State Bank of India shares experienced their largest single-day drop in two years, falling nearly 7% after disappointing fourth-quarter earnings. The stock ended 6.7% lower at ₹1,019.3 on Friday, with the decline attributed to reduced net interest margins and lower treasury income. As per The Economic Times, analysts suggest potential further dips, with support expected around the ₹970-990 zone. The stock has fallen 4.1% over the past month while the Nifty 50 is up 0.8%, with technical indicators pointing to further near-term weakness.
State Bank of India reported mixed fourth quarter results that fell short of analyst expectations. Net profit increased 6% year-on-year to ₹19,684 crore in Q4FY26, compared to ₹18,643 crore in the corresponding quarter of the previous financial year. However, Net Interest Income (NII) rose 4.1% year-on-year to ₹44,381 crore, missing the CNBC-TV18 poll estimate of ₹46,487.4 crore. The bank's net interest margin nudged lower to 2.81% against 2.99% in the year-ago period, with Chairman CS Setty attributing the pressure to the repo rate cut that took effect on December 15, 2025. Despite margin compression, the bank demonstrated strong business growth with gross advances increasing 17% year-on-year to ₹49,32,627 crore as of March-end 2026, led by SME (20.99%), Agriculture (19.68%), Retail Personal (15.22%), and Corporate (14.83%) segments.
The bank's treasury operations faced significant challenges during the quarter, with treasury losses of ₹4,500 crore primarily due to regulatory changes. As per The Economic Times, Setty explained that the bank had to unwind $5 billion of derivative positions after RBI late March asked banks to cap their net open rupee positions in offshore markets to $100 million at the end of each business day effective April 10. The bank suffered a ₹1,471 crore loss in bond investments in Q4FY26, compared to a ₹6,879 crore gain in the same period last year. Non-interest income fell 29% to ₹17,314 crore mainly due to these treasury losses, with the bank having to unwind forex positions and make ₹100 crore mark-to-market loss during the fourth quarter. Arijit Malakar from Ashika Stock Broking noted that the weaker numbers were on account of the decline in net interest margins and fall in other income due to lower treasury income.
Asset quality for India's largest bank showed significant improvement during the quarter. Gross NPA ratio decreased to 1.49% in Q4FY26 from 1.57% in the previous quarter, while net NPA remained unchanged at 0.39% compared with 0.47% in the same period. Chairman CS Setty expressed confidence in asset quality management, noting that around ₹850 crore worth of slippages had subsequently been pulled back during the quarter. The bank's pre-provisioning operating profit declined 16% sequentially to ₹27,704 crore from ₹32,862 crore in the previous quarter, while provisions fell to ₹2,872 crore from ₹4,507 crore in the December quarter. Setty emphasized that the bank remains comfortable on margins, liquidity and asset quality despite pressure from lower interest rates, with the bank continuing to guide for credit costs of around 50 basis points for the current financial year.
SBI Chairman CS Setty outlined an optimistic growth strategy for FY27, retaining a 13-15% credit growth target with strong corporate credit pipeline at more than ₹5 trillion. The pipeline includes both unutilised working capital limits and undrawn term loans under discussion, providing visibility on future corporate credit growth. Setty noted that the bank has not seen any withdrawal of planned corporate capital expenditure commitments, with the existing pipeline giving confidence that FY27 loan growth guidance is achievable, provided geopolitical tensions in West Asia do not persist for a prolonged period. The bank's agriculture portfolio crossed ₹4 lakh crore, while the retail loan portfolio advanced 17% annually with double-digit growth in all segments. SME advances rose 21%, retail personal loans portfolio gained 15%, and corporate loan book climbed by 14.83%. Setty expects loan yields to improve as more of the bank's assets on floating rates get repriced, with the bank maintaining confidence in achieving its growth targets despite current market challenges.
Chairman CS Setty reaffirmed the bank's margin guidance, stating that net interest margin (NIM) will remain above 3% during the current financial year, with the exit NIM guidance of above 3% having been fulfilled. Despite margin pressures from repo rate cuts and external benchmark-linked lending rate improvements, Setty expressed no concern about managing margins going forward. The bank's capital adequacy ratio stands at over 15%, which Setty said provides the ability to fund almost ₹12 trillion of credit growth without needing immediate equity capital raising. This strong capital position removes any immediate pressure to access the market for additional capital, providing flexibility for future expansion plans. Setty noted that with a capital adequacy of 15% that can support ₹12 lakh crore of loan growth and excess bond investments of ₹3 lakh crore, the bank does not need to raise equity capital this fiscal.
The bank's optimistic outlook is supported by strong demand across retail and corporate segments, with Setty noting that the bank remains comfortable despite reporting a rise in quarterly slippages. However, SBI's stock fell 7% to ₹1,019 per share on BSE, likely as investors were disappointed with the bank's NIM performance. Ajit Mishra from Religare Broking suggests that SBI may see a further dip after this sharp fall and may find support around the ₹970-990 zone, with participants waiting for signs of stability to enter fresh positions. In the case of a rebound, the ₹1,050-1,075 zone may act as an immediate hurdle. The bank's full financial year 2025-26 net profit stood at ₹80,032 crores witnessing an annual growth of 13% against ₹70,901 crore in FY25, demonstrating consistent performance despite quarterly challenges.
