trump administration along with entering into free trade agreements (FTAs) with several leading trading partners including the European Union and Australia, this is expected to create new banking opportunities for the broader banking system over the medium term.
Comparative Valuations and Market Outlook
| Bank | Price to Standalone Book Value |
| HDFC Bank | 2.7 |
| SBI | 1.9 |
| PNB | 1.0 |
On the preferred valuation matrix, price to (standalone) book value, SBI trades at 1.9 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.
PNB on the above valuation metric, trades at 1 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 2.7 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.
Banking stocks have largely factored in the growth opportunities over the next few quarters. It may be a good idea to add them to your watchlist and see whether they meet expectations, or if they surprise with better than expected performance.
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.
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