SBI Chairman Sees Credit Costs Staying Near Historic Lows, Bank Reports ₹23,038 Crore Q2 Profit As Rate Hike Expectations Cloud Lending Outlook

Mumbai: State Bank of India (SBI), the country's largest public sector lender, reported a 14.28% year-on-year (YoY) increase in net profit at ₹23,038 crore for the second quarter of FY27, compared with ₹20,160 crore in the corresponding quarter last year. The growth was supported by strong loan expansion, higher net interest income and an improvement in asset quality.

Profit Growth

The bank's operating profit increased 7.28% year-on-year to ₹34,226 crore during the July-September quarter. Net interest income (NII), which is the difference between interest earned and interest paid, grew 14.69% to ₹49,143 crore, compared with ₹42,847 crore in Q2 FY26.

Loan Expansion

SBI's total business crossed ₹115 trillion during the quarter, reflecting continued growth in its lending and deposit operations. Total advances increased 17.84% year-on-year to ₹52.08 lakh crore, while total deposits grew 12.27% to ₹62.78 lakh crore.

Among the lending segments, small and medium enterprises (SME) recorded strong growth of 21.97%, while agriculture advances increased 22.64%. Retail personal advances grew 14.54% and corporate advances registered growth of 16.12%. Home loans also remained strong, rising 11.94% year-on-year to ₹9.86 lakh crore.

Deposit Growth

On the deposit front, SBI's CASA deposits, which include current and savings accounts, increased 8.13% to ₹22.97 lakh crore. However, the CASA ratio declined to 38.32% from 39.63% a year ago, indicating a change in the composition of the bank's deposit base.

Asset Quality

The bank also reported an improvement in asset quality during the quarter. Its gross non-performing asset (NPA) ratio declined to 1.39%, improving by 34 basis points compared with the same period last year. The net NPA ratio stood at 0.36%, down 6 basis points.

The slippage ratio, which measures fresh loans turning into bad loans, improved to 0.41% from 0.45% a year ago. Credit cost also declined to 0.22% from 0.39%, indicating lower provisioning pressure.

Margin Performance

SBI's domestic net interest margin (NIM) stood at 3.11%, compared with 3.08% in Q2 FY26. The bank's capital position remained comfortable, with its Capital to Risk Weighted Assets Ratio (CRAR) at 16.09%.

Overall, SBI's second-quarter performance reflects healthy credit growth and improving asset quality, while the decline in the CASA ratio remains an important factor to watch in the coming quarters.

FPJ's Questions:

Reporter's Question

Hi, sir. So my question is on provisioning. What is the current provisioning requirement for the bank? Do you expect provisioning cost to increase or decrease going forward?

SBI Chairman's Answer

There's no clear number to give, but we believe that, you know, the credit costs have been historical low level, 22 basic point credit costs. Our effort is to maintain this level of credit call, but our guidance, if you remember, the credit costs have been 50 basis point. For at least a year or 2, we don't foresee that kind of level achieved.

Question:

Okay. So my next question is, with crude prices and born eels remaining elevated, how do you see the interest rate environment evolving and what impact could it have on loan growth and margins?

SBI Chairman's Answer:

So, obviously, the eels are factoring one more rate hike, that is what we believe, which means that the eel moment probably would soften going forward because it's a been factored, but there are certain external factors like your oil price, geopardic intention, how it is going to play out.

But otherwise, I think the current deal is factoring in one brain hike in our view. So, which means that the any rate moment in the EBLR moment will happen along with a report rating increase. There could be a situation where the interest rate, another 50 base point, I mentioned in other context, probably would slightly moderate the consumption credit.

Otherwise, in the productive sectors, we don't see any impact on rate moment immediately. And if the credit growth continues at this level, there could be some tweaking on the deposit rates also. Thank you.