SBI Q2 profit rises 14% to Rs 23,038 crore as bad loans ease
State Bank of India's September-quarter profit rose 14.3% to Rs 23,038 crore and gross NPA fell to 1.39%, but one-time gains did the heavy lifting.
State Bank of India, the country's largest lender, reported a standalone net profit of Rs 23,038 crore for the July to September 2026 quarter, up 14.3% from a year earlier, in results announced on 3 November. Bad loans fell again, with the gross NPA ratio at 1.39%. But a closer look at the numbers, as reported by Kotak Neo and IIFL (India Infoline), shows that profit grew faster than the bank's core operating earnings, because one-time gains were much larger than a year ago.
What SBI reported for the September quarter
Net interest income (NII), the gap between what the bank earns on loans and pays on deposits, rose 14.7% to Rs 49,143 crore. Total advances (loans) grew 17.84% over the year, while deposits grew 12.27%, according to Kotak Neo's report. In Kotak Neo's table, loan losses and provisions were down 33.23% from a year earlier, and the bank's credit cost, the share of loans set aside for expected losses, was 0.22%, an improvement of 17 basis points. A basis point is one-hundredth of a percentage point.
Margins moved the right way. The domestic net interest margin was 3.11%, up 11 basis points from the June quarter, and the whole-bank margin was 2.94%, up 8 basis points on the quarter. Margin is the profit a bank keeps per rupee of earning assets, so even small moves matter for a balance sheet of this size. IIFL puts SBI's total business at about Rs 115 trillion, with deposits near Rs 63 trillion and advances near Rs 52 trillion.
The bank's capital position also improved. Kotak Neo reports a capital adequacy ratio of 16.09% and a common equity tier-1 ratio of 13.34%. Capital adequacy is the cushion of the bank's own money against its risk-weighted assets, and tier-1 is the highest-quality part of it.
Asset quality: the lowest gross NPA in years
Gross NPA, loans where borrowers have stopped paying for 90 days or more, fell to 1.39% from 1.47% in the June quarter. In rupees, IIFL reports gross NPAs of Rs 72,529 crore, down from Rs 74,272 crore. Net NPA, which subtracts the provisions already set aside, was 0.36%, down from 0.38%. Kotak Neo gives the provision coverage ratio, including written-off accounts, as 91.83%.
New slippages, meaning loans that turned bad during the quarter, were Rs 5,227 crore, according to IIFL. The two outlets differ on the slippage ratio. Kotak Neo reports 0.41% of loans, improved by 4 basis points, and other coverage cited by the outlets is not consistent on the comparison base. Treat the exact slippage ratio as unsettled until the bank's investor presentation is read in full.
Think of the NPA ratio as a smoke alarm. A reading of 1.39% on a Rs 52 trillion loan book means the alarm is quiet. It does not mean there is no fire: the figure is a snapshot, and slippages in smaller loan segments can build for several quarters before they show up.
Where the profit really came from
The numbers do not all tell the same story. IIFL reports operating profit of Rs 26,937 crore, down 1.4% from Rs 27,311 crore a year ago, and one-time (exceptional) gains of Rs 7,289 crore, compared with Rs 4,593 crore in the same quarter last year. On that reading, the jump in net profit leaned on the bigger one-time item.
Kotak Neo's report tells it differently: it says operating profit rose 7.28% to Rs 34,226 crore. The gap between the two figures is large, and the outlets do not explain it. It may reflect different definitions of operating profit, for example whether the one-time gain is included. Because the two reports disagree, this briefing uses the IIFL figures when it discusses the profit mix and flags the conflict. The bank's own exchange filing is the document that settles it.
What is clear on both accounts is that the reported profit of Rs 23,038 crore is a post-tax number, and that it was larger than most readers' expectations only because of items that may not repeat. The share price reflected some caution. Kotak Neo had the stock at Rs 964.55 in the afternoon of 3 November, down 2.27% on the day, and IIFL had it at Rs 973.75, down 1.34% at 2:48 pm. The timestamps differ, which explains the gap.
Lending growth: who is borrowing
Loan growth was broad. Kotak Neo and IIFL both report agriculture advances up 22.64% over the year and small and medium enterprise (SME) loans up 21.97%. Corporate loans grew 16.12% and personal retail loans 14.54%. IIFL adds that the retail, agriculture and MSME group together grew 17.34%, and that foreign-office lending in rupees grew 22.86%.
Loans growing 17.84% while deposits grow 12.27% is a gap worth watching. A bank funds loans from deposits, and when loans grow much faster, it must either attract deposits at higher rates or borrow elsewhere, both of which can squeeze margins. Kotak Neo notes that the share of low-cost current and savings deposits (CASA) fell to 38.32%, although it gives no earlier figure for comparison.
What it means for borrowers, depositors and the sector
For borrowers, a bank with falling bad loans and a strong capital cushion has room to keep lending, and loan growth of nearly 18% suggests it intends to. That can matter for small businesses and farmers, the two segments growing fastest. It does not by itself say whether SBI will cut or raise lending rates, which depend on the RBI's policy rate and on funding costs.
For depositors, the faster loan growth means banks need deposits. Competition for deposits is one of the reasons deposit rates have stayed firm across the sector, though SBI's own rate card is the thing to check before relying on that.
For anyone reading bank results, the lesson is to separate the engine from the extras. Net interest income and margins show how the lending business is doing. One-time gains show how the quarter was cushioned. A profit growth rate of 14.3% on a base that included a larger gain this year than last should be read next to operating profit, not instead of it.
Use the slider below to see how sensitive the gross NPA ratio is to new bad loans. It uses the figures above: gross NPAs of Rs 72,529 crore and a loan book of about Rs 52 trillion, which together give the 1.39% ratio. The extra bad loans are an example, not a forecast.
What to watch next
The bank's detailed investor presentation and exchange filing will settle the operating profit question and show the slippage ratio. Other large lenders are still reporting September-quarter results, and the pattern in deposits growth against loan growth will show whether SBI's gap is typical. The RBI's next monetary policy decision, and any change in the policy rate, will decide whether margins keep widening.
Key takeaways
- SBI reported a standalone net profit of Rs 23,038 crore for the September 2026 quarter, up 14.3% year on year, per Kotak Neo and IIFL.
- Gross NPA fell to 1.39% from 1.47% in the previous quarter, and net NPA to 0.36% from 0.38%.
- IIFL reports operating profit down 1.4% with exceptional gains of Rs 7,289 crore, while Kotak Neo reports operating profit up 7.28%; the exchange filing should settle the difference.
- Advances grew 17.84% against deposit growth of 12.27%, a gap that can pressure funding costs and margins.
- Agriculture and SME loans grew fastest, at 22.64% and 21.97%.
Sources
- [Kotak Neo: State Bank of India Q2 results and share price, November 2026](https://www.kotakneo.com/news/stocks/state-bank-of-india-q2-results-and-share-price-november-2026/)
- [IIFL: SBI Q2 FY27 results, net profit up 14.3% to Rs 23,038 crore, asset quality improves](https://www.indiainfoline.com/news/companies/sbi-q2-fy27-results-net-profit-up-14-3-to-rs-23038-crore-asset-quality-improves)
Tags: SBI Quarterly results Asset quality Banking Net interest margin