State Bank of India (SBI), India’s largest lender by assets, reported a 14.3% year-on-year increase in standalone net profit to ₹23,038 crore for the second quarter of FY2026-27. The bank had reported a net profit of ₹20,160 crore in the corresponding quarter last year. Growth was supported by higher net interest income, lower provisioning expenses and a one-time gain from the sale of a stake in SBI Funds Management. The result reflects continued strength in the bank’s lending business, even as other income declined during the quarter.
SBI’s net interest income (NII) increased 14.7% to ₹49,143 crore, while provisions and contingencies fell nearly 22% to ₹4,217 crore. Asset quality also improved, with the gross non-performing asset ratio declining to 1.39% from 1.73% a year earlier. The bank’s loan book expanded 18.2% year on year, while deposits grew 12.3%. However, the quarter also included a substantial one-time gain from a stake sale, making it important to distinguish recurring banking income from exceptional contributions to profitability.
SBI Q2 FY27 Results: Key Financial Highlights
SBI’s September-quarter performance showed growth in profitability and core interest income, alongside lower provisions and improved asset quality.
| Financial metric | Q2 FY27 | Q2 FY26 | Year-on-year change |
|---|---|---|---|
| Standalone net profit | ₹23,038 crore | ₹20,160 crore | +14.3% |
| Net interest income | ₹49,143 crore | ₹42,847 crore | +14.7% |
| Other income | ₹11,777 crore | ₹15,463 crore | -23.8% |
| Provisions and contingencies | ₹4,217 crore | ₹5,400 crore | -21.9% |
| Gross NPA ratio | 1.39% | 1.73% | Improved |
| Net NPA ratio | 0.36% | 0.42% | Improved |
| Return on assets | 1.19% | 1.17% | Improved |
Figures are standalone unless otherwise specified. Percentage changes are year-on-year.
The 14.3% profit increase was achieved despite a decline in other income. Lower provisions and higher NII helped offset that weakness.
Net Interest Income Rises 14.7% to ₹49,143 Crore
Net interest income represents the difference between the interest a bank earns from loans and investments and the interest it pays on deposits and borrowings.
SBI reported NII of ₹49,143 crore in Q2 FY27, compared with ₹42,847 crore in the year-ago quarter. This represents an increase of 14.7%.
On a sequential basis, NII increased 4.6% from ₹46,992 crore in Q1 FY27.
The improvement indicates that SBI continued generating higher interest income from its expanding loan portfolio. Lending to businesses, small and medium enterprises, housing customers and vehicle borrowers supported credit demand across the banking sector.
However, NII growth should be considered alongside net interest margin (NIM), which measures how efficiently a bank earns from its interest-bearing assets relative to its funding costs. Deposit rates and competition for customer savings remain important factors influencing margins.
Provisions Fall 21.9%, Supporting Profit Growth
A major contributor to SBI’s profit growth was the decline in provisions and contingencies.
The bank’s provisions fell to ₹4,217 crore in Q2 FY27 from ₹5,400 crore in Q2 FY26, a reduction of 21.9%.
Sequentially, provisions declined 16.4% from ₹5,047 crore in Q1 FY27.
Banks set aside provisions to cover potential losses from bad loans and other financial risks. When expected credit losses decline, the amount charged against current earnings can also fall, supporting reported profitability.
The lower provisioning requirement helped SBI increase its net profit even though other income declined significantly.
However, lower provisions do not automatically mean that all credit risks have disappeared. Investors will continue monitoring fresh loan defaults, recoveries, restructuring and the bank’s ability to maintain adequate protection against future losses.
Asset Quality Improves as Gross NPA Falls to 1.39%
SBI reported further improvement in its asset quality during the September quarter.
The gross non-performing asset (GNPA) ratio declined to 1.39% as of September 30, 2026, compared with 1.73% a year earlier and 1.47% in the preceding quarter.
The net NPA ratio also improved to 0.36%, against 0.42% in September 2025 and 0.38% in June 2026.
| Asset quality indicator | Q2 FY27 | Q1 FY27 | Q2 FY26 |
|---|---|---|---|
| Gross NPA ratio | 1.39% | 1.47% | 1.73% |
| Net NPA ratio | 0.36% | 0.38% | 0.42% |
| Gross NPAs | ₹72,529 crore | — | — |
| Net NPAs | ₹18,546 crore | ₹19,158 crore | ₹18,460 crore |
| Provision coverage ratio | 74.43% | — | — |
Gross NPAs represent loans where borrowers have stopped making payments for the prescribed period. Net NPAs account for provisions already set aside against those bad loans.
The decline in both ratios indicates an improvement in the overall quality of SBI’s loan portfolio. Gross NPAs also declined 4.9% year on year and 2.3% sequentially to ₹72,529 crore.
The provision coverage ratio stood at 74.43%, indicating the extent to which the bank has provided for its gross bad loans.
SBI’s Loan Book Expands 18.2% to ₹51.54 Trillion
SBI’s total advances increased 18.2% year on year to ₹51.54 trillion as of September 30, 2026, compared with ₹43.62 trillion a year earlier.
Deposits grew 12.3% to ₹62.78 trillion from ₹55.92 trillion.
| Banking metric | September 30, 2026 | September 30, 2025 | Growth |
|---|---|---|---|
| Total advances | ₹51.54 trillion | ₹43.62 trillion | +18.2% |
| Total deposits | ₹62.78 trillion | ₹55.92 trillion | +12.3% |
The faster growth in advances compared with deposits highlights the importance of continued deposit mobilisation. Banks need a stable funding base to support lending without allowing their funding costs to rise excessively.
Demand from businesses and households remained strong during the quarter. Corporate lending, SME financing, housing loans and vehicle credit were among the areas supporting India’s broader banking credit growth.
For SBI, sustaining this expansion while maintaining asset quality and managing deposit costs will be important for future earnings.
SBI Records One-Time Gain From SBI Funds Management Stake Sale
Another important factor behind SBI’s quarterly earnings was a one-time gain of ₹7,288 crore from the sale of a nearly 6% stake in SBI Funds Management.
The transaction included a pre-IPO placement and contributed to the bank’s reported earnings during the quarter.
SBI also divested a 0.65% stake in the National Stock Exchange during its IPO. However, Reuters reported that the proceeds from this transaction were credited to capital reserves rather than being routed through the profit-and-loss account.
These transactions should be distinguished when analysing SBI’s recurring profitability. A stake-sale gain can significantly support earnings in a particular quarter, but it does not necessarily represent income that the bank can generate repeatedly through normal lending operations.
This is particularly relevant because SBI’s other income declined 23.8% year on year to ₹11,777 crore, compared with ₹15,463 crore in Q2 FY26.
The combination of lower other income, higher NII and reduced provisions provides a more complete picture of the bank’s performance than net profit alone.
What SBI’s Q2 Results Mean for the Banking Sector
SBI’s results offer an indication of broader trends in India’s banking industry. Credit demand remains healthy, supported by lending to businesses and households. At the same time, improving asset quality is helping banks manage credit costs and maintain profitability.
However, deposit mobilisation remains an important challenge. If loans grow faster than deposits for an extended period, banks may need to offer more attractive deposit rates or seek alternative funding sources. This can increase the cost of funds and put pressure on NIM.
For SBI, the key performance indicators to watch in the coming quarters include loan growth, deposit growth, NIM, fresh slippages, recoveries and credit costs.
The Bigger Picture
SBI’s Q2 FY27 results show a combination of strong core interest-income growth and improving asset quality. The 14.3% increase in net profit was supported by a 14.7% rise in NII and lower provisions. However, the one-time SBI Funds Management stake-sale gain also contributed to the quarter’s earnings, while other income declined.
The results highlight the importance of looking beyond headline profit growth when evaluating a bank. Sustainable earnings depend on the ability to expand lending, mobilise deposits, protect margins and control bad loans. SBI’s performance across these areas will determine whether its current growth can be maintained.
Looking Ahead
SBI enters the second half of FY2027 with an expanding loan book and improved reported asset quality. The bank’s ability to maintain credit growth while securing deposits at competitive costs will be important for its interest margins. Investors will also monitor whether provisioning requirements remain controlled and whether the improvement in bad-loan ratios continues.
The next few quarters will help establish how much of SBI’s earnings growth comes from recurring banking operations rather than exceptional transactions. With the one-time stake-sale gain providing additional support in Q2, future profit comparisons will need to account for this effect. Continued NII growth, stable margins and lower credit costs will remain central to the bank’s financial performance.
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