Domestic net interest margin reached 3.11% as net profit climbed 14.28%, aided by a ₹7,288 crore stake sale in SBI Funds Management that offset treasury losses. First-half loan growth hit 17.8%, yet credit expansion outpaced deposit growth of 12.27%, reducing the low-cost Casa ratio to 38.32%. Despite these underlying gains, leadership maintained conservative FY27 targets that include loan growth of 14-15% and a return on assets of 1%. Investors also face external overhangs, including an upcoming Supreme Court ruling regarding Yes Bank AT1 bonds.
Key points
Exceptional gains from an asset management stake sale effectively shielded the bank from…: Exceptional gains from an asset management stake sale effectively shielded the bank from quarterly treasury losses.
Management preserved conservative full-year targets despite first-half return on assets a…: Management preserved conservative full-year targets despite first-half return on assets and credit growth exceeding those marks.
Lingering uncertainties include upcoming judicial rulings on AT1 bonds alongside broader…: Lingering uncertainties include upcoming judicial rulings on AT1 bonds alongside broader financial market volatility.
Sources checked by our analysis pipeline: 1
The September quarter (Q2FY27) of State Bank of India (SBI) was a mixed bag. An improved margin profile and asset quality were offset by softer operating performance. Domestic net interest margin (NIM) improved 11 basis points (bps) sequentially to 3.11%, clearing the bank’s “above 3%” commitment.
NIM expansion was noteworthy given expectations of margin pressure from FCNR(B) or foreign currency non-resident bank deposit mobilization, which helped replace a portion of domestic wholesale funding requirements, and intensifying competition for low-cost deposits.
Lower funding costs and improved loan yields translated into stronger core net interest income (NII) of ₹49,143 crore. SBI’s 15% year-on-year (y-o-y) rise in NII is top-tier among large-cap banks, said Jefferies India. However, the improvement comes with a trade-off. FCNR(B) deposits cannot be a substitute for low-cost Casa deposits. SBI’s Casa ratio as share of domestic deposits declined to 38.32% from 39.63% a year earlier, highlighting a continuing challenge of acquiring low-cost deposits.
Net profit rose 14.28% year-on-year in Q2FY27, while operating profit increased 7.28% to ₹34,226 crores. This included an exceptional gain of around ₹7,288 crores from the…
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