SBI Q1 Preview: Rate pass through, margin squeeze likely to cap growth

SBI Q1 earnings preview: Flat profit, weak margins expected

India’s largest lender, State Bank of India (SBI), is likely to post modest growth in both net interest income (NII) and profit for the June quarter (Q1FY26), as elevated funding costs and the pass-through of recent rate cuts weigh on performance. The public sector bank is scheduled to announce its Q1FY26 results on August 8, 2025.

According to Moneycontrol's poll, SBI’s net interest income (NII) is likely to grow modestly by 3 percent year-on-year (YoY) to Rs 42,347 crore in Q1FY26, up from Rs 41,125 crore in the same quarter last year. The bank’s profit too is expected to rise marginally by 0.7 percent to Rs 17,166 crore in Q1FY26 versus Rs 17,035 crore in the year-ago period.

Estimates of analysts polled by Moneycontrol are shown to be in a diverse range, meaning any positive or negative surprises may elicit a sharp reaction in the stock price. Among the brokerages polled, Prabhudas Lilladher Capital rolled out the most bullish projections while Equirus Research forecasted the slowest growth for SBI.

What factors are driving the earnings?

Margin contraction: Analysts anticipate some pressure on margins, with Emkay forecasting a 28 basis point contraction in net interest margin (NIM) year-on-year. SBI’s NIM is expected to come in at 2.9 percent for Q1FY26, compared to 3.2 percent a year ago.

Stable asset quality: Analysts at Motilal Oswal expect gross non-performing assets (GNPA) to decline to 1.8 percent from 2.2 percent in the same period last year, while net NPA is likely to improve to 0.5 percent from 0.6 percent.

Healthy loan growth: Loan growth is expected to remain healthy, in the range of 13 to 14 percent year-on-year, led by strong traction in both retail (especially housing and auto) and corporate segments, according to Ashika Institutional Equities.

What to look out for in the quarterly show?

Market participants will closely monitor the management’s commentary on capital adequacy, loan book growth, and return ratios in the quarterly update.

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