State Bank of India — Q2 FY26 earnings call

Call held 4 Nov 2025

Management summary

State Bank of India reported a strong Q2 FY26, showcasing industry-leading credit growth and improved domestic NIMs of 3.09%. The bank successfully completed a ₹25,000 crore equity capital raise through a significantly oversubscribed QIP. Management highlighted robust recovery efforts, exceeding AUCA targets, and expressed confidence in maintaining NIMs above 3% long-term. Strategic initiatives like Project SARAL and YONO 2.0 are progressing to enhance digital capabilities and operational efficiency, positioning SBI for sustained growth and value creation.

Highlights

  • Domestic NIMs improved by 7 basis points quarter-on-quarter to 3.09% in Q2 FY26.

  • Successfully raised ₹25,000 crores of equity capital via QIP, which was oversubscribed 4.5 times.

  • Achieved AUCA recovery of ₹2,400 crores, exceeding the Chairman's guidance of ₹2,000 crores per quarter.

  • Gross NPA as on September 30, 2025, was ₹76,000 crores, and AUCA was ₹1,63,000 crores.

  • LCR of the bank was 143.8%, an increase from 139% on June 30.

  • Net profit from Yes Bank stake sale (net of tax) was ₹3,386 crores.

  • Fee growth was phenomenal, with over 20% increase this quarter, primarily driven by debit card spends and interchange fees.

  • The bank's overall credit growth guidance was revised upwards to 12-14% from the previous 11-13%.

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

Banking Sector Growth

  • Scheduled Commercial Banks' Credit & Deposit Growth Banking Sector Growth · FY26 · Medium confidence 11-12%
    Going forward, we expect demand for credit to continue in the second half. By looking at the trend, deposits and credit growth of scheduled commercial banks may remain in the range of 11-12% during FY26.

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

Profitability

  • Domestic NIM Profitability · Q3 and Q4 (FY26) · High confidence Above 3%
    So, our guidance still stands good that we will be above 3% in Q3 and Q4.

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

  • Return on Assets (excluding Yes Bank profit) Profitability · Ongoing · High confidence Around 1.04%
    If we do not consider profit in YES Bank, the ROA is still above 1. It would be around 1.04.

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

Credit Growth

  • Corporate Credit Growth Credit Growth · Next two quarters (Q3, Q4 FY26) · Medium confidence At least 10%
    with the pipeline what we have the visibility of at least reaching 10% corporate credit growth in the next two quarters.

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

  • Overall Credit Growth Credit Growth · Future (implied) · High confidence 12-14%

    Previously 11-13% → 12-14%

    So, the 12% to 14% guidance is across the segments, not necessarily Home Loans.

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

  • Home Loan Growth Credit Growth · As portfolio grows · High confidence 14-15% stability
    But I think 15%-16% growth, I would place that, as the portfolio grows, 14%-15% stability will be achieved there.

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

Recovery

  • AUCA Recovery Recovery · Ongoing · High confidence ₹2,000 crores per quarter
    And AUCA recovery, Chairman's guidance was 2000 crores per quarter, we have done 2400 crores and the guidance continues.

    — Mr. Rana Ashutosh Kumar Singh - Managing Director (Risk, Compliance and SARG), State Bank of India

  • Recovery Rate from Written-off Accounts Recovery · Future (implied) · Medium confidence Around 8%

    Previously 10% → Around 8%

    We place it around 6%-8%. We started saying about 10% but as the security value is coming down, you know, based on the security value and accumulated written off accounts our recovery rates are likely to be around 8%.

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

Treasury Profit

  • Trading Profit (excluding exceptional item) Treasury Profit · Q3 (FY26) · Medium confidence Repeat Q2 performance
    We are reasonably confident that a large portion of this, whatever we have performed in Q2, we will be able to repeat in Q3 as well.

    — Mr. Rama Mohan Rao Amara Managing Director (International Banking, Global Markets & Technology), State Bank of India

Portfolio Mix

  • International Banking Group (IBG) Book as % of Credit Portfolio Portfolio Mix · Ongoing · High confidence 15%
    I think the IBG book constitutes about 15% of our credit portfolio, I think that is the level which we would like to maintain.

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

Human Resources

  • Attrition Rate Human Resources · Ongoing · High confidence Less than 0.5%
    I think we have less than 0.5% attrition rate because of our investment in human resources.

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

Cross-selling

  • Products Per Customer (PPC) Cross-selling · Future (implied) · Medium confidence 5

    Previously 3.5 → 5

    So, our PPC at this juncture is about 3.5. ... We can definitely move to 5.

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

Market Conditions

  • 10-year G-Sec Yield Range Market Conditions · Future (implied) · Medium confidence 6.2-6.65%
    We feel like the range can be 6.2-6.65 kind of range for the 10-year G-Sec. It is just an internal house view.

    — Mr. Rama Mohan Rao Amara - Managing Director (International Banking, Global Markets & Technology), State Bank of India

Capital Market Funding

  • M&A Activity Funding Cap Capital Market Funding · Ongoing (draft guidelines) · High confidence 10% of capital
    I think the draft guidelines put some cap on that, 10% of capital.

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

Operational Efficiency

  • Project SARAL Benefits Operational Efficiency · Q1 FY26 (April 2026) · High confidence First drop of benefits
    SARAL is 1st of April'2026, I think April quarter we would talk more about what are those benefits we are getting out of this project.

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

Market context

  • World GDP Growth Macroeconomic Outlook · 2025 · High confidence 3.2%
    The IMF's World Economic Outlook October 2025 projects world GDP growth at 3.2% in 2025 and 3.1% in 2026

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

  • World GDP Growth Macroeconomic Outlook · 2026 · High confidence 3.1%
    The IMF's World Economic Outlook October 2025 projects world GDP growth at 3.2% in 2025 and 3.1% in 2026

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

  • India Real GDP Growth Macroeconomic Outlook · FY26 · High confidence 6.8%
    The RBI projects real GDP growth at around 6.8% for FY26 and 6.6% for FY27.

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

  • India Real GDP Growth Macroeconomic Outlook · FY27 · High confidence 6.6%
    The RBI projects real GDP growth at around 6.8% for FY26 and 6.6% for FY27.

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

  • Xpress Credit Growth Credit Growth · Future (implied) · Medium confidence Double digit
    And Xpress credit is one segment we would like to further grow. Currently, we expected this Xpress credit to reach double digit.

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

2 min read

Detailed narrative

State Bank of India presented a robust performance for Q2 FY26, underscoring its durable structural advantages and disciplined growth strategy. The bank's domestic Net Interest Margins (NIMs) saw a healthy improvement, rising by 7 basis points quarter-on-quarter to 3.09%, driven by effective repricing of deposits and liability management. This performance is set against a backdrop of a modest global economic recovery, with the IMF projecting world GDP growth at 3.2% for 2025 and 3.1% for 2026, while India's real GDP growth is anticipated to be around 6.8% for FY26 and 6.6% for FY27.

The quarter was marked by significant capital strengthening, with SBI successfully raising ₹25,000 crores of equity capital through a Qualified Institutional Placement (QIP). This QIP was notably oversubscribed 4.5 times, demonstrating strong investor confidence. The bank also reported industry-leading credit growth, with a good 7.1% credit growth post-March 2025, and management expressed confidence in achieving at least 10% corporate credit growth in the next two quarters. The overall credit growth target for scheduled commercial banks is projected to be in the range of 11-12% for FY26, with SBI's own overall credit growth guidance revised upwards to 12-14% from the previous 11-13%.

Operationally, SBI demonstrated strong recovery efforts, with AUCA recovery reaching ₹2,400 crores, surpassing the Chairman's guidance of ₹2,000 crores per quarter. However, the recovery rate from written-off accounts is now expected to be around 8%, a slight downward revision from the previous 10%, attributed to declining security values. The bank's fee income growth was described as "phenomenal," exceeding 20% this quarter, primarily driven by increased debit card spends and interchange fees. The Liquidity Coverage Ratio (LCR) stood strong at 143.8%, an increase from 139% in June.

Strategic initiatives are well underway, with Project SARAL, aimed at simplifying operational processes and enhancing digital capabilities, expected to yield its first benefits by Q1 FY26 (April 2026). The bank also launched Tab Banking in Q1 FY26, initially for Corporate Salary Package customers, streamlining the onboarding process to just 5-7 minutes. Management reiterated its commitment to leveraging its extensive CASA franchise, with a current CASA ratio of 39.63%, and aims to increase its Products Per Customer (PPC) from 3.5 to 5. The bank is also seriously considering the listing of its subsidiaries, SBI AMC and SBI General, to unlock value.

During the Q&A, management addressed concerns regarding treasury profits, which were down almost 50% from ₹8,082 crores to ₹4,011 crores, attributing it to the absence of OMO and switch operations available in the previous quarter. They expressed confidence in repeating Q2's treasury performance in Q3. Discussions on Expected Credit Loss (ECL) guidelines indicated a limited immediate impact due to a four-year roadmap for implementation. The bank's Return on Assets (ROA), excluding the exceptional profit from the Yes Bank stake sale (net ₹3,386 crores), was noted to be around 1.04%, reinforcing underlying profitability. The outlook for the 10-year G-Sec yield is seen as range-bound between 6.2-6.65%.

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