State Bank of India (SBI), the nation's largest lender, anticipates robust credit growth of 13-15 percent for the financial year ending March 2027. This optimistic outlook is fueled by sustained demand across various segments, including both corporate and retail lending.
Chairman Setty on Geopolitical Risks and Economic Outlook
Speaking on the bank's prospects, SBI Chairman CS Setty expressed confidence in the current credit momentum, noting, "We have grown across the segments and corporate advance is in double digits. We are continuously seeing the credit growth in the current quarter also, which gives us confidence that 13-15 percent credit growth is imminently possible."
While the bank currently sees no immediate cause for concern regarding the ongoing conflict in West Asia involving the US, Israel, and Iran, Setty cautioned about potential long-term impacts. He highlighted two primary downside risks if the conflict were to persist for another five to six months: significant disruptions to global supply chains and a rise in inflation, which could subsequently moderate domestic consumption.
"Domestic consumption is what is the driving force for us. So, we assume that, if inflation is at 4 percent, the domestic consumption may not be badly impacted. But if it goes beyond that, and if the war lingers for a longer time, the consumption demand moderation will impact the credit growth," Setty stated.
Q4 Earnings and Market Reaction
SBI reported a net profit of Rs 19,684 crore for the January-March quarter, marking a 5.6 percent increase from Rs 18,643 crore in the same period last year. Net interest income (NII) also saw a 4.1 percent year-on-year rise, reaching Rs 44,380 crore.
However, on a sequential basis, the bank's profit after tax declined by 6.4 percent, and NII fell by 1.4 percent. The domestic net interest margin (NIM) also decreased to 2.93 percent, down 21 basis points year-on-year and 18 basis points quarter-on-quarter. These factors contributed to a sharp decline in SBI's shares, which closed over 6.6 percent lower at Rs 1,019.55 on Friday, May 8, 2026, amidst a weaker broader market.
Treasury Losses and Regulatory Impact
The bank experienced a drop in other income, primarily attributed to impacts on its treasury operations. Overall treasury losses amounted to approximately Rs 4,500 crore during the quarter. Setty clarified that while the unwinding of a $5 billion non-deliverable forward (NDF) portfolio resulted in a minimal loss of Rs 57 crore, valuation adjustments of derivatives and swaps undertaken for proprietary requirements led to significant forex losses.
Additionally, sharp movements in bond yields further contributed to the treasury losses. These developments occurred in the context of recent regulatory actions by the Reserve Bank of India (RBI), which had previously barred banks from offering rupee NDF contracts to corporate clients to stabilize the rupee. The RBI also directed lenders to cap their net open rupee positions in the onshore deliverable market.
Despite these challenges, SBI maintains its guidance for net interest margins to hover around 3 percent for the 2026-27 financial year.