Treasury, forex gains help SBI post 10 pc growth in Q1 net profit; core income contracts

The Print

6 days ago

Despite an 11.6 per cent jump in overall advances, the core net interest income declined by 0.13 per cent to Rs 41,072 crore, as net interest margins contracted by 0.33 per cent to 3.02 per cent, following the RBI's deep rate cuts and the time taken for deposit rate repricing impacted the spreads.
On a standalone basis, the country's largest lender's net profit grew to Rs 19,160 crore from Rs 17,035 crore in the year-ago period.
Mumbai, Aug 8 (PTI) State Bank of India on Friday reported a 9.71 per cent increase in its consolidated net profit to Rs 21,201 crore in the June 2025 quarter, helped by a handsome performance on the treasury and forex income.
Its chairman CS Setty told reporters that the NIMs will follow a U-shaped trajectory in FY26, pointing out that there will be challenges on NIMs in the second quarter before the number inches up, and added that it aims to have a NIM of 3 per cent for FY26 on an annual basis.
A 55 per cent jump in overall non-interest income at Rs 17,346 crore helped the bank deliver its profit growth for the quarter.
This was led by a 352 per cent rise in forex income at Rs 1,632 crore and the profit on sale of investments being 144 per cent higher at Rs 6,326 crore.
Additionally, restricting growth in operating expenses, which were up 7.88 per cent to Rs 27,874 crore, also helped the bottomline.
From a loan growth perspective, Setty said the bank is maintaining its target of growing at 12 per cent for FY25. Corporate advances increased by 5.7 per cent, and the domestic retail segment rose 12.56 per cent, and overseas book climbed 14 per cent year-on-year during the reporting quarter.
The chairman said the bank has a pipeline of Rs 7 lakh crore, including proposals and cleared loans yet to be disbursed, and the current uncertainties stemming from geopolitical issues are delaying disbursements.
The bank is hoping for an acceleration in corporate loan disbursements in the remainder of the year and close FY26 with a 10 per cent loan growth in the segment, he said.
Setty said companies are not investing due to a lack of clarity on the consumption demand front, and sectors like renewable power and data centres, which are seeing the maximum credit demand at present.
Acknowledging that the bank has exposures to the 4-5 sectors directly impacted by the US move on tariffs, he said the banking sector will not be impacted by the measures unleashed by the Trump administration as its overall contribution to bank credit is under 2 per cent.
The uncertainty over the tariff issue will have a greater impact because businesses are deferring their investment decisions, Setty said.
'The narrative is more damaging. I think that it needs to be addressed,' he said.
Its managing director Ashwini Kumar Tewari said the bank expects the current uncertainties to settle down by the third quarter.
SBI will not face any impact of IT sector layoffs because of its diversified book, and much of the personal loans it gives are to government servants.
Setty also said the start of the festive season will help grow the retail loans portfolio, and the bank is very keen to grow the unsecured book within that.
On the asset quality front, the bank's gross non-performing assets ratio was unchanged over the last quarter at 1.83 per cent, and Setty reiterated that the idea is to keep it under 2 per cent across cycles.
The fresh slippages came at Rs 7,945 crore, and Setty explained that the first quarter sees elevated levels on the number and that over Rs 1,600 crore of loans classified as bad as on June 30 have already returned to performing status by now.
The overall provisions stood at Rs 4,759 crore against Rs 3,449 crore in the year-ago period.
The deposit growth came at 11.66 per cent, and Setty said that the overall cost of deposits has peaked now.
Its overall capital adequacy stood at 14.63 per cent as of June 30, with the core tier-I ratio at 11.10 per cent.
Among its subsidiaries, SBI Life's PAT grew to Rs 594 crore from Rs 520 crore for the quarter, SBI Card declined to Rs 556 crore from Rs 594 crore in the year-ago period, and the general insurance arm saw a marginal rise at Rs 188 crore.
The SBI scrip closed 0.09 per cent down at Rs 804.55 apiece on Friday against a 0.95 per cent correction on the benchmark. PTI AA BAL BAL
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