State Bank of India (SBI) reported a modest increase in net profit for the January-March quarter (Q4FY26) on Friday, with earnings rising 5.58 percent year-on-year to ₹19,684 crore. However, this represented a sequential decline of 6.39 percent from the previous quarter. For the full fiscal year 2026, the country’s largest lender posted its highest-ever annual net profit of ₹80,032 crore, marking a 12.9 percent increase compared to FY25.

The bank’s subdued Q4 performance was primarily attributed to a sharp decline in non-interest income, which dropped nearly 29 percent year-on-year to ₹17,314 crore. This contraction was largely driven by a ₹1,471 crore loss on the sale of investments, contrasting with a profit of ₹6,879 crore in the same period last year. Additionally, SBI faced a mark-to-market loss related to new regulatory limits on the net open position (NOP) for onshore rupee derivatives, imposed by the Reserve Bank of India (RBI) at $100 million starting at the end of March. While the total loss from this was about ₹100 crore, only ₹57 crore will be reflected in Q1FY27 results.

Net interest income (NII) for Q4 rose 4.13 percent to ₹44,380 crore, supported by a 16.9 percent year-on-year growth in gross advances, which reached ₹49.32 trillion. Deposits also increased 11.03 percent year-on-year to ₹59.75 trillion. Despite this growth, SBI’s net interest margin (NIM) declined by 21 basis points quarter-on-quarter, settling at 2.93 percent for Q4FY26. For the full year, NIM slid 18 basis points to 3.03 percent. SBI’s chairman, C S Setty, linked this margin compression partly to the December interest rate cut, which had a delayed impact on loans linked to the external benchmark-linked rate (EBLR) that became evident in the latest quarter.

On the asset quality front, the bank’s gross non-performing assets (NPAs) ratio improved slightly to 1.49 percent, down 8 basis points sequentially. Net NPAs remained steady at 0.39 percent. Loan loss provisions decreased 21 percent year-on-year to ₹3,140 crore in Q4, although fresh slippages rose to ₹5,521 crore from ₹4,458 crore in the previous quarter.

Following the earnings release, SBI shares fell sharply by 6.62 percent, closing at ₹1,019.55 on the Bombay Stock Exchange (BSE), the biggest drop in almost two years. Despite ongoing challenges such as the geopolitical tensions in West Asia and associated supply chain disruptions, Setty expressed confidence in maintaining the bank’s FY27 credit growth target of 13 to 15 percent. He also cautioned that should the conflict in West Asia persist beyond six months, it could have wider adverse effects on the Indian economy.

The SBI board declared a dividend of ₹17.35 per equity share alongside the earnings announcement. For the full fiscal year, total income grew by 5 percent to ₹551,648 crore, while consolidated net profit edged up 8 percent to ₹85,168 crore.