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Informist, Thursday, May 7, 2026

By Kabir Sharma

MUMBAI – State Bank of India is expected to report a steady growth in net profit for the March quarter, with brokerages factoring in stable margins, healthy credit growth, and benign asset quality, although treasury-related pressures are likely to weigh on the bottom line sequentially.

Based on the average of estimates from 12 brokerages, the net interest income for the quarter is pegged at INR 466.46 billion, up 9% on year, while net profit is estimated at INR 193.98 billion, up over 4% on year. The estimates factor in a resilient core income but profitability could see some moderation due to external factors such as bond yield movements and provisioning trends.

Brokerage projections indicate a noticeable dispersion in profit estimates. Emkay Global Financial Services Ltd. has the most optimistic projections, forecasting net profit at INR 216.81 billion, significantly above the consensus. At the other end of the spectrum, Kotak Securities Ltd. has the lowest estimate at INR 164.74 billion, factoring in higher treasury losses. The country's largest lender reported a profit after tax of INR 210.28 billion in the trailing quarter.

For NII, estimates are more tightly clustered, reflecting broad agreement on the strength of SBI's core lending franchise. Anand Rathi Share and Stock Brokers Ltd. has the highest NII estimate at INR 473.51 billion, while Kotak Securities Ltd. was the most conservative with INR 453.61 billion. Net interest income--the difference between interest earned and expended--had risen 9% on year to INR 451.90 billion in Oct-Dec.

On the business growth front, brokerages expect SBI to maintain a healthy momentum in advances, although sequential growth may moderate slightly. Nomura Equity Research expects broad-based loan growth of around 17% year-on-year and 5% quarter-on-quarter, highlighting continued traction across segments. Similarly, Equirus Securities Pvt. Ltd. expects advances growth of about 2.6% sequentially and deposits growth of around 3.2%, indicating a steady expansion in the balance sheet. State Bank of India's total advances rose 15.1% on year to INR 46.835 trillion as of Dec. 31. Of this, domestic advances were up 15.4% on year to INR 39.902 trillion.

Nomura noted that margin performance was likely to remain stable, with the impact of yield repricing on loans offsetting any rise in the cost of funds. Equirus expects net interest margins to remain largely flat, suggesting limited upside from spreads in the near term. The brokerage also expects credit costs to normalise and flagged deposit mobilisation and margin guidance as key factors to watch. In December, the domestic net interest margin was little changed at 3.12%, up 3 basis points on quarter but down 3 bps on year.

Offering a slightly more optimistic view on margins, YES Securities (India) Ltd. expects sequential NIM expansion, driven by an increase in yields on advances outpacing the cost of deposits. It also sees fee income growth outpacing loan growth, supported by improving business activity, while operating expenses are expected to grow at a slower pace than business volumes, aiding overall profitability.

SMIFS Ltd. also expects a modest improvement in margins, attributing it to the full pass-through of the repo rate cut during the quarter. The brokerage projects NII growth of about 10.4% year-on-year and 4.5% sequentially, driven by loan growth of around 15.5% YoY. 

While core income remains strong, profitability is expected to face some headwinds. Nomura pointed out that fourth-quarter profit could be impacted by treasury losses, as government bond yields hardened during the period. This is likely to have led to mark-to-market losses on the bank's investment portfolio, offsetting gains from core operations. Income from treasury operations rose over eight times on year to INR 69.93 billion in the December quarter.

Further pressure on profitability is expected from operating metrics, brokerages said. Prabhudas Lilladher Pvt. Ltd. expects NII to grow 2.5% sequentially, but forecasts a 9.9% decline in pre-provision operating profit. It also expects provisions to rise 4.5% quarter-on-quarter, which could weigh on net earnings. Provisions rose nearly fivefold on year to INR 45.07 billion in the December quarter, eating into the bottom line.

On the asset quality front, the outlook remains stable to positive. Prabhudas Lilladher expects gross non-performing assets ratio to improve by around 10 basis points, indicating continued strengthening of the loan book. It also pegs credit costs at around 0.39%, broadly stable from previous quarters. Nomura similarly expects credit costs to remain stable around 40 basis points, reinforcing the view that asset quality risks are contained. SBI's gross non-performing asset ratio declined to 1.57% as of Dec. 31 from 1.73% a quarter ago and 2.07% a year ago. The net NPA ratio was also down to 0.39% as of December-end from 0.42% on Sept. 30 and 0.53% a year ago. However, credit cost rose 5 bps on year to 0.29%.

YES Securities also highlighted that slippages are likely to decline sequentially, aided by seasonal factors, while provisions are expected to remain broadly stable. This aligns with the broader consensus that SBI's asset quality cycle remains favourable, supported by recoveries, upgrades and disciplined underwriting. The bank reported fresh slippages of INR 44.58 billion in the December quarter, down sequentially but up from INR 38.23 billion a year ago.

Key metrics for the quarter will include management commentary on NIM trajectory, particularly in the context of evolving interest rate dynamics, as well as deposit mobilisation strategies amid system liquidity conditions. Investors will also watch for guidance on credit costs and asset quality trends, along with updates on growth outlook and return ratios.

Of the 18 brokerage reports on the company available with Informist, 17 have a 'buy' recommendation on the stock with an average target price of INR 1,186 per share. This is over 8% higher than the current market price. One brokerage has a 'hold' recommendation with a target price of INR 970 per share. At 1003 IST, shares of the bank traded largely flat at INR 1,097.20 on the National Stock Exchange.

Following are the March quarter earnings estimates of SBI from 12 brokerages in descending order of the estimate of net profit in INR billion:

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Edited by Akul Nishant Akhoury

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