State Bank of India (SBI) reported its highest-ever quarter profit, clocking Rs 21,028 crore in the three months to end-December on the back of strong growth in advances, stable margins and check in cost of funds.

The fee income, rise in recoveries from written off accounts, government business and cross-sell of insurance and mutual fund products also added to the state-owned lender’s kitty during the quarter. 

The 24.49% jump over the year-ago net profit of Rs 16,891 crore beat market expectations and indicated growth trends in the Indian economy.  

The state-owned bank earned a special dividend income of Rs 2,200 crore from SBI Mutual Fund. The recovery from the AUCA (advances under collection account) accounts during the fiscal third-quarter ended December was Rs 2,604 crore.

The bank’s fee income grew 15.65% YoY to Rs 8,404 crore in the quarter ended December 2025. 

“The bank has many levers and we will continue to use them. If you see, most of the segments have shown good growth - cross-sell, up-sell, government business, LC business, fee-based income in terms of processing charges, recovery in written off accounts and, more importantly, credit growth across segments,” SBI chairman CS Setty said.

The lender, he added, has focussed on moderating the cost of resources, which has given the uptick in net interest income (NII). 

NII and NIM

NII grew 9.04% year-on-year to Rs 45,190 crore at the end of the December quarter, due to a combination of cost of resources containment and credit growth. 

The bank’s net interest margin (NIM) declined to 2.99% from 3.01% a year ago. The lender is confident of maintaining it at these levels by keeping cost of funds under check. 

Total business

The bank’s total business crossed Rs 103 lakh crore in Q3, with deposits at Rs 57 lakh crore and advances at Rs 46.8 lakh crore.

Credit growth

The bank’s loan book grew 15.14% year-on-year to Rs 46.84 lakh crore, with retail advances comprising 41.70%, corporate at 33.42%, SME (small and medium enterprises) at 15.05% and agriculture at 9.83%.

The growth in advances continued to be led by retail which grew at 14.95% to Rs 16.64 lakh crore, followed by corporate loans at 13.37% to Rs 13.34 lakh crore. SME loans rose 21.02% YoY to Rs 6.01 lakh crore while agri grew 16.56% to Rs 3.92 lakh crore. 

"The bank has a strong loan pipeline, with about Rs 7 lakh crore loan in sanctions and a mix of unutilised working capital limits and term loans that are currently under disbursement. This will keep advances growing at a strong pace,” said Ashwini Kumar Tewari, managing director and in charge of corporate accounts at SBI. 

The country’s largest bank also raised its FY26 credit growth guidance to 13-15% from the earlier projection of 12-14%.

Deposit growth

The bank’s deposit growth lagged behind at 9.02% YoY to Rs 57.01 lakh crore. 

The cost of funds was under check, with the bank benefitting from the savings bank rate falling to 2.5% while current account grew at 10.32% YoY to Rs 3.14 lakh crore. Saving bank deposits rose 8.63% to Rs 18.25 lakh crore.

The low-cost CASA (current account savings account) deposits grew 8.88% YoY to 21.40 lakh crore as on 31 December 2025. 

The CASA ratio in the total deposit mix fell marginally to 39.13% at the end-December quarter compared to 39.20% a year ago.

“On the deposit side, we focus on CASA (current account savings account) and also on retail term deposits. We have not aggressively chased high-cost deposits but gone with the conservative card rate bulk deposits,” Setty said. 

Asset quality

The asset quality of the bank improved, with gross non-performing assets (NPAs) declining 50 basis points to 1.57% in the December quarter.

Net NPA was at 0.39% at the December-end quarter, improving from 0.53% a year ago.

Slippage ratio was at 0.40% for the quarter. 

The bank has had a bad loan run rate of Rs 2,000 crore a quarter. The outstanding gross NPAs at the end of the December quarter was Rs 73,637 crore, lower than the Rs 84,360 crore reported in the year-ago period.

The provision coverage ratio at 75.54% was up 88 basis points from the year-ago period.