SBI Q3FY26 Earnings Preview: Profit Growth and Loan Expansion in Focus
State Bank of India (SBI), the nation's largest public sector lender, is set to announce its financial results for the December quarter (Q3FY26) on Saturday, 7 February. According to a consensus estimate from a Bloomberg analyst poll, the bank is expected to report a net profit of ₹17,810 crore, marking a 5% increase compared to the ₹16,891 crore recorded in the same period last year. This anticipated growth underscores SBI's resilience in a dynamic economic environment.
Robust Loan Growth Driven by Retail and SME Segments
Analysts highlight that SBI is likely to demonstrate strong credit expansion, with industry-leading growth projected at 13-14% year-on-year. This surge is primarily fueled by advancements in retail lending, agricultural loans, and small business financing, alongside a resurgence in personal loan disbursements and selective utilization of working capital limits. Notably, corporate loans, which constituted 33% of SBI's domestic loan portfolio as of September 2025, have seen muted growth due to a subdued corporate capital expenditure cycle.
In November 2025, SBI Chairman CS Setty expressed optimism, forecasting FY26 credit growth of 12-14%, an upward revision from the earlier estimate of 11-12%. He attributed this positive outlook to regulatory measures by the Reserve Bank of India (RBI), such as facilitating bank financing for mergers and abandoning proposals to restrict lending to overlapping businesses, which are expected to boost industry-wide credit growth by approximately 100 basis points.
Stable Margins and Asset Quality Expectations
Market observers will closely monitor management commentary on net interest margins (NIMs) and loan performance. Since the September quarter, the RBI has implemented a 25 basis points reduction in the repo rate, cumulatively totaling 125 basis points since February 2025. Despite these rate cuts, Motilal Oswal analysts note that SBI's structural advantages—including low-cost current and savings account (CASA) deposits, pricing discipline, and a diversified loan mix—provide confidence that margins can remain resilient, potentially staying above 3% in Q4 FY26.
In Q2FY26, SBI reported a nearly 13% year-on-year loan growth to ₹44.19 trillion, with domestic advances rising by 12.3%. Including overseas operations, total loan growth reached 12.7%, culminating in an aggregate loan book of ₹44.2 trillion. Corporate loans expanded by 7%, while retail loans saw a more significant increase of 14% during the quarter.
Asset Quality and Credit Cost Outlook
Asset quality is anticipated to remain stable, with SBI's gross non-performing asset (NPA) ratio standing at 1.73% as of September. Elara Capital analysts, in a note dated 26 December, emphasized that asset quality should sustain due to curtailed slippages, steady recoveries, and upgrades, which will help maintain benefits on gross non-performing loans. With strong coverage levels, credit costs—referring to provisions and write-offs as a percentage of total assets—are expected to be contained.
Motilal Oswal reinforced this view, stating that asset quality remains a key strength for SBI, with credit costs in Q2FY26 at a benign 39 basis points, reflecting disciplined underwriting and consistent recoveries. The brokerage projects credit costs to remain low at 40-50 basis points over FY26-28. Additionally, Kotak Institutional Equities estimates slippages at about 0.8% of loans and does not foresee new concerns regarding unsecured lending for the bank.
As SBI prepares to unveil its Q3 results, investors and analysts will be keenly watching for insights into future growth trajectories, margin sustainability, and overall financial health in the evolving banking landscape.
