SBIN

Shares Fall 11% as Margins Compress Despite Strong Core Profit

’s shares have dropped nearly 11% in two sessions to ₹974, following its Q4FY26 results. The decline stems from net interest income (NII) lagging loan growth, as asset yields fell after policy rate cuts. Despite margin compression, SBI’s core operating performance remained strong, supported by fee income and stable asset quality. Financial Highlights (Q4FY26) Interest‑earning assets: +14% YoY (loans & investments). NII growth: +4% YoY, lagging loan growth. Domestic NIM: 2.93% (–19 bps QoQ); FY26 average 3.03% vs 3.22% in FY25. Treasury impact: MTM loss ₹4,522 crore; overall treasury loss contained at ₹1,471 crore due to ₹3,051 crore trading gains. Core PPoP: ₹29,174 crore (+20% YoY). Fee income: ₹3,055 crore (+55% YoY), driven by retail, corporate, and MSME segments. Gross NPA: 1.49% (–8 bps QoQ). Fresh slippages: +31% YoY; +24% QoQ. Key Drivers & Management Commentary Rate repricing: Repo‑linked EBLR loans (~50% of total) and MCLR loans were repriced lower after RBI’s 25 bps cut in December. Investment strategy: Sale of high‑yield securities reduced interest income but cushioned treasury losses. Guidance: Loan growth 14–16% in FY27; credit cost <50 bps; domestic NIM expected to stay above 3%. Focus: Fee‑based income and cost control to offset margin pressure. Market & Valuation Context SBI stock up 27% YoY, while HDFC Bank down 21%. Valuation gap narrowing: SBI trades at 10.6× FY27 EPS, a 16% discount to HDFC Bank’s 12.5× (adjusted for subsidiaries). Conclusion SBI’s Q4FY26 results highlight margin compression amid rate repricing, but strong core profitability and fee income provide resilience. Management’s FY27 guidance suggests steady credit growth and contained credit costs, positioning SBI for profit recovery once margins stabilize.