SBIN

Outpaces Peers in Fee Growth, Narrows Gap with Private Banks

delivered a strong Q2 FY26 performance, led by exceptional fee income growth and stable margins. Despite rising costs, its asset quality and valuation remain compelling, positioning it as a potential beneficiary of shifting investor preference. - SBI’s fee income rose 25% YoY to ₹8,574 crore—best among peers and well ahead of ICICI Bank’s 10%. Fee growth outpaced 13% advance growth, indicating strong traction in processing-linked income. - Net interest margin (NIM) rose 3 bps QoQ to 2.93%, aided by QIP proceeds and tax refund interest. NIM guidance of 3%+ for the rest of FY26 is encouraging amid repo rate-driven yield pressure. - Core net income (ex-treasury gains) grew 6% YoY to ₹55,434 crore, supported by fee and interest income. Operating expenses rose 12% YoY to ₹30,999 crore, driven by higher rental and mobile banking costs. - Core pre-provisioning operating profit (PPoP) declined 1% YoY to ₹24,435 crore due to cost pressures. Asset quality improved: slippage ratio declined 15 bps QoQ to 0.6%, flat YoY. - SBI’s total business crossed ₹100 trillion; total assets expected to reach ₹75 trillion by FY26-end. At 1.1% RoA, FY26 net profit could reach ₹77,000 crore based on average assets of ₹70 trillion. - Adjusted P/E ratio stands at 9x for FY26, versus 18x for HDFC Bank, highlighting valuation comfort. With SBI and HDFC Bank both targeting ~10% asset growth, valuation gap may narrow. - Investor preference could tilt toward SBI, given its scale, improving metrics, and cheaper valuation.