State Bank of India: Loan Growth Leads the Pack

SBIN State Bank of India is India’s largest bank by assets, deposits and branches. It operates across retail, corporate, SME and agricultural lending, alongside subsidiaries in insurance, asset management, capital markets and international banking. The government holds a majority stake. What happened: In Q2FY27, SBI’s loans grew 18.2% year on year, partly fuelled by branches extending approximately Rs 83,600 crore in loans against recently raised FCNR(B) deposits. Deposits grew 12.3% to Rs 62.77 lakh crore; fixed deposits rose 14.5% and savings deposits 8.8%. Net interest margin held steady at 3.06%. Standalone net profit grew 14.3% to Rs 23,038 crore. Other income fell 24% to Rs 11,778 crore, weighed down by a 19.5% decline in profit on sale or revaluation of investments as 10-year government bond yields rose due to the Middle East conflict and global rate pressures. Why it matters: Asset quality reached a multi-decade best. Net NPA ratio fell to 0.36% from 0.42% a year earlier. NPA provisions dropped to Rs 4,217 crore from Rs 5,400 crore, while the provision coverage ratio remained at 74.4%. Return on assets (annualised) was 1.19%. What I am watching: Management has guided credit growth of 14%-15% for FY27, below the 18.2% achieved in Q2FY27. Sustaining loan growth while managing deposit costs and bond-yield volatility will determine whether NIMs hold or compress in the coming quarters. My stance: SBI trades at 1.6 times standalone book value, within its five-year range of 1.4 to 2.3 times. Loan growth, asset quality and profit trajectory are all running well. The guidance cut disappointed markets, but the fundamentals remain sound. I do not hold a position in State Bank of India at the time of writing. This is not investment advice.