SBI Q1 results preview: Will India's largest public bank report a decline in profit?

India's leading lender State Bank of India (SBI) is expected to report a muted June quarter, with profit likely to fall from a year earlier as margin pressure and slower income growth weigh on earnings despite healthy loan growth. The country's largest lender is expected to report a 4% year-on-year (YoY) decline in profit after tax for Q1FY27, according to the average estimate of six brokerages.

The main worry for investors will be net interest margin. Analysts expect loan growth to remain strong, but the benefit may be partly offset by higher cost of funds and term deposit repricing.

Nomura expects loan growth to be strong in the first quarter, but sees net interest margins declining by 4 basis points quarter-on-quarter. It also expects treasury income to remain healthy during the quarter.


The brokerage said commentary on the FCNR(B) deposit scheme, NIM trajectory and credit cost outlook will be key monitorables.

Margins in focus

Motilal Oswal expects SBI’s NIM to remain at 2.84% after a sharp fall in the March quarter. It said pressure from term deposit repricing could be offset by improvement in corporate loan spreads.

Kotak Mahindra Bank also does not expect a recovery in NIM in the June quarter. It expects net interest income to grow around 10% year-on-year, even as loan growth is seen at 17%, due to higher cost of funds.

Kotak expects operating profit to decline about 5% YoY, led by lower income growth. It is also building in slower fee income growth for the quarter.

Credit growth likely strong

Loan growth is expected to remain one of the stronger parts of SBI's quarterly performance. Motilal Oswal expects credit growth of 3.1% quarter-on-quarter, led by broad-based growth across SME, corporate, agriculture and Xpress credit segments. However, deposit growth is expected to lag credit growth.

The deposit trend will be important because banks have been facing pressure to mobilise funds at higher rates. For SBI, the pace of deposit growth and cost of deposit repricing will decide how soon margins can stabilise.

Asset quality seen stable

Asset quality is expected to remain under control. Motilal Oswal expects asset quality ratios to improve during the quarter. It also expects credit cost to remain steady and return on assets to stay in the 1.0-1.1% range.

Kotak expects slippages at around 1.1% of loans, indicating normalisation over time. It does not expect fresh concerns in any portfolio. However, it also expects lower recoveries and upgrades during the quarter.

For investors, the key questions will be whether SBI can defend margins, how quickly deposit costs stabilise, and whether loan growth can continue without pushing credit costs higher.

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