Loan growth, fall in provisions help SBI profits in Q2

State Bank of India (SBI) reported a 14% year on year increase in net profit to Rs 23,038 crore in the quarter ended September 2026 on the back of strong loan growth, lower cost of funds and falling provisions despite a sharp fall in treasury income. The profit was higher than a Bloomberg poll of analysts which expected net profit to be at Rs 22,619 crore.

Chairman CS Setty said that the Indian economy remains on the growth path despite heightened global challenges due to geopolitical tensions, elevated oil prices and trade policy uncertainties which pose risks to inflation and global supply chains.

“The Indian economy continues to be on a consistent growth path, supported by consumption, investment and sustained activity across manufacturing and services. Available indicators suggest that the underlying momentum remains healthy. At the same time, we remain watchful of developments in food and energy prices, currency markets and the broader global environment,” Setty said. The ongoing rabi sowing season also needs to be watched because of heightened El Nino concerns and its impact on the rural economy, Setty said.


SBI’s profit in the second quarter was based on strong long growth with total advances increasing 18% to Rs 52.08 lakh crore with double digit growth in all segments led by 23% growth in agriculture, 22% growth in SME loans and 16% growth in corporate advances. As a result, the bank’s net interest income (NII) or the difference between interest earned on loans and that paid for deposits increased 15% year on year to Rs 49,143 crore.

In a quarter when many banks faced margin pressures, SBI held on to net interest margin (NIM) at 2.90% versus 2.92% a year ago. NIM or the difference between the yield earned on loans and interest rate paid for deposits is considered a key matrix for a bank’s profitability.

Setty said the bank kept deposit costs under tight control during the quarter which helped maintain margins. “We have been able to do better liability management as cost of deposits has significantly come down and that combined with yield on advances has helped us to maintain the NIM. In case if there is any further repo action, EBLR (external benchmark linked) portfolio further get repriced quickly which will add maybe 4-5 basis points, even assuming that there will be some increase in the deposit rate, some tweaking from here,” Setty said.

Domestic cost of deposits fell sharply to 4.84% in September 2026 from 5.13% a year ago as a result the bank’s domestic NIM at 3.06% remained stable compared to 3.04% a year ago and up from 3% in June 2026.

Loan growth together with falling provisions helped the bank maintain profits. Loan loss provisions fell 33% year on year to Rs 2759 crore while provisions for standard assets fell 69% reflecting benign asset quality.

In a note after the results Bernstein analysts said SBI’s headline earnings growth masked a softer underlying quarter, with lower credit costs and stake-sale gains supporting profitability.

Non interest income fell 5% year on year to Rs 19,066 crore despite a Rs 7,288 crore gain on account of stake sale in the bank’s mutual fund arm SBI Funds Management during the second quarter. Both profit from treasury as well as forex and derivatives income fell year on year by 20% and 46% respectively pulling down non interest income.

“The healthy loan growth and an 8 bps QoQ NIM recovery failed to lift underlying pre provision operating profit which declined 1% YoY amid weaker other income and rising expenses. Excluding one-offs, EPS grew a more modest 5% YoY, while RoA declined 21 bps QoQ to about 0.90%,” Bernstein said.