The State Bank of India (SBI), the nation’s largest bank, has lowered its loan growth forecast for the financial year 2026 to between 12-13 percent, revising it down from the previous estimate of 14-16 percent. Chairman C. S. Setty announced this adjustment during a press briefing following the bank’s quarterly earnings report, highlighting the impact of prevailing tariff uncertainties on the economic landscape.
For the quarter ended March 2025, SBI reported a 10 percent decline in profit after tax, amounting to ₹18,643 crore, compared to ₹20,698 crore during the same period last year. Setty attributed the downward revision to potential disruptions in global trade, particularly following recent tariff announcements by U.S. President Donald Trump, which have significantly affected financial markets worldwide. Although India’s economy is largely driven by domestic consumption—with minimal reliance on exports to the U.S.—Setty cautioned that the uncertainty surrounding tariffs could dampen overall economic and investment activity.
SBI’s recent financial performance shows a gross advance growth of 12.03 percent, and deposit growth at 9.48 percent for the financial year ending March 31, 2025. The corporate loan book expanded by 9 percent, while the retail segment saw an even higher growth rate of 11.4 percent. Setty noted that although the bank’s corporate loan pipeline stands robust at ₹3.4 lakh crore, immediate new investment announcements may be delayed as businesses monitor the global environment closely. However, existing commitments remain intact, indicating confidence in the ongoing projects.
Despite the profit decline for the most recent quarter, SBI’s annual net profit for fiscal 2025 increased by 16.08 percent, reaching ₹70,901 crore, compared to ₹61,077 crore in fiscal 2024. Additionally, the bank’s net interest income (NII) rose by 2.69 percent to ₹42,775 crore but saw a dip in domestic net interest margin, which fell by 32 basis points to 3.15 percent. Setty warned that ongoing pressures on margins are likely as market conditions evolve, particularly with expectations of a potential repo rate cut by the Reserve Bank of India (RBI).
In terms of loan loss provisions, SBI reported a notable increase of 20.35 percent, amounting to ₹3,964 crore for the March quarter, escalating from ₹3,294 crore in the same period the previous year. However, the bank managed to improve its gross non-performing assets (NPA) ratio to 1.82 percent, down from 2.24 percent, with a corresponding reduction in net NPA to 0.47 percent from 0.57 percent. The bank aims to maintain gross NPA at around 2 percent moving forward.
In a strategic move, SBI’s board has approved plans to raise equity capital up to ₹25,000 crore through various methods, including qualified institutional placements or follow-on public offers, during FY26. Additionally, a dividend of ₹15.9 per equity share has been declared for FY2025, reflecting the bank’s commitment to shareholder returns despite the ongoing economic challenges.
As SBI navigates through these complexities, the focus on ensuring stability and growth remains paramount, underscoring its critical role in India’s banking sector while adapting to an evolving global landscape.
Original Source: https://indianexpress.com/article/business/sbi-expects-slower-loan-growth-of-12-13-in-fy26-amid-tariff-related-risks-9981317/
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Publish Date: 2025-05-04 04:30:00
