SBI Elevates FY26 Loan Growth Projection to 13-15% on Trade Momentum and Economic Recovery
In a significant development, India's largest financial institution, the State Bank of India (SBI), has revised its loan growth guidance for the fiscal year 2026 upwards by 100 basis points to a robust 13-15%. This optimistic adjustment was announced on Saturday following the declaration of the bank's December quarter financial results, with Chairman C.S. Setty highlighting the favorable conditions emerging from recent trade agreements and Union Budget announcements.
Strategic Positioning in a Dynamic Economic Landscape
"I see many areas where SBI is well positioned to take advantage of the emerging scenario," stated Chairman C.S. Setty during a press briefing. He emphasized that the benefits of trade deals extend beyond large corporations to encompass a vast number of small businesses, thereby broadening the economic impact. This statement comes in the wake of India's interim trade framework agreement with the United States, which advances ongoing bilateral trade agreement (BTA) negotiations.
India's proactive trade diplomacy has yielded several key agreements, including finalized deals with the United Kingdom and Oman, and the implementation of a pact with the European Free Trade Association (EFTA) effective from October 1. Additionally, trade negotiations with New Zealand and the European Union have been successfully concluded, creating a conducive environment for business expansion.
Corporate Credit Rebound and Sectoral Strength
The bank is experiencing a notable resurgence in corporate credit growth, driven by sectors such as oil and gas, infrastructure, metals, large non-bank financiers, and power. Corporate loans now account for slightly over 33% of SBI's total loan portfolio. In the December quarter, corporate loans grew by 13.4%, a figure that, while lower than the overall loan growth of 15.1%, marks a substantial improvement from the 7.1% growth recorded in the September quarter. Setty described this as a "robust rebound in corporate credit growth."
As of December 31, SBI's total loans stood at an impressive ₹46.8 trillion. Ashwini Kumar Tewari, one of the bank's managing directors, revealed a strong corporate loan pipeline of ₹7.9 trillion, comprising sanctioned loans that have yet to be availed or utilized. "Economic activity has really picked up after GST rationalization, resulting in working capital utilization. We are seeing various sectors where long loans are being drawn and a good pipeline visibility is there," Setty elaborated.
Financial Performance and Prudent Growth Strategy
SBI's financial health showed marked improvement, with the share of top-rated AAA borrowers increasing to 44% of the corporate loan book, up from 40% in the same period last year. The bank remains committed to sustainable growth, as Setty affirmed that SBI is "not chasing growth at the cost of margins" and has maintained its margin outlook above 3%. Domestic net interest margins, a critical profitability indicator, rose to 3.12%, up 3 basis points from the previous quarter.
The bank's net interest income reached ₹45,190 crore, reflecting a 9% year-on-year increase. Loan growth in the December quarter was broad-based, with retail loans growing by 15%, agricultural loans by 16.6%, and small business loans by 21%. "We would like to grow in every area and our approach would be to see that every segment and every sector grows reasonably well," Setty noted.
Deposit Challenges and Future Strategies
With credit growth accelerating and deposit growth lagging at 9% year-on-year to ₹57 trillion, Setty pointed to a structural shift in household savings from bank deposits to alternatives like mutual funds. "Structurally, we need to relook at our balance sheet composition," he remarked, indicating that banks may increasingly turn to bond markets for funding. SBI plans to tap the bond market in FY27 to enhance balance sheet flexibility.
Impressive Quarterly Results and Asset Quality Enhancement
SBI reported a net profit of ₹21,028 crore for the December quarter, a 24.5% increase from the same period last year, surpassing analyst expectations of ₹17,810 crore. Other income surged by 66% to ₹18,359 crore, while interest income grew by 4.4% to ₹1.2 trillion. The bank also received a ₹2,200-crore dividend from its asset management subsidiary, SBI Funds Management.
Asset quality showed significant improvement, with gross non-performing assets declining to 1.57% of total loans, down 16 basis points from the previous quarter. This comprehensive performance underscores SBI's resilience and strategic foresight in navigating a rapidly evolving economic landscape.
