State Bank of India (SBI), the country’s largest lender, on Tuesday reported a 14.28 per cent year-on-year (Y-o-Y) increase in net profit for the July-September quarter (Q2FY27), aided by lower provisions and healthy growth in net interest income (NII).
The net profit stood at ₹23,038 crore in Q2FY27, beating market estimates of ₹22,619 crore. Its NII — the difference between interest earned and interest expended — grew nearly 15 per cent Y-o-Y to ₹49,413 crore in Q2FY27, driven by robust loan growth.
The bank’s non-interest income declined nearly 5 per cent Y-o-Y to ₹19,066 crore, mainly due to lower treasury income. This was despite SBI gaining ₹7,288 crore from the sale of its stake in SBI Funds Management during the quarter. The bank also sold shares in the National Stock Exchange during its public offering, realising around ₹2,400 crore. However, the proceeds were added to reserves and did not flow into the profit and loss account.
SBI’s shares closed 1.77 per cent down at ₹969.55 on the BSE on Tuesday following the announcement of the results. SBI’s net interest margin (NIM) improved during the quarter, with domestic NIM rising 11 basis points (bps) sequentially to 3.11 per cent, while global NIM increased 8 bps to 2.94 per cent at the end of Q2FY27.
SBI Chairman C S Setty said the lender has improved liability management, particularly on the cost front. “The fall in cost of deposits, coupled with the yield on advances, has helped us maintain and improve our overall NIM,” said SBI Chairman C S Setty.
Setty said SBI raised $10.9 billion in Foreign Currency Non-Resident (Bank), or FCNR(B), deposits through the concessional swap window opened in June.
The bank used these deposits to retire some of its high-cost borrowings, which helped improve margins.
“I am happy that the NIM trajectory has been positive. We will continue to benefit from the 25 bps increase in the external benchmark-linked rate (EBLR). If there are any further repo rate hikes, the EBLR-linked portfolio will be repriced relatively quickly,” he said.
SBI’s advances grew nearly 18 per cent Y-o-Y and 3.19 per cent sequentially to ₹52.08 trillion in Q2FY27. Retail loans increased 14.54 per cent to ₹18.25 trillion, while agricultural advances grew 22.64 per cent to ₹4.51 trillion. SME loans rose 22 per cent to ₹6.61 trillion, and corporate advances grew 16.12 per cent to ₹14.39 trillion.
Deposits grew 12.27 per cent Y-o-Y and 4.53 per cent sequentially to ₹62.77 trillion in Q2FY27. Domestic current account and savings account (CASA) deposits rose 8.13 per cent Y-o-Y to ₹22.96 trillion, while domestic term deposits increased 14.26 per cent to ₹36.97 trillion. The bank’s CASA ratio declined to 38.32 per cent in Q2FY27 from 39.63 per cent a year earlier.
Setty said the lender has maintained its earlier guidance of 14-15 per cent credit growth and 10-11 per cent deposit growth.
“Deposit growth in Q2 was supported by FCNR(B) mobilisation. Excluding these deposits, growth was around 10.5-10.6 per cent, which is in line with our guidance. On credit growth, our focus is on maintaining growth above nominal GDP growth. If nominal GDP growth is around 12-12.5 per cent, SBI’s growth rate is typically 3-4 percentage points higher. That is the basis for our guidance of 14-15 per cent credit growth,” Setty said.
He said SBI did not face any immediate pressure to raise deposit rates, as it had excess government securities (above the mandated statutory liquidity ratio) worth more than ₹4 trillion, providing sufficient liquidity to support credit growth. However, with robust credit growth across the banking system, some banks may need to consider increasing deposit rates. “We will take an appropriate call at the appropriate time,” he said.
The bank’s provisions for bad loans declined 33 per cent Y-o-Y to ₹2,759 crore in Q2FY27. However, slippages rose to ₹5,227 crore during the quarter from ₹4,754 crore a year earlier.
The bank’s asset quality improved, with its gross and net non-performing asset (NPA) ratios at their lowest levels in more than two decades. Gross NPAs declined 12 bps sequentially to 1.39 per cent, while net NPAs fell 2 bps to 0.36 per cent. “At 1.39 per cent, our gross NPA ratio remained at its lowest level in more than two decades, supported by disciplined underwriting, strong recoveries and focused risk management,” Setty said.
On the data breach at SBI, Setty said the root cause analysis was still underway and would take some time to complete. “Our immediate focus has been on containment measures, identifying the vulnerabilities that led to the breach and taking steps to address them,” Setty said, adding that a comprehensive cybersecurity drill, including API security and vulnerability assessments, had been undertaken.
“The security of our systems and customer information is of paramount importance to us. The incident has further strengthened our resolve to bolster our cybersecurity measures and prevent any such breaches in the future,” he said.
