State Bank of India (SBI), the country’s largest lender, reported a consolidated net profit of ₹21,504 crore for the second quarter of FY26, showing a 6.4% year-on-year (YoY) growth from about ₹20,220 crore in the same quarter last year. On a standalone basis, profit came in at ₹20,160 crore, which is 10% higher than the ₹18,331 crore reported in Q2 FY25.
The bank’s Net Interest Income (NII), the difference between what it earns on loans and what it pays on deposits, rose to ₹42,984 crore, marking a 3.3% YoY increase. However, the Domestic Net Interest Margin (NIM), which measures profitability from lending, declined to 3.09% from 3.27% a year ago. This 18-basis-point fall in margin indicates that while SBI continues to grow its loan book, the earnings from these loans are slightly lower due to rising funding costs or competitive pressure.
On the positive side, operating profit grew nearly 9% YoY, reaching ₹31,904 crore. The bank’s advances, or total loans given, rose by 12.73%, while domestic advances climbed 12.32%. Within this, retail loans – covering personal, home, auto, and education loans, jumped 15.09%, highlighting strong consumer demand and SBI’s deep reach in individual lending.
The data paints a mixed picture. SBI’s growth in overall business is solid, supported by strong credit demand, but the pressure on NIM shows that rising deposit costs and competition in the lending market are squeezing profitability. The gap between advances growth (12%+) and NII growth (3%) also suggests that while SBI is lending more, it’s earning relatively less per rupee lent.
For investors and analysts, this pattern signals a “volume strong, margin tight” story. SBI’s size allows it to grow steadily, but sustaining profit growth will depend on how effectively it manages interest spreads and funding costs in the coming quarters. The NIM trend becomes a key indicator to watch, if margins continue to fall, even double-digit loan growth might not translate into higher profits.
Another important factor to monitor is asset quality, though not mentioned in the brief, SBI’s non-performing assets (NPAs) and provision coverage determine how much of its income is lost to bad loans. Similarly, the cost-to-income ratio and CASA (Current and Savings Account) deposits will influence how cheaply SBI can raise funds.
In the broader economic context, SBI’s results mirror what’s happening across the Indian banking sector: strong credit demand, stable profits, but rising margin pressures due to tighter liquidity and competition for deposits. As the festive season drives higher retail borrowing, this momentum may continue in the short term, but sustaining it into FY27 will require careful balance sheet management.