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SBI Q1 FY26 Results: Steady Growth with Strong Asset Quality

Lesson 149/225 | Study Time: 15 Min

Course: Top Quality Companies

SBI Q1 FY26 Results: Steady Growth with Strong Asset Quality

🏦 Company Overview

State Bank of India (SBI) is India’s largest public sector bank with a domestic market share of over 22%, a robust balance sheet, diversified subsidiaries (SBI Life, SBI Cards, SBI MF, SBI General, SBI Caps), and a strong digital franchise via YONO with 9+ crore registered users.

With advances of ₹42.5 lakh crore and deposits of ₹54.7 lakh crore as of Q1 FY26, SBI continues to dominate India’s banking sector across retail, SME, agriculture, corporate, and international segments.

📈 Industry & Growth Prospects

The Indian banking sector is in a strong growth cycle:

Credit growth driven by consumption, infrastructure, and digital finance adoption.
NPAs across the system have reduced, improving profitability.
SBI’s leadership in home loans (27.7% share) and auto loans (19.3% share) positions it well for India’s growing middle-class economy.

🔢 Q1 FY26 Performance Highlights

Particulars	Q1 FY26	Q1 FY25	YoY Growth	QoQ Growth
Interest Income	₹1,17,996 Cr	₹1,11,526 Cr	+5.8%	-1.4%
Net Interest Income (NII)	₹41,072 Cr	₹41,125 Cr	-0.1%	-4.0%
Non-Interest Income	₹17,346 Cr	₹11,162 Cr	+55.4%	-28.3%
Operating Profit	₹30,544 Cr	₹26,449 Cr	+15.5%	-2.4%
Net Profit	₹19,160 Cr	₹17,035 Cr	+12.5%	+2.8%
Advances	₹42.5 L Cr	₹38.1 L Cr	+11.6%	-
Deposits	₹54.7 L Cr	₹49.0 L Cr	+11.7%	-
ROA	1.14%	1.10%	+4 bps	-
ROE	19.7%	20.9%	-120 bps	-
GNPA	1.83%	2.21%	-38 bps	-
NNPA	0.47%	0.57%	-10 bps	-

Key Takeaways:
✔ Net profit growth driven by other income and operating efficiency despite flat NII.
✔ Asset quality strengthened – GNPA at 1.83%, NNPA at 0.47%.
✔ Cost-to-Income ratio improved to 47.7% (from 49.4%).
✔ Provisions remained high at ₹11,384 Cr, providing a strong buffer.

📊 Segmental Performance (Q1 FY26)

Segment	Q1 FY26 (₹ Cr)	Q1 FY25 (₹ Cr)	Growth	Share of Advances
Retail	15,39,878	13,68,045	+12.6%	42.5%
Agri	3,48,267	3,09,094	+12.7%	9.6%
SME	5,28,095	4,43,412	+19.1%	14.6%
Corporate	12,03,430	11,38,579	+5.7%	33.2%
International	6,34,845	5,52,957	+14.8%	-

Subsidiaries (Q1 FY26 profits):

SBI Life: ₹594 Cr (+14%)
SBI Card: ₹594 Cr (+7%)
SBI MF: ₹845 Cr (+24%)
SBI General: ₹188 Cr (+3%)
SBI Caps: ₹181 Cr (-13%)

📉 Cost & Provisioning Breakdown

Interest expenses: ₹76,923 Cr (+9.3% YoY)
Staff expenses: ₹16,900 Cr (+9.3% YoY)
Overheads: ₹10,974 Cr (+5.8% YoY)
Provisions: ₹11,384 Cr (+20.9% YoY), of which loan loss provisions ₹4,934 Cr.

🏦 Asset Quality & Capital Adequacy

Credit Cost: 0.47% (vs 0.48% last year).
PCR (Provision Coverage Ratio): 74.5%.
Additional provisions (outside PCR): ₹30,345 Cr (~152% of NNPA).
Capital Adequacy Ratio: 14.63% (CET1: 11.10%).

📉 Historical Trends

Advances CAGR (20 years): 16%
Profit CAGR (20 years): 16%
NPM improved to 11.9% in FY25–26 vs <7% a decade ago.
GNPA reduced from 6.2% in FY20 to 1.8% in FY26.
PE Range: Typically 7.8–10.5x in last 5 years.
PBV Range: 1.2–1.7x in last 5 years.

🔮 Estimates & Valuations

Year	Revenue (₹ Cr)	Profit (₹ Cr)	EPS	Book Value	Blended Fair Value (₹)
FY26E	7,36,311	95,720	105	635	993
FY30E	11,58,599	1,08,350	119	913	1,225
FY35E	20,41,848	1,99,628	210	1,438	2,069

⚖️ Investment View

Positives:
✔ Strong earnings visibility (double-digit profit growth).
✔ Improving asset quality, NPAs at multi-year lows.
✔ Leadership in retail credit (home, auto, personal).
✔ Diversified income via subsidiaries.
✔ Consistent dividend track record.

Risks:
✘ NIM compression due to higher cost of deposits.
✘ Credit growth slowdown in corporate & infra segments.
✘ Global economic risks affecting international book.

🎯 Conclusion – Long-Term Risk & Reward

SBI remains a core holding for long-term investors, offering:

Stable growth (EPS CAGR ~12–15% for next decade).
High return ratios (ROE ~19–20%).
Attractive valuations at ~1.3x PBV and ~8–9x PE.

With its digital scale, strong subsidiaries, and reduced NPAs, SBI is well-positioned to deliver compounding returns till FY2035.

Portfolio Allocation Suggestion (Strategic Weightage): ~1.5% with tactical entry around fair value zones (PBV 1.2–1.4x).

📌 Disclosure: This analysis is for educational purposes only.

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Piyush Patel

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