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Informist, Friday, May 8, 2026

By Shubham Rana and Priyasmita Dutta

NEW DELHI – The war in West Asia is unlikely to affect the asset quality of State Bank of India, its Chairman C.S. Setty said Friday. Higher slippages in the March quarter are also not a cause for concern and there are no structural issues in asset quality, Setty said at a post-earnings call with analysts. 

"Despite whatever happens on the West Asian conflict, we are confident that asset quality is holding up," Setty said. "Unless, of course, something dramatically happens in the system and macros further get disturbed."

The bank's fresh slippages rose to INR 55.21 billion in the March quarter, up from INR 44.58 billion a quarter earlier. Setty said this rise was seasonal and "has nothing to do with any stress in the system." "Most of the slippages have come from agriculture. We are sticking to our credit cost guidance of 50 basis points," the chairman said. 

The country's largest lender Friday reported a net profit of INR 196.84 billion for the March quarter, up 6% on year. The net profit exceeded the analysts' estimate of INR 193.98 billion.

A fall in treasury income, mainly due to higher market-to-market losses from a rise in bond yields, ate into the bank's net profit for the quarter. Going ahead, the bank does not expect more pain for bond yields, Setty said. "Our treasury holds a view that it (10-year bond yield) would be in the range of 6.75% to 6.90%, not beyond that unless the West Asian conflict or any other fiscal imbalances create a problem," Setty said. 

The bank wants significantly reduced wholesale bank deposits, which are expensive, and will further cut them to bring down the cost of resources, Setty said. More focus on the current account savings account deposits will also help reduce the cost of resources, Setty added. 

Setty said the bank would like to keep the liquidity coverage ratio at least 10-15% above the regulatory minimum of 100%. "So 115%, I think, is a good ratio to have... as we entered the year, around 125%. And in this quarter, again, it will move up further," Setty said.  

Asked about the impact of the new expected credit loss norms, Setty said the bank is tweaking the models to account for the final guidelines released last month. "It would not be appropriate for me to give a number at this juncture. I think probably after the end of June quarter, we will have much clarity in terms of what is the stock, which will create, which which is required to be taken care of approximately," Setty said. 

The transition to the new provisioning norms "is going to be smooth", Setty said. "It is not going to impact our ability to fund credit growth. It will not be impacting our capital ratios as much. And I hope we will be smoothly transitioning in the next four years."

The bank wants strong but "qualitative" growth in the gold loan segment, the chairman said. The bank would like a product that doesn't require any capital allocation and has almost zero non-performing assets, Setty said. 

The state-owned bank hopes to complete the listing process of its asset management subsidiary, SBI Funds Management Ltd., in the current financial year, Setty said. The AMC filed a draft red herring prospectus with the Securities and Exchange Board of India in March, aiming to raise INR 130 billion via a public offer.  

Friday, State Bank of India's shares ended 6.7% lower at INR 1,019.30 on the National Stock Exchange.  End

Edited by Saji George Titus

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