Shares of State Bank of India (SBI), the country’s largest public sector lender, erased their intraday gains in Tuesday’s trade on November 3, falling 1.70% to close at ₹970, even as the bank’s September-quarter performance came in ahead of Street estimates.
The state-owned lender reported a 14.28% year-on-year (YoY) increase in standalone net profit to ₹23,038 crore for the second quarter ended September 30, 2026, supported by strong credit growth and a one-time gain from the sale of shares in its fund management subsidiary earlier in the year.
The bank had reported a net profit of ₹20,160 crore in the July-September quarter a year ago. Its net interest income (NII), which is the difference between interest earned on loans and interest paid on deposits, increased 14.69% YoY to ₹49,143 crore during the reporting quarter.
SBI’s domestic net interest margin (NIM) expanded by 11 basis points from the preceding quarter to 3.11%.
SBI’s loan book expands
SBI’s loan book expanded 3.2% over the previous quarter to ₹52.08 lakh crore. Retail, agriculture, and MSME (RAM) advances grew 17.34% YoY, driven by 22.64% growth in agricultural loans, 21.97% in SME advances, and 14.54% in retail personal loans. Corporate advances also increased 16.12% YoY.
India’s credit growth is gaining momentum as festive-season spending drives consumer borrowing, while companies are also increasing their reliance on bank loans.
Banks have raised nearly $133 billion through foreign currency deposits from non-resident Indians under a special Reserve Bank of India (RBI) scheme, supporting deposit and credit growth. However, the higher cost of attracting these deposits has put pressure on banks’ margins.
Meanwhile, SBI’s total deposits increased 12.27% YoY, with current account and savings account (CASA) deposits growing 8.13%. The CASA ratio stood at 38.32% as of September 30, 2026, while retail term deposits grew 16.74% YoY.
Operating profit rises; asset quality improves
SBI’s operating profit grew 7.28% YoY to ₹34,226 crore in Q2 FY27. The bank’s return on assets (ROA) and return on equity (ROE) stood at 1.14% and 18.68%, respectively, in the first half of FY27.
On asset quality, the bank’s gross non-performing asset (NPA) ratio dropped by 34 basis points (bps) YoY to 1.39%, while the net NPA ratio declined by 6 bps to 0.36%. The provision coverage ratio (PCR) stood at 74.43%, rising to 91.83% when accounts under collection were included.
Meanwhile, the slippage ratio improved by 4 bps YoY to 0.41% in Q2 FY27, while the credit cost declined by 17 bps YoY to 0.22%.
One-time gain from SBI Funds Management stake sale
The lender reported an exceptional gain of ₹7,290 crore from the sale of its stake in SBI Funds Management Ltd. State Bank of India and France’s Amundi SA offered up to 203.71 million shares in the country’s largest fund house by assets.
The bank also divested a 0.65% stake in the National Stock Exchange (NSE) during its IPO. However, SBI said the profit from the sale was credited to capital reserves without being routed through the profit and loss account.
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