State Bank of India Q4 FY2026 Concall Summary

Key Takeaways

• Record profit, steady guidance: Net profit hit a record ₹80,032 crores, up 12.88% YoY, while management reaffirmed its full-year domestic NIM guidance of above 3% and a credit cost of 50 bps.
• NIM dipped on rate transmission and mix shift: Domestic NIM fell to 2.93% in Q4 as the December repo rate cut fully transmitted and large corporates drew down lower-yielding T-bill linked facilities, a mix shift the bank is actively reversing.
• Asset quality held at two-decade lows: Gross NPAs improved 33 bps YoY to 1.49% and net NPAs to 0.39%, with no structural stress visible despite seasonal agri and SME slippages and no impact yet from West Asia.
• Deposit franchise strengthened: CASA ratio improved 33 bps QoQ to 39.46%, non-government current account deposits grew 23% YoY to their best year-end ever, and the bank is cutting expensive wholesale deposits to contain funding costs.
• What to watch next quarter: The pace of the corporate book’s migration from T-bill linked loans back to MCLR, the trajectory of domestic NIM toward the 3% full-year target, and any early ECL impact quantification after the June quarter.

Margin Dynamics and the Corporate Mix Shift

• Repo rate transmission hit Q4 NIM: The 25 bps December repo rate cut fully transmitted through the EBLR portfolio in Q4, and a 5 bps MCLR cut was also fully factored in, compressing yields on the floating-rate book.
• Corporate drawdowns shifted the mix: Large, well-rated corporates that had been accessing the CP market moved to banks and drew on committed T-bill linked facilities they had not been using, pushing the share of EBLR-linked corporate loans from 43% to 49% of the book and softening the overall yield on advances by ~30 bps QoQ.
• The bank is actively reversing this shift: All corporate loans being repriced or refinanced are now predominantly moving to MCLR, and management expects to migrate a large chunk of the T-bill linked book back to MCLR within the current financial year, which should support a yield uptick.
• Repo rate stability helps the outlook: The house view is that the repo rate will remain stable this year, so no further EBLR-driven yield compression is expected, and the corporate mix shift back to MCLR should lift yields.
• Deposit cost containment is the other lever: The bank is focused on growing absolute CASA and cutting expensive wholesale deposits further, though management cautioned that the movement on deposit costs will be very limited from here.
• Investment yield moderated by design: Some profitable securities were sold, including sales over the 5% allowed limit, generating trading profits but moderating the portfolio yield, even as G-sec yields ticked up.

C.S. Setty: "While you all are looking at the NII part, we are looking at the overall value of the relationship with the corporate, which is not evident in the NIM. It is evident in our ROA. Where do I get the ROA? Where do I get the fee-based income what you are seeing, and the other income? It is because of the relationship with the corporate."

Asset Quality and Credit Risk

• Two-decade-low NPAs sustained: Gross NPAs fell 33 bps YoY to 1.49% and net NPAs improved 8 bps YoY to 0.39%, validating the bank’s underwriting and risk management through the cycle.
• Q4 slippages were seasonal, not structural: Slippages came predominantly from agriculture and some SME accounts, and nearly ₹850 crores had already been pulled back as of the call date; management sees no structural issue.
• West Asia exposure shows no stress: The Middle East wholesale book is over 98% sovereign, bank, or sovereign-related exposures, and retail housing loans, predominantly to Kerala-based workers, show no impact; GCC countries are returning to normalcy with staff back in offices.
• Morbi cluster is a contained pocket of stress: The ceramic cluster is affected because gas is unaffordable and units have not returned to production after annual maintenance, but overall credit exposure to the cluster is very minimal and they may need some support going forward.
• Hydrocarbon P&L pressure is not a credit issue: Oil companies are impacted but have very strong balance sheets, so P&L issues will not translate into credit problems.
• MSME risk mitigation is improving: Business Rule Engine underwriting models are showing lower delinquencies versus the non-BRE portfolio, and CGTMSE coverage now reaches 58% of the eligible universe, providing higher mitigation and recourse.
• Credit cost guidance held at 50 bps: Management is sticking to the same credit cost guidance maintained for the last three years, confident that asset quality is holding up unless macros dramatically deteriorate.

C.S. Setty: "We are confident that the asset quality is holding up unless of course there is something dramatically happens in the system and macros will further get disturbed."

Deposit Franchise and Funding

• CASA ratio improved to 39.46%: A 33 bps QoQ improvement reinforced the low-cost funding advantage, supported by 10.6% savings account growth and 14.77% growth in retail term deposits.
• Non-government current account hit a record: Government current account deposits fell 21% YoY because FY25 March had ~₹50,000 crores in last-minute government fund releases that were not repeated, but non-government current account grew 23% YoY, which management called the best year-end number SBI has ever achieved.
• The ‘ABCD’ campaign is driving savings growth: The ‘All Branches to Contribute to Deposits’ campaign helped deliver nearly double-digit savings bank growth on a very large base.
• Expensive wholesale deposits are being cut: Cost of resources was contained in Q4 partly because of a significant cut-down on expensive wholesale deposits, and further reduction is planned, though the scope is now limited.
• Term deposit repricing is mostly done: Only a residual tail end remains, so the drag from deposit repricing should fade.
• LCR moderated as credit consumed liquidity: LCR declined from ~135% to ~124% QoQ as credit grew at 17%, and management sees a comfortable operating range of 115–120%, with current guidelines providing a ~3–4% improvement.

C.S. Setty: "The number which you see, the yearend number for March '26, in my view is the best number ever could achieve by SBI, because we had a double impact of the last minute flows which were not available this year."

Growth Strategy and Market Ambition

• Credit growth of 16.87% YoY was broad-based: All segments registered double-digit growth, with corporate at 14.83%, foreign office advances up 20% YoY, and the domestic CD ratio improving 337 bps YoY to 73.08%.
• FY27 credit growth guided at 13–15%: The bank builds 3–4% over nominal GDP growth of ~10.5–11%, and will not grow significantly beyond what macros can support; corporate loans are guided at 12–13% and RAM at 13–15%.
• District-level market share push is underway: The bank has embarked on a strategy to increase market share by 1% every year in every district, with market share data now available at the district level and the lowest field officer aware of targets; the aspiration is to reach 25% market share in 4–5 years.
• Processing fees were restructured, not hiked: Processing fees nearly doubled QoQ because the bank reduced concessions and began charging for process efficiency across retail, large corporate, small corporate, and MSME segments; retail operations saw ~50% growth and the corporate book ~30–35%.
• Auto loans are a hook product: Management acknowledged that auto loans themselves are not profitable after dealer commissions, but they bring multiple other product engagements, and the bank is redeploying branch workforce into sales and upselling as transactions move to digital channels.
• Products per customer targeted to rise from ~3 to 5: The potential exists to reach 8–10 products per customer, supported by deep integration of subsidiary products on YONO 2.0.

C.S. Setty: "25% is a little farther, but we would like to move 1% every year, that means 4 to 5 years. As I mentioned several times, we would like to be 25% in terms of the GDP of the country."

Digital, Subsidiaries, and Emerging Sectors

• YONO 2.0 crossed 4 crore registrations in three months: Total users are now above 10 crores, and 66% of new savings accounts were originated on YONO in FY26, confirming a digital-first transition.
• SBI AMC listing is targeted for FY27: The bank has embarked on listing SBI AMC, which will result in CET-1 capital augmentation; the bank has also given in-principle consent to participate in the NSE OFS, which would unlock hidden reserves in strategic investments currently not marked to market.
• CHAKRA initiative targets sunrise sectors: The bank is building capabilities to finance green hydrogen, data centres, new renewable energy models, small modular reactors, and semiconductors, which require composite structures beyond vanilla loans, including mezzanine and equity funding.
• Data centre financing is gaining traction: SBI funds both GPUs and infrastructure as a package, focusing largely on the hyperscaler model where demand and client quality are assured; Mumbai especially has a lot of data centres coming up.
• Battery energy storage and pump storage hydro pipelines are building: A large number of BESS proposals are being processed, and pump storage hydro is starting to come, driven by round-the-clock power tenders that combine storage with solar and wind.
• Gold loans are a capital-efficient ROE driver: With zero risk weight, an LTV of 52%, yields of 8.5–8.75%, and almost zero NPAs, gold loans are described as a very efficient ROE product; the portfolio has crossed ₹1 lakh crore in critical mass.

Regulatory Transition and Capital

• ECL transition begins April 2027: Final guidelines have been received and models tweaked accordingly; management expects a smooth transition over four years that will not significantly impact capital ratios or the ability to fund credit growth, though no quantification will be given until after the June quarter.
• Current capital can fund ~₹12 trillion of credit growth: CAR improved 115 bps YoY to 15.4%, well above regulatory requirements, and further augmentation from the SBI AMC listing will add headroom.
• AFS reserves declined but had limited CET-1 impact: AFS reserves fell by roughly ₹3,000 crores during the quarter to ₹5,136 crores at March-end, but the impact on the CET-1 ratio was not significant.
• Q4 profit was lower than Q3 mainly on MTM: An MTM loss of ₹4,520 crores in Q4, versus a loss of ₹143 crores in Q3, was routed through other income and drove the sequential profit decline; the forex open position unwinding was completed on 10th April with a net loss of only ₹57 crores.
• ROA and ROE commitments are through-cycle: ROA is guided at 1% through the cycles, maintained even through the 3–4 year ECL transition journey, and ROE is targeted at a minimum of 15% through cycles.

C.S. Setty: "It is not going to impact our ability to fund credit growth. It will not be impacting our capital ratios as much and I hope we will be smoothly transitioning in the next four years in terms of the ECL guidelines implementation."

Guidance & Commitments

Key Metrics