SBI Q3 Results: Record Profit of ₹21,028 Cr Spurs Target Upgrades

Introduction

State Bank of India (SBI), the country's largest lender, announced a stellar performance for the third quarter of fiscal year 2026, posting its highest-ever quarterly net profit. The robust results, which surpassed analyst expectations, were driven by healthy loan growth, stable margins, and a significant improvement in asset quality. Following the announcement, the bank's shares saw a positive reaction, and several brokerage firms upgraded their price targets, reinforcing confidence in the public sector bank's growth trajectory.

A Record-Breaking Quarter

SBI reported a standalone net profit of ₹21,028 crore for the quarter ending December 31, 2025, a substantial 24.5% year-on-year increase from ₹16,891 crore in the same period of the previous year. This performance was underpinned by steady growth in core income. The Net Interest Income (NII) grew by 9% year-on-year to ₹45,190 crore. The bank's pre-provision operating profit (PPOP) surged by nearly 40% YoY, a result of a 66% jump in other income and disciplined control over operating expenses, which grew by only 6%.

Strong Growth in Loans and Deposits

SBI demonstrated impressive momentum in its lending operations, with domestic loan growth standing at 15.6% year-on-year. This growth rate outpaced that of the top four private sector banks and the top seven public sector undertakings. Corporate loans, a key segment, expanded by a healthy 13.4% YoY. On the liabilities side, deposit growth was recorded at 9% YoY, reaching over ₹57 lakh crore. The bank's credit-to-deposit ratio crossed the 80% mark for the first time since FY16, settling at 81%.

Asset Quality Reaches a Two-Decade High

One of the most significant highlights of the quarter was the marked improvement in asset quality. SBI's Gross Non-Performing Assets (GNPA) ratio declined to 1.57% from 1.73% in the previous quarter, reaching its lowest level in nearly two decades. The Net Non-Performing Assets (NNPA) ratio also eased to 0.39% from 0.42% sequentially. This improvement was supported by contained slippages and a low credit cost of just 0.29%, reflecting the bank's effective risk management practices. The provision coverage ratio remained strong at 92.37%, providing a substantial cushion against potential credit losses.

Stable Margins and Upgraded Outlook

Despite a challenging interest rate environment, SBI maintained stable margins. The Net Interest Margin (NIM) for the quarter was 2.99%, a slight improvement from 2.97% in the preceding quarter. The bank's management expressed confidence in its ability to maintain NIM above 3% in the fourth quarter. Buoyed by the strong performance and positive economic outlook, SBI revised its domestic loan growth guidance for the full fiscal year 2026 upwards to 13-15%, from the earlier projection of 12-14%.

Brokerages Turn More Bullish

SBI's strong Q3 performance prompted a wave of positive revisions from equity research analysts. Multiple brokerage houses raised their price targets on the stock, citing the bank's all-around performance and strong growth visibility. The consensus among analysts points to a potential upside, with the highest target reaching ₹1,305.

Nuvama Institutional Equities hailed SBI's performance as the best among large banks and reiterated it as their top buy. Similarly, Motilal Oswal Financial Services highlighted the robust business growth and healthy asset quality, increasing its earnings estimates for FY27 and FY28.

Market Reaction and Management Commentary

Following the results, SBI's stock price surged, hitting a fresh 52-week high of ₹1,137. The market's positive reception reflects investor confidence in the bank's sustained operational strength. The management team sounded confident about the overall credit environment, noting a healthy corporate loan pipeline of ₹7.9 trillion. The bank aims to deliver a return on assets (RoA) of 1% through the cycle and expects to keep its cost-to-income ratio below 50% in the coming years.

Analysis and Forward Look

SBI's Q3 FY26 results underscore its ability to outperform peers, including major private banks, for the third consecutive quarter. The combination of strong credit growth, controlled operating expenses, and pristine asset quality positions the bank favorably. While some analysts believe a significant part of the stock's re-rating has already occurred, further upside is expected to be driven by consistent earnings growth rather than multiple expansion. The bank's leadership in both corporate and retail lending, coupled with ample liquidity, provides a solid foundation for future performance.

Conclusion

State Bank of India has delivered an exceptionally strong quarter, setting new records in profitability and demonstrating fundamental strength across key metrics. The positive revisions from brokerages and the confident management outlook suggest that the momentum is likely to continue. As India's largest lender, SBI is well-positioned to capitalize on the country's economic growth, making it a key stock to watch in the banking sector.