Aniket PujariMumbai: India’s largest lender State Bank of India (SBI) on Saturday raised its FY26 loan growth guidance by 100 basis points to 13-15% on the back of trade deals and announcements in the recent Union Budget.
“I see many areas where SBI is well positioned to take advantage of the emerging scenario,” C.S. Setty, chairman, SBI told reporters after announcing the bank’s December quarter results.
Setty said trade deals will not just benefit corporates but a large number of small businesses as well.
On Saturday, India and the US agreed on an interim trade framework that advances their ongoing bilateral trade agreement (BTA) talks.
So far, India has signed trade deals with the UK and Oman, while a trade deal with the European Free Trade Association (EFTA) came into effect from 1 October. That apart, trade deals with New Zealand and the European Union have been concluded.
The bank is witnessing a rebound in corporate credit growth, backed by sectors like oil and gas, infrastructure and metals, large non-bank financiers, power, among others. Corporate loans now constitute a little over 33% of its total book.
SBI’s loans to corporates grew 13.4% in the three months to December, which though lower than its total loan growth of 15.1%, was higher than the 7.1% growth witnessed in the September quarter. Setty said the bank saw a “robust rebound in corporate credit growth”.
The bank’s total loans stood at ₹46.8 trillion as on 31 December.
His deputy and one of SBI’s managing director Ashwini Kumar Tewari said the bank has a strong corporate loan pipeline. These include loans that have been sanctioned but not availed or utilised. As of 31 December, the pipeline stood at ₹7.9 trillion.
“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,” said Setty.
The bank also saw an increase in the share of top-rated borrowers or those rated AAA to 44% of the corporate loan book, as against 40% in the same period last year.
The bank, Setty said, is not chasing growth at the cost of margins. He said that the bank has “not compromised on margins” to grow its book and held on to its earlier margin outlook of over 3%. SBI is not in the game of, or in the competition for growing the book at any cost, said Setty.
Its domestic net interest margins — a key indicator of profitability — stood at 3.12%, up 3 basis points (bps) from the previous quarter. The bank’s net interest income stood at ₹45,190 crore, up 9% from the same period last year.
SBI’s loan growth in the December quarter was secular and not limited to any particular sector. While its retail loans grew 15%, agri loans and small businesses were up 16.6% and 21% respectively.
“We would like to grow in every area and our approach would be to see that every segment and every sector grows reasonably well,” said Setty.
With credit growth picking up and deposits still lagging, Setty pointed to the structural shift in saving patterns of households from bank deposits to areas like mutual funds.
“Structurally, we need to relook at our balance sheet composition,” said Setty, referring to the situation unfolding for the broader banking sector. “Banks will be able to access the bond (market), if not lower than the deposits, at least equivalent to the deposit cost, and that will give the facility and flexibility for the banks to structure their balance sheets.”
SBI, said Setty, plans to tap the bond market in FY27. The bank’s deposits grew 9% y-o-y to ₹57 trillion, and Setty refrained from any guidance on how it will perform later this year.
On Saturday, the bank reported a net profit of ₹21,028 crore for the three months to December, 24.5% higher than the same period last year, beating analyst estimates.
SBI was expected to report a profit of ₹17,810 crore in Q3 of FY26, according to consensus estimates from a Bloomberg poll of analysts.
Its other income rose 66% to ₹18,359 crore, while interest income was up 4.4% to ₹1.2 trillion. The bank also received a ₹2,200-crore dividend from its asset management arm SBI Funds Management. The bank’s asset quality also saw an improvement in the December quarter, with gross bad loans at 1.57% of total loans, down 16 bps from the previous quarter.
