State Bank of India — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

State Bank of India reported a strong financial performance in Q1 FY26, with net profit increasing by 12.48% YoY to ₹19,160 crores. The bank demonstrated healthy credit and deposit growth, alongside significant improvements in asset quality, reflected in a Net NPA ratio of 0.47% and a slippage ratio of 0.75%. Despite some corporate credit headwinds from prepayments, retail segments, especially home loans, showed robust growth. Management remains confident in achieving its full-year targets for NIM, RoA, and RoE, supported by strategic digital transformation initiatives and a strong project pipeline.

Highlights

  • Net profit for Q1 FY26 reached ₹19,160 crores, marking a 12.48% YoY increase.

  • Whole bank credit growth stood at 11.61% YoY, with domestic credit growth at 11.06%.

  • Deposit growth was 11.66% YoY, contributing to a domestic CD ratio of 68.88%.

  • Operating expenses decreased significantly by 21.92%, driven by a 37.98% reduction in overheads.

  • Asset quality improved, with the Net NPA ratio declining by 10 bps YoY to 0.47% and the slippage ratio improving by 9 basis points YoY to 0.75%.

  • The bank reported a Return on Equity (RoE) of 19.7% and a Return on Assets (RoA) of 1.14% for the quarter.

  • SBI maintained a strong market presence with a 22.17% share of domestic deposits and 19.24% share of system-wide advances.

  • Home loans demonstrated robust growth of 15% YoY on a substantial base of ₹8 lakh crores.

What they filed

Q1 FY27: revenue up 8.4%, net profit up 13.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,21,045 1,24,654 1,26,840 1,25,729 1,28,040 +6%1,30,386 +5%1,31,080 +3%1,36,240 +8%
Net profit20,565 19,484 20,379 22,121 21,861 +6%22,176 +14%20,508 +1%25,121 +14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Profitability

  • Return on Equity (RoE) Profitability · through the cycle · High confidence above 15%
    We reaffirm our structural targets of RoE above 15% and RoA of 1% through the cycle.

    — Mr. C S Setty – Chairman, State Bank of India

  • Return on Assets (RoA) Profitability · through the cycle · High confidence 1% and above

    — Mr. C S Setty – Chairman, State Bank of India

  • Return on Assets (RoA) Profitability · FY26 · High confidence 1% and above
    I believe that is the reason our guidance is 1% and above. We are not giving what level of above that 1%, but we are sticking to our 1% guidance on the ROA.

    — Mr. C S Setty – Chairman, State Bank of India

  • Net Interest Margin (NIM) Profitability · full year · High confidence 3%
    As far as margin outlook, we are still standing by our 3% guidance on NIM.

    — Mr. C S Setty – Chairman, State Bank of India

  • Net Interest Margin (NIM) Trajectory Profitability · Q2, Q3, Q4 · Medium confidence U-shaped (down in Q2, improve from Q3 to Q4)
    I think the NIM trajectory will be U-shaped. It probably will come down in Q2. While we are not hazarding a guess how much it will come down, but I think it will definitely improve from Q3 to Q4 for 2-3 reasons, one is the deposits get repriced, predominantly the fixed deposits get repriced. We will also have the full benefit of savings bank account rate reduction, and the NIM contribution which will come from the CRR cut.

    — Mr. C S Setty – Chairman, State Bank of India

Efficiency

  • Cost to Income Ratio Efficiency · through the cycle · High confidence below 50
    our effort is to keep below 50. I am not giving any number whether it is 47, 45. The effort is through the cycle, we would like to maintain the cost to income ratio below 50.

    — Mr. C S Setty – Chairman, State Bank of India

Recovery

  • Recovery from AUCA Recovery · FY26 · High confidence ₹7,000 - 8,000 crores
    Recovery, yes, we had given a guidance of around ₹7,000 - 8,000 crores in recovery from AUCA, which means that ₹2,000 crores every quarter, but it is not uniformly distributed.

    — Mr. C S Setty – Chairman, State Bank of India

Credit Growth

  • Corporate Growth Credit Growth · this year (FY26) · Medium confidence 10-11%
    overall, we still think that we might have this year still at around 10-11% in corporate growth.

    — Mr. Ashwini Kumar Tewari – Managing Director (Corporate Banking & Subsidiaries), State Bank of India

  • SME Growth Rate Credit Growth · FY26 · High confidence 19-21%
    SME, my view is that 19-21% growth rate is very robust. I do not think it will further get into a higher mode. Even if we are growing at 19-20%, it is a good growth rate to have.

    — Mr. C S Setty – Chairman, State Bank of India

  • Overall Growth Credit Growth · FY26 · High confidence 12%
    That's the reason we are still sticking to 12%.

    — Mr. C S Setty – Chairman, State Bank of India

  • Overall Growth Credit Growth · FY26 · Medium confidence 13%

    Previously 12% → 13%

    And as the uncertainties get cleared, probably there is a potential upside of 13%.

    — Mr. C S Setty – Chairman, State Bank of India

Asset Quality

  • Slippage Ratio Asset Quality · FY26 · High confidence below 0.6%
    We are still sticking to our slippage ratio, to contain the slippages below 0.6%.

    — Mr. C S Setty – Chairman, State Bank of India

Market context

  • Corporate Credit Growth Credit Growth · next quarter onwards · Medium confidence double-digit
    we will be able to get back to a double-digit corporate credit growth next quarter onwards.

    — Mr. C S Setty – Chairman, State Bank of India

2 min read

Detailed narrative

State Bank of India delivered a strong performance in Q1 FY26, with net profit rising by 12.48% YoY to ₹19,160 crores. The bank reported healthy credit growth of 11.61% YoY for the whole bank and 11.06% for domestic credit, alongside a 11.66% YoY increase in deposits, maintaining a domestic CD ratio of 68.88%. Operating expenses saw a significant reduction of 21.92%, primarily due to a 37.98% decrease in overheads, contributing to a robust Return on Equity (RoE) of 19.7% and Return on Assets (RoA) of 1.14% for the quarter.

Asset quality continued to improve, with the Net NPA ratio declining by 10 basis points YoY to 0.47% and the slippage ratio improving by 9 basis points YoY to 0.75%. The bank's market leadership was reinforced by a 22.17% share of domestic deposits and a 19.24% share of system-wide advances, with an incremental loan market share gain of 14 bps YoY, driven by retail mortgages and secured small business credit.

Management highlighted that while corporate credit growth was impacted by ₹12,000 crores in prepayments and ₹16,000-18,000 crores shifting to the CP market, a robust pipeline of ₹7.2 lakh crores gives confidence for a return to double-digit corporate credit growth from the next quarter. Retail segments, particularly home loans, showed strong 15% YoY growth. The bank also expects SME growth to remain robust at 19-21% for FY26. The overall credit growth target for FY26 remains at 12%, with a potential upside to 13% as uncertainties clear.

Strategic initiatives include Project SARAL, aimed at re-engineering operational processes for enhanced productivity and customer service. The bank is also significantly investing in technology and digitalization, including building its own AI stack for underwriting and risk scoring. Management reiterated its full-year guidance for Net Interest Margin (NIM) at 3% and aims to maintain RoE above 15% and RoA above 1% through the cycle, alongside keeping the cost-to-income ratio below 50. The NIM trajectory is expected to be U-shaped, dipping in Q2 before improving in Q3 and Q4 due to deposit repricing and CRR benefits.

During the Q&A, management addressed concerns about slippages, providing a detailed breakdown for Q1 FY26 (SME: ₹2,680 crores, Agriculture: ₹2,464 crores, Personal: ₹2,602 crores, CCG: ₹196 crores, total ₹7,942 crores, with ₹1,585 crores pulled back). They expressed confidence in containing the slippage ratio below 0.6%. While acknowledging the impact of supply chain disruptions and tariff uncertainties on certain sectors, they noted SBI's minor exposures and the government's efforts to resolve these issues. The bank also confirmed that the ₹25,000 crores raised through QIP would augment CET-1 and support growth plans, rather than being used for immediate growth capital.

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