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Informist, Friday, Feb. 6, 2026

 

By Kabir Sharma

 

MUMBAI - State Bank of India is expected to report a marginal on-year growth in its December quarter net profit as muted margins may weigh on the bank's net interest income, according to brokerages tracking the lender. A fall in treasury income is also expected to weigh on the state-owned bank's bottom line. 

 

State Bank of India, the only Indian bank in the list of top 50 largest banks in the world by assets, is expected to report a net profit of INR 173.6 billion for the December quarter, according to the average of estimates from 13 brokerages. This will be just 2% higher than the year-ago number and over 11% higher than the quarter-ago number. The highest estimate for net profit is INR 194.3 billion from Emkay Global Financial Services Ltd., which banks on strong loan growth boosting the profit. The lowest estimate is INR 155.2 billion from Kotak Securities Ltd., which expects a fall in treasury income to weigh on the bank's bottom line.

 

In the September quarter, SBI sold its 13.18% stake in YES Bank to Sumitomo Mitsui Banking Corp. for INR 88.89 billion, which resulted in a one-time profit of INR 45.93 billion. 

 

Going by the results released by banks so far this earnings season, public sector banks' loan growth has outpaced that of private sector banks' and brokerages expect SBI to reflect the same. SBI is expected to report a loan growth of 10-12%, according to brokerages. Credit growth is expected to remain broad-based across corporate, retail and small, micro, medium enterprise segments.

 

"Banks that published business updates posted strong loan growth… 12.4% YoY (on-year)/4.7% QoQ (on quarter) for state-owned banks," Nuvama said in its sector preview report and added large lenders such as SBI remain among its preferred picks. The gross advances of India's largest lender grew at a quicker pace than the banking industry at INR 44.20 trillion as of Sept. 30, up 12.7% on year.

 

However, deposit growth continues to trail credit growth across the system, keeping credit-deposit ratios on the higher side of the ideal band. According to a report by SBI, the ideal CD ratio for public sector banks is 76-80%. SBI's CD ratio was at 69.82% at the end of September. Domestic advances were up 12.3% on year at INR 37.43 trillion as of Sep. 30, SBI said.

 

NIM, NII

SBI's net interest margin is expected to take a milder hit on deposit re-pricing compared to its peers owing to a high share of low-cost deposits and a diversified loan book. While the pass through of the 125 basis points cut in the repo rate by the Reserve Bank of India's Monetary Policy Committee to deposit rates is almost complete, the yield on advances is adjusting at a slower pace, and this supports the margins, brokerages said.

 

"State banks shall post a 3–6 bps decrease in core NIM as they pass on rate cuts immediately. Within state banks, SBI is confident of maintaining flattish NIM in Q3 (Oct-Dec) with a pickup in Q4 (Jan-Mar)," Nuvama Wealth Management Ltd. said. SBI's NIM expanded in the September quarter to 3.09% against 3.02% in the June quarter and 3.27% in the year-ago quarter.

 

As a consequence of subdued margins, the net interest income of the bank —its core income— is also seen rising just 2% on year, according to estimates. The average of estimates from 13 brokerages pegs SBI's net interest income at INR 422.76 billion for the December quarter. Nirmal Bang Equities Pvt. Ltd. has the highest estimate for the net interest margin at INR 452.98 billion while Kotak Securities Ltd. has the lowest at INR 436.16 billion. 

 

One metric on which almost all brokerages concur is treasury income, which is likely to be lower due to volatility in bond yields during the December quarter. SBI's treasury portfolio of over INR 17 trillion helped the lender report other income of INR 152.71 billion in the September quarter. 

 

ASSET QUALITY

The stress in unsecured and microfinance portfolio has dissolved, while seasonal stress in the agriculture portfolio is seen as manageable for SBI, according to brokerages. "Asset quality remains broadly stable across banks, with slippages moderating and collection efficiencies improving... large banks such as HDFC Bank, SBI and ICICI Bank are expected to report credit costs around 0.5%," JM Financial Institutional Securities Pvt. Ltd. said.

 

The state-owned lender reported fresh slippages of INR 47.54 billion in the September quarter, down from INR 48.71 billion a year ago. However, recoveries and upgrades also fell to INR 22.79 billion from INR 26.00 billion a year ago.

 

Lower credit costs are expected to support bottom line growth for SBI on a year-on-year basis, brokerages said. The bank's credit cost in Jul-Sept was similar to its cost in the year-ago quarter at 0.39%, and was down from 0.47% in the June quarter.

 

Brokerages also expect SBI's more-than-adequate provision buffers to cushion the impact of bad loans arising out of the agriculture portfolio. Provisions for non-performing assets in the September quarter rose to INR 41.32 billion, up 13.8% on year, but lower than INR 49.34 billion in the June quarter.

 

SBI remains the top pick from the banking sector for most brokerages. Shares of the bank have risen almost 12% since it declared its earnings for the September quarter. Of the 16 brokerage reports on the bank available with Informist, 15 have a 'buy' or equivalent recommendation on the stock with an average target price of INR 1,111 which is around 5% higher than the stock's price of INR 1054.20 at 1326 IST on the National Stock Exchange. Only one brokerage has a 'hold' rating on the stock with a target price of INR 970.

 

Analysts look forward to management commentary on the outlook of margin amid evolving interest rate dynamics, deposit growth strategy, corporate loan pipeline, and trends in retail asset quality. Analysts will also track guidance on credit growth for the remainder of the financial year and early signals for the next year.

 

Following are the Oct-Dec earnings estimates for SBI from 13 brokerage firms in descending order by the estimate of net profit in INR billion:

 

Brokerage	Net interest income	Net profit
Emkay Global Financial Services Ltd	441.62	194.30
SMIFS Ltd	452.00	183.00
Systematix Shares and Stocks (India) Ltd	443.06	181.36
Mirae Asset Sharekhan Ltd	443.93	179.79
Elara Securities (India) Pvt Ltd	446.00	178.53
Motilal Oswal Financial Services Ltd	447.98	177.57
YES Securities (India) Ltd	445.36	172.10
Nuvama Wealth Management Ltd	442.70	171.90
ICICI Securities Ltd	437.93	170.65
JM Financial Institutional Securities Pvt Ltd	449.83	168.58
Prabhudas Lilladher Pvt Ltd	445.56	164.68
Nirmal Bang Equities Pvt Ltd	452.98	158.78
Kotak Securities Ltd	436.16	155.22
Average	422.76	173.57

 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Deepshikha Bhardwaj

 

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