State Bank of India (SBI) shares fell around 2% in early trade on Monday after the country’s largest lender reported mixed Q4 FY25 results, sparking a cautious response from investors and analysts.
Q4 Performance: Profit Declines Despite Income Growth
SBI posted a 10% year-on-year drop in net profit for the March quarter, falling to ₹18,643 crore from ₹20,698 crore a year earlier.
This decline was primarily due to higher operating expenses and a significant rise in provisions for potential bad loans, which offset a modest 2.7% increase in net interest income to ₹42,775 crore. The bank’s domestic net interest margin (NIM) slipped 32 basis points year-on-year to 3.15%, reflecting ongoing margin pressures in a competitive lending environment.
Asset Quality and Dividend
Despite the profit miss, SBI’s asset quality showed improvement. Gross non-performing assets (NPA) declined to 1.82% from 2.24% a year ago, and net NPA fell to 0.47%. The provision coverage ratio stood at 74.42%, indicating prudent risk management.
The board also declared a dividend of ₹15.90 per share for FY25 and approved a plan to raise up to ₹25,000 crore in equity capital during FY26, signaling confidence in future growth.
Analyst Reactions: Outlook Remains Cautious
While most brokerages maintain a positive long-term outlook on SBI, several have trimmed their earnings estimates for the next two years, citing ongoing margin compression and slower loan growth.
Some analysts note that treasury gains and other income helped cushion the impact of higher expenses, but the absence of one-time provision write-backs and the likelihood of further rate cuts could keep margins under pressure.
Brokerages such as Motilal Oswal and Nuvama Institutional Equities have reiterated “buy” ratings but have reduced their target prices and earnings projections.
The consensus remains that SBI’s strong asset quality and leading market position support its long-term prospects, but near-term performance may remain subdued as the bank navigates a softer interest rate environment.