Net profit seen rising 5%, loan growth to stay strong

State bank announced net profit ₹It will announce its Q2FY26 results on February 7, compared to 16,891 crore in the same period of the previous year. Analysts expect SBI to deliver strong loan growth in the quarter under review.

Analysts at Motilal Oswal said the public sector lender is poised for industry-leading loan growth of 13-14% annually due to expansion in retail, agriculture and small business segments, rise in retail loans and selective use of working capital limits even as the corporate capital expenditure cycle remains muted.

Corporate loans accounted for 33% of SBI’s domestic loan book as on September 30, 2025.

In November last year, SBI chairman CS Setty had said that he expected FY26 credit growth to be 12-14%, higher than the 11-12% projected in August. Setty said the Reserve Bank of India’s measures to smooth the flow of credit alone would boost sector-wide credit growth by about 100 basis points, citing steps such as allowing banks to finance mergers and withdrawing an earlier proposal to block loans to overlapping businesses except through interest rate cuts.

Analysts said management’s comments on margins and loan growth will be watched closely. The RBI has reduced the repo rate by 25 basis points (bps) since the September quarter, taking the cumulative rate cuts since February 2025 to 125 basis points.

“The bank expects NIMs (net interest margin) to remain unchanged at above 3% in Q4 FY26. SBI’s structural advantage, namely low-cost Casa (current and savings account deposits), pricing discipline and diversified credit mix provide comfort that margins remain flexible,” Motilal Oswal said in a note.

In the September quarter, SBI reported loan growth of around 13% year-on-year. ₹44.19 trillion with sequential growth of almost 4%. Domestic advances increased by 12.3% on an annual basis. Total loan growth, including foreign operations, was 12.7%, while total loan book ₹44.2 trillion. During the quarter, corporate loans increased by 7% and personal loans increased by 14%.

Asset quality is also expected to remain stable. SBI’s gross non-performing assets (NPA) ratio stood at 1.73% as of September.

“Asset quality should continue with decreasing slippage. This, along with steady recovery and upswing, will help sustain benefits in GNPs (gross non-performing loans),” Elara Capital analysts said in a Dec. 26 note. “We expect the cost of credit to decrease with strong collateral levels.”

Cost of credit represents provisions and charge-offs as a percentage of total assets.

Motilal Oswal said asset quality remains a key strength for SBI. “The cost of credit in the second quarter of FY26 was at a good level at 39 basis points, reflecting disciplined underwriting and steady recoveries. We expect the cost of credit to remain lower at 40-50 basis points compared to FY26-28,” the brokerage firm said.

Kotak Institutional Equities estimates slippages in loans at around 0.8% and said it sees no new concerns for the bank over unsecured loans.