Treasury, Forex Gains Help SBI Post 10% Growth in Q1 Net Profit; Core Income Contracts

State Bank of India on Friday reported a 9.71% increase in its consolidated net profit to ₹21,201 crore in the June 2025 quarter, helped by a handsome performance on the treasury and forex income.

On a standalone basis, the country's largest lender's net profit grew to ₹19,160 crore from ₹17,035 crore in the year-ago period.

Despite an 11.6% jump in overall advances, the core net interest income declined by 0.13% to ₹41,072 crore, as net interest margins contracted by 0.33 per cent to 3.02%, following the RBI's deep rate cuts and the time taken for deposit rate repricing impacted the spreads.

Its chairman CS Setty told reporters that the NIMs will follow a U-shaped trajectory in FY26, pointing out that there will be challenges on NIMs in the second quarter before the number inches up, and added that it aims to have a NIM of 3% for FY26 on an annual basis.

A 55% jump in overall non-interest income at ₹17,346 crore helped the bank deliver its profit growth for the quarter.

This was led by a 352% rise in forex income at ₹1,632 crore and the profit on sale of investments being 144% higher at ₹6,326 crore.

Additionally, restricting growth in operating expenses, which were up 7.88% to ₹27,874 crore, also helped the bottomline.

From a loan growth perspective, Setty said the bank is maintaining its target of growing at 12% for FY25. Corporate advances increased by 5.7%, and the domestic retail segment rose 12.56%, and overseas book climbed 14% year-on-year during the reporting quarter.

The chairman said the bank has a pipeline of ₹7 lakh crore, including proposals and cleared loans yet to be disbursed, and the current uncertainties stemming from geopolitical issues are delaying disbursements.

The bank is hoping for an acceleration in corporate loan disbursements in the remainder of the year and close FY26 with a 10% loan growth in the segment, he said.

Setty said companies are not investing due to a lack of clarity on the consumption demand front, and sectors like renewable power and data centres, which are seeing the maximum credit demand at present.

Acknowledging that the bank has exposures to the 4-5 sectors directly impacted by the US move on tariffs, he said the banking sector will not be impacted by the measures unleashed by the Trump administration as its overall contribution to bank credit is under 2%.

The uncertainty over the tariff issue will have a greater impact because businesses are deferring their investment decisions, Setty said.

"The narrative is more damaging. I think that it needs to be addressed," he said.

Its managing director Ashwini Kumar Tewari said the bank expects the current uncertainties to settle down by the third quarter.

SBI will not face any impact of IT sector layoffs because of its diversified book, and much of the personal loans it gives are to government servants.

Setty also said the start of the festive season will help grow the retail loans portfolio, and the bank is very keen to grow the unsecured book within that.

On the asset quality front, the bank's gross non-performing assets ratio was unchanged over the last quarter at 1.83%, and Setty reiterated that the idea is to keep it under 2% across cycles.

The fresh slippages came at ₹7,945 crore, and Setty explained that the first quarter sees elevated levels on the number and that over Rs 1,600 crore of loans classified as bad as on June 30 have already returned to performing status by now.

The overall provisions stood at ₹4,759 crore against ₹3,449 crore in the year-ago period.

The deposit growth came at 11.66%, and Setty said that the overall cost of deposits has peaked now.

Its overall capital adequacy stood at 14.63% as of June 30, with the core tier-I ratio at 11.10%.

Among its subsidiaries, SBI Life's PAT grew to ₹594 crore from ₹520 crore for the quarter, SBI Card declined to ₹556 crore from ₹594 crore in the year-ago period, and the general insurance arm saw a marginal rise at ₹188 crore.

The SBI scrip closed 0.09% down at ₹804.55 apiece on Friday against a 0.95% correction on the benchmark.