India News | SBI Q4 Profit Declines as Margins Fall; Expects Tariffs to Impact Loan Growth in FY26

Mumbai, May 3 (PTI) State Bank of India on Saturday reported an 8.34 per cent decline in its consolidated net profit to Rs 19,600 crore for the January-March quarter compared to Rs 21,384 crore a year ago, impacted by a decline in net interest margins.

On a standalone basis, the net profit of the country's largest lender declined to Rs 18,642 crore in the March quarter from Rs 20,698 crore in the year-ago period.

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The core net interest income of the bank increased 2.69 per cent to Rs 42,775 crore despite a loan growth of over 12 per cent due to a lower net interest margin. NIM declined by 32 basis points year-on-year to 3.15 per cent.

Total income on consolidated basis, however, increased to Rs 1,79,562 crore in the last quarter of FY2024-25 (FY25) from Rs 1,64,914 crore in the year-ago period.

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SBI chairman C S Setty said the NIMs (net interest margin) will continue to be under pressure in the new fiscal year, especially with the policy rate cuts by RBI given the fact that 27 per cent of its loans are linked to the repo.

Without giving a target on NIMs, Setty said it will take up to 12-18 months for the policy rate actions to translate into the deposit costs for the bank, and stressed that policy transmission will only be complete when the costs of both the assets and liabilities reprice.

Setty said that the net profits are down because of a one-off item which had benefited the bank's financials in the year-ago period.

The bank is targeting a 12-13 per cent loan growth for the new fiscal, Setty said, admitting that there will be an impact of the tariff wars on the credit growth as well.

He said companies will go slow on their investment plans because of the uncertainties in the global economy induced by the shifts in trade policies, which will have an impact on the credit growth for banks.

At present, SBI has a corporate loan pipeline of Rs 3.4 lakh crore, split evenly between loans sanctioned earlier but yet to be disbursed and conversations on future requirements.

The bank's managing director Ashwini Kumar Tewari said demand for credit is coming from the infrastructure, renewable energy, data centres and commercial reality segments.

The other income for the bank rose to Rs 24,210 crore in the March quarter of FY25 from Rs 17,369 crore in the year-ago period.

During the reporting quarter, corporate loan growth moderated to 9 per cent on prepayments done by corporates to either deleverage balance sheets or as they raised new equity, Setty said, adding that retail personal credit grew 11 per cent which included a 14 per cent growth in home loans.

The bank grew the unsecured personal loans at 0.49 per cent in FY25, and Setty said the bank will push the pedal on this product as it does not see any challenges on it.

On the asset quality front, the gross non-performing assets ratio further improved to 1.82 per cent, and Setty said this is the fifth consecutive year of an improvement in the number.

He said the bank expects asset quality to be benign for many more years now as no stress is seen from large-value corporate loans, and added that the ratio will continue to be under 2 per cent level.

The fresh slippages came at Rs 4,222 crore during the quarter with a bulk of them coming from SME, agriculture and personal loan portfolios, the bank said, adding that Rs 572 crore of the loans have already been pulled back into performing advances through payments in April.

The overall provisions shot up to Rs 6,441 crore from Rs 1,610 crore in the year-ago period, and Setty explained that a bulk of the money set aside was for ageing advances.

The bank's board approved an enabling provision to raise up to Rs 25,000 crore in equity capital at its meeting on Saturday, Setty said, adding that it can support loan growth of up to Rs 8 lakh crore from the current buffers and it does not need capital for business growth.

Overall capital adequacy stood at 14.25 per cent as on March 31, with the core buffer at 10.81 per cent, which is lower than many banks in the system

Setty said the bank has received the Supreme Court order on the Bhushan Power case, and pointed that the committee of creditors is studying the order.

For the entire 2024-25 financial year, the bank reported a 16 per cent increase in standalone profit to Rs 70,901 crore against Rs 61,077 crore in the previous year.

The bank's board has declared a dividend of Rs 15.90 per equity share for FY25.

Setty said that the bank will hire 18,000 people in FY26, the largest number in a decade. This will include 13,400 clerks, 3,000 probationary officers and 1,600 specialist officers for roles like technology, he said.

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