Lower NIM, treasury income limit SBI Q4 growth to 6 pc; retains FY27 loan target

The countrys largest lender SBI on Friday reported a 6 per cent growth in its March quarter standalone net profit at Rs 19,684 crore, limited by a compression in net interest margin NIM and decline in treasury income amid hardening of yields.

The country's largest lender SBI on Friday reported a 6 per cent growth in its March quarter standalone net profit at Rs 19,684 crore, limited by a compression in net interest margin (NIM) and decline in treasury income amid hardening of yields. On a consolidated basis, the net profit inched up to Rs 19,648.87 crore in the quarter from Rs 19,600.46 crore in the year-ago period, and was down when compared with Rs 21,317 crore in the preceding December quarter. SBI Chairman C S Setty said that despite the headwinds like the West Asia conflict, the bank is retaining its FY27 loan growth target at 13-15 per cent, but added that the macroeconomic impact of the war can be felt in the Indian economy if the challenges continue for six months more. The lender, which has a market share of around a fifth of the banking system loans, has a loan pipeline of Rs 5.5 lakh crore, Setty said, adding that corporate borrowers are likely to take a final call on their capital expenditure around July when they see better clarity on things. Terming the impact of the conflict ''not intense but widespread'', Setty said the bank's asset quality is holding up well since the beginning of the conflict and added that it does not expect a lot of borrowers to resort to availing the emergency credit line guarantee scheme even though it has a headroom to extend up to Rs 80,000 crore of relief under the central government scheme. Despite a 16 per cent credit growth, its core net interest income grew by just 4.13 per cent to Rs 44,380 crore for the quarter as a 0.21 per cent compression in NIM to 2.91 per cent impacted the line. Setty explained that a faster growth in the loan book linked to external benchmark was a prime reason for the NIM compression, and added that the bank is aiming to have a 3 per cent NIM in FY27. The deposit growth came at over 11 per cent, but the bank is not concerned about the wide gap between the credit and deposit growths, Setty said. The non-interest income declined 29 per cent to Rs 17,314 crore, mainly due to a loss of Rs 1,471 crore on revaluation of investments amid the hardening of yields and a 56 per cent decline in forex income at Rs 1,258 crore. Setty said the bank had to contend with a Rs 4,500 crore impact because of external factors playing into its other income line, but clarified that the impact of the regulatory changes on forex front were limited to Rs 57 crore. From an asset quality perspective, the bank's fresh slippages increased to Rs 5,521 crore in January-March from Rs 4,458 crore in the preceding December quarter and Rs 4,222 crore in year-ago period, but the gross non-performing assets ratio improved to 1.49 per cent in March from 1.57 per cent in December. Setty said over Rs 850 crore of the slippages have already been pulled back, underlining that there are no concerns on the asset quality front. The NPA provisions declined to Rs 3,140 crore from Rs 3,964 crore in the year-ago period. Beyond the challenges faced by certain gas-dependent businesses like the ceramic units in Morbi, there are no sectoral concerns because of the Middle East conflict and added that there can be a hit to consumption if the inflation goes beyond 4 per cent. There is no move to go slow on the international book. Setty said the bank does not expect any change in the repo rate by the Reserve Bank in the whole of FY27. The bank is set to hire up to 6,000 people to its overall staff of 2.45 lakh, Setty said, adding that a bulk of the technology additions will be on the cybersecurity front. Setty, who also chairs the industry body IBA, said that banks are working with the RBI and the government to tackle the Mythos challenge. SBI is also setting up a centre of excellence on cybersecurity, he added. SBI's overall capital adequacy stood at 15.4 per cent as on March 31, 2026 and the bank has no plans to raise equity capital, Setty said, adding that the current buffers can deliver credit growth of over Rs 12 lakh crore. The SBI scrip closed 6.62 per cent down at Rs 1,019.55 a piece on the BSE on Friday as against a 0.66 per cent correction on the benchmark, possibly due to concerns on the core income growth among investors.