The exceptional gain lifted the headline
- Standalone net profit
- ₹23,037.95 croreQuarter ended 30 September 2026, up 14.28% year on year.
- SBI Funds Management gain
- ₹7,288.47 crorePre-tax exceptional profit from selling a 6.30% stake.
- Operating profit before provisions
- ₹26,917.24 croreExcludes the exceptional item and fell from ₹27,310.92 crore.
State Bank of India reported standalone net profit of ₹23,037.95 crore for the September quarter on Tuesday, 14.28% more than a year earlier. The result included a ₹7,288.47 crore pre-tax exceptional gain from selling 6.30% of SBI Funds Management through a pre-initial public offering transaction and the subsequent offer for sale.
The statutory result gives the cleaner view: SBI’s recurring operating profit fell even as lending income rose. Operating profit before provisions and contingencies declined to ₹26,917.24 crore from ₹27,310.92 crore, while the exceptional gain was recorded separately below that line.
SBI’s presentation instead shows operating profit of ₹34,226 crore because it includes the stake-sale gain in non-interest income. Investors therefore need to separate a valuable but non-recurring disposal from the banking business. SBI shares closed 1.70% lower at ₹970.25 after the results.
SBI’s reported profit growth overstates the improvement in recurring earnings because a subsidiary stake sale supplied a large exceptional gain.
The statutory result gives the cleaner view: SBI’s recurring operating profit fell even as lending income rose.
Core interest income was strong
- Net interest income
- ₹49,143 croreUp 14.69% from ₹42,847 crore.
- Domestic net interest margin
- 3.11%Up 11 basis points from the June quarter and three basis points year on year.
- Operating expenses
- ₹33,983 croreUp 9.63% year on year in SBI’s presentation.
The lending franchise performed better than the recurring profit line suggests. Net interest income, the difference between interest earned and interest paid, rose 14.69% to ₹49,143 crore. Domestic net interest margin increased to 3.11%, from 3% in June and 3.08% a year earlier.
The weakness came outside that spread income. Other income excluding the exceptional item fell to ₹11,777.46 crore from ₹15,462.60 crore, while the presentation shows operating expenses rising 9.63% to ₹33,983 crore. Lower investment income and higher costs therefore absorbed much of the increase in net interest income.
SBI’s presentation combines the disposal gain with non-interest income, producing 7.28% growth in its broader operating-profit measure. The statutory filing separates the exceptional item and shows recurring operating profit down 1.37%. For assessing the next quarter, the statutory treatment is more useful because SBI cannot repeat the same stake sale indefinitely.
Strong net interest income shows that the loan book is producing more revenue, but weaker other income and higher costs prevented that growth from reaching recurring operating profit.
Deposits remain the growth constraint
- Gross advances
- ₹52.08 lakh croreUp 17.84% year on year.
- Total deposits
- ₹62.78 lakh croreUp 12.27% year on year.
- CASA ratio
- 38.32%Current and savings accounts as a share of domestic deposits.
SBI expanded gross advances by 17.84% to ₹52.08 lakh crore, ahead of its retained full-year credit-growth guidance of 14% to 15%. Growth was broad: agricultural advances rose 22.64%, small and medium-sized business loans increased 21.97%, corporate advances grew 16.12% and retail personal loans rose 14.54%.
Deposits grew more slowly, by 12.27% to ₹62.78 lakh crore. Current and savings account deposits, which usually cost less than term deposits, rose 8.13%, while term deposits increased 14.26%. SBI’s current and savings account ratio fell to 38.32% from 39.63% a year earlier.
The funding mix has not yet damaged margins, which improved during the quarter. The risk lies ahead. Chairman CS Setty maintained deposit-growth guidance of 10% to 11% and said deposit rates may need adjustment if credit keeps expanding at the present rate. Faster deposit repricing would transmit directly into interest expense and could narrow the margin.
Loan growth remains healthy, but the faster expansion of advances than deposits could make funding more expensive if it persists.
The balance sheet supports the other case
- Gross NPA ratio
- 1.39%Down from 1.73% a year earlier.
- Credit cost
- 0.22%Loan-loss charges as a share of average advances for the quarter.
- CET1 capital ratio
- 13.34%Up from 11.47% a year earlier.
The strongest case against a cautious reading is that the stake sale realised genuine value rather than covering a deteriorating loan book. SBI still owns 55.56% of SBI Funds Management after the sale, while the asset manager produced ₹1,566 crore of profit in the first half. The transaction also made part of the subsidiary’s value observable.
Credit quality strengthened at the same time. Gross non-performing loans fell to 1.39% of advances from 1.73% a year earlier, fresh slippages declined to ₹5,227 crore from ₹7,046 crore in June, and loan-loss provisions fell 33.23% to ₹2,759 crore. SBI’s common equity tier-one capital ratio rose to 13.34% from 11.47%.
SBI also booked post-tax gains of ₹2,409.63 crore on its National Stock Exchange stake sale and ₹81.46 crore on ARCIL directly into capital reserves, as required by revised Reserve Bank of India rules. These figures make the balance-sheet outcome positive, even though the income statement exaggerates recurring growth.
The strongest case against focusing on recurring operating profit is that SBI converted subsidiary value into capital while its loan book and asset quality continued to improve.
The next quarter tests repeatability
- Early-stress accounts
- ₹4,801 croreSMA-1 and SMA-2 accounts above ₹5 crore, up from ₹3,762 crore a year earlier.
- Provision coverage ratio
- 74.43%Excludes accounts transferred to the Advance Under Collection Account.
- Full-year credit-growth guidance
- 14% to 15%Retained by management after the September quarter.
Low credit costs supplied another support that may be difficult to improve further. Provisions other than tax fell 21.91% to ₹4,216.86 crore, while the quarterly credit cost declined to 0.22% from 0.39% a year earlier. Setty said SBI would try to maintain credit costs near the present level, although the bank’s formal guidance remains 0.50%.
There is one early warning in an otherwise strong asset-quality picture. Special mention accounts, loans showing overdue payments before becoming non-performing, totalled ₹4,801 crore for borrowers with exposure above ₹5 crore. That was higher than ₹3,762 crore a year earlier, although it remained small relative to SBI’s loan book.
The decisive evidence will come in the results for the quarter ending December. SBI needs to keep its domestic net interest margin above management’s 3% objective, fund 14% to 15% annual credit growth without sharply dearer deposits, and hold credit costs near current levels when no comparable subsidiary sale is available.
The December-quarter results must show that margins and credit costs can hold without another disposal gain.
Sources
- The Listing Department, · nsearchives.nseindia.com
- The Listing Department, · nsearchives.nseindia.com
- Q2FY27 RESULTS - sbi.bank.in · sbi.bank.in
- State Bank of India posts quarterly profit rise · reuters.com
- SBI Q2 net profit rises 14.3% to ₹23,038 crore as provisions fall · business-standard.com
- Quick Take: Why SBI shares fell sharply after Q2 · cnbctv18.com
- SBI growth outlook: What is the bank's FY27 credit growth guidance? SBI chairman CS Setty answers · zeebiz.com
