State Bank of India Prepares for Q2FY26 Financial Results Amid Margin Pressures and Cost Challenges

State Bank of India (SBI) is set to announce its financial results for the second quarter of FY26, which ended in September 2025. Analysts predict that despite robust loan growth, the bank might report weak results. This is due to margin pressures and increased operating expenses. Rising funding costs and moderate treasury gains are expected to negatively affect net interest income and operating profits.

Prabhudas Lilladher anticipates SBI's Q2FY26 performance to be steady, with Net Interest Income (NII) projected at Rs 41,520 crore. This marks a slight increase of 1.1% quarter-on-quarter but remains nearly unchanged year-on-year. Provisions are expected to decrease by 7% sequentially to Rs 4,426 crore.

Loan growth is expected to remain strong at 12.3% year-on-year, reaching Rs 43.31 lakh crore, indicating sustained demand for credit. Asset quality is anticipated to improve, with the gross non-performing assets (NPA) ratio predicted to drop by 35 basis points year-on-year and 6 basis points quarter-on-quarter to 1.77%. Credit costs may ease to 0.41%, reflecting stable asset performance.

ICICI Securities forecasts a mixed performance for SBI in Q2FY26, with NII estimated at Rs 40,631 crore, down by 1.1% quarter-on-quarter and 2.4% year-on-year. Profit Before Tax (PBT) might decline by 17.2% quarter-on-quarter and 13.9% year-on-year to Rs 21,343 crore.

The Net Interest Margin (NIM) is expected to drop by 7 basis points sequentially to 2.83%, highlighting the impact of rising funding expenses. Advances are projected to rise gradually by 2.6% quarter-on-quarter and 11.6% year-on-year, reaching Rs 43.05 lakh crore.

Axis Direct predicts a weak Q2FY26 performance for SBI due to margin pressures, with NII anticipated at Rs 40,499 crore, down by 1.4% quarter-on-quarter and 2.7% year-on-year. Non-interest income is forecasted at Rs 15,172 crore, remaining almost unchanged annually but down by 12.5% sequentially due to subdued treasury gains.

SBI's Profitability Challenges

InCred Equities projects SBI's NII at Rs 40,800 crore, down by 0.6% quarter-on-quarter and 1.9% year-on-year due to margin pressures. Pre-Provision Operating Profit (PPOP) is likely to decline by 16.5% sequentially and 13% year-on-year to Rs 25,500 crore due to lower income and higher operating costs.

The bank's Profit After Tax (PAT) is anticipated at Rs 16,000 crore, a drop of 13% year-on-year and 16.8% quarter-on-quarter. Margins are expected to compress by six basis points sequentially to 2.84%, indicating the impact of rising funding costs.

SBI's Future Outlook

"With credit growth likely to pick-up in H2FY26 and FY27, SBI is better placed compared to other PSU and private banks due higher unsecured and NBFC exposure respectively," commented Prabhudas Lilladher analysts.

SBI's deposits and advances are expected to surge by 9% and 12% year-on-year respectively. Commentary on loan book growth projections, return ratios, and net interest margins (NIMs) are important factors for investors.

Despite profitability challenges, advances are predicted to jump by a solid 12% year-on-year and 3% quarter-on-quarter to Rs 43.22 lakh crore, demonstrating strong loan growth momentum.

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