As sentiment improves, SBI raises credit growth target

State Bank of India Boosts Credit Growth Outlook Amid Strong Quarterly Results

State Bank of India, the country's largest lender, has revised its credit growth guidance upwards to 13-15% for the financial year ending March 2026. This decision comes on the heels of a stellar third-quarter performance, where the bank reported its highest-ever quarterly net profit of Rs 21,028 crore, marking a 24.5% increase from the previous year. Chairman C S Setty highlighted the broad-based momentum in lending as a key driver behind the optimistic revision. Earlier, the bank had projected 12-14% growth, but recent trends prompted this adjustment. The improvement in economic sentiment, fueled by factors like favorable trade deals and consumption boosts from GST rationalization and income tax benefits, has played a crucial role in enhancing corporate appetite for credit.

The bank's net interest income climbed 9% year-on-year to Rs 45,190 crore, supported by healthy loan expansion and controlled funding costs. Even after accounting for a one-time special dividend of Rs 2,200 crore from SBI Mutual Fund, core profitability remained strong. Fee income surged from cross-selling services, government business, letters of credit, and recoveries from written-off accounts. Setty emphasized that growth was not confined to any single area but spanned retail, agriculture, MSMEs, and corporates, with the latter rebounding impressively at 13.4%. This holistic expansion underscores SBI's resilience in a competitive landscape.

Broad-Based Lending Surge Powers Revised Targets

SBI's retail, agriculture, and MSME segments—collectively known as RAM—delivered double-digit growth, continuing to anchor the bank's portfolio. Corporate credit, previously expected at 10-11%, exceeded forecasts, reflecting renewed vigor in the sector. The bank is also tapping into emerging opportunities like data centre financing and renewables, with its green portfolio hitting Rs one lakh crore. Asset quality improved further, with a lower gross non-performing asset ratio, easing provisioning needs and bolstering earnings stability. Total business crossed Rs 103 lakh crore, with deposits over Rs 57 lakh crore and advances surpassing Rs 46 lakh crore, maintaining a comfortable credit-deposit ratio of around 72%.

Setty noted during a media briefing, capturing the confidence in sustained momentum. Domestic net interest margins held steady at about 3.12%, aligning with long-term targets above 3%.

On the credit growth advice we had given 12 to 14% credit guidance earlier. We are revising that upwards to 13 to 15% based on the trend which we have seen in the current quarter so far. Growth has been secular and double-digit corporate credit growth should continue,

Strategic Focus on Deposits and Future Growth

While prioritizing loan expansion, SBI is intensifying deposit mobilization efforts, aiming for 9-10% growth in FY26. The bank is strategically pivoting from costly wholesale deposits to retail term deposits and low-cost current and savings accounts, or CASA. This shift yielded 10% growth in current account balances despite market challenges, thanks to robust branch-level engagement. Such measures ensure liquidity without compromising margins. Looking ahead, SBI anticipates revisiting its full-year guidance next quarter, buoyed by positive investment climates from recent trade announcements. The bank's massive scale positions it well to capitalize on India's economic upswing.

This performance has resonated positively with investors, lifting share prices and drawing analyst upgrades. SBI's ability to balance aggressive lending with prudent risk management exemplifies its leadership in India's banking sector. As sentiment continues to brighten, the revised targets signal broader optimism for credit demand and economic recovery.

In summary, SBI's upward revision of its credit growth target to 13-15%, driven by record Q3 profits, broad-based lending, and improving sentiment, highlights the bank's strong positioning for FY26 amid a favorable economic backdrop.