SBI Q3 Results: Profit Soars by 84%, But Net Interest Income Falls Short

Strong Profit Growth but NII Below Expectations

State Bank of India (SBI), the country’s largest lender, released its financial results for the October-December 2024 quarter, showcasing an 84% year-on-year (YoY) surge in net profit to ₹16,801 crore. This figure exceeded analyst expectations of ₹16,099 crore, underscoring the bank’s solid earnings performance. However, the lender’s Net Interest Income (NII), a key indicator of core earnings, grew by 4.1% YoY to ₹41,446 crore, falling short of the estimated ₹42,592 crore projected in a CNBC-TV18 poll.

Stable Asset Quality Amid Strong Loan Growth

Despite missing NII expectations, SBI’s asset quality remained stable. The Gross Non-Performing Assets (NPA) ratio improved slightly to 2.07%, down from 2.13% in the previous quarter. Meanwhile, the Net NPA ratio stayed unchanged at 0.53%, reflecting robust risk management.

Provisions for bad loans increased to ₹911 crore, higher than the ₹688 crore recorded in the same period last year but significantly lower than the ₹4,506 crore provisioned in the September quarter. This decline signals improved credit health and lower default risks.

SBI also reported a 14% YoY loan growth, indicating strong demand for credit. In contrast, deposit growth stood at 10%, reflecting a more measured expansion in savings and investment inflows.

Net Interest Margin Decline and Market Reaction

The Net Interest Margin (NIM), a key profitability metric, slipped to 3.01%, down from 3.14% in the previous quarter. The decline suggests pressure on interest earnings despite overall profitability growth.

Following the earnings announcement, SBI’s stock traded 1.8% lower at ₹752.7, reflecting investor concerns over NII performance and margin compression.

Looking Ahead: What’s Next for SBI?

While the sharp rise in net profit and stable asset quality present a strong financial outlook, the softer-than-expected NII and margin decline highlight potential challenges ahead. Loan growth remains promising, but sustaining profitability amid fluctuating interest rates will be crucial for India’s largest lender.

Market participants will closely watch how SBI navigates interest rate movements and economic uncertainties in the coming quarters. Investors and analysts alike will keep an eye on upcoming strategies to improve NII and maintain operational efficiency in an evolving financial landscape.