State Bank of India (SBI), the country's largest public sector lender, reported a standalone net profit of Rs. 20,160 crore for the second quarter of fiscal year 2026, a 9.97% year-on-year (YoY) increase that comfortably beat market expectations. The robust bottom-line figure was significantly boosted by a one-time exceptional gain from the sale of its stake in Yes Bank, while the bank's core operational performance remained steady with healthy loan growth and a remarkable improvement in asset quality.
The strong results were well-received by investors, with the stock rallying to a new 52-week high of Rs. 959.30 following the announcement, reflecting renewed confidence in the banking behemoth's trajectory.
Table of Contents
- Deconstructing the Profit Beat: One-Off Gain Masks Margin Pressure
- Asset Quality: The Unquestionable Star of the Quarter
- Business Growth: SBI Crosses Rs. 100 Trillion Milestone
- The Investor’s Bottom Line: A Story of Core Strength and One-Off Gains
- Frequently Asked Questions (FAQs)
While the headline profit number was impressive, a deeper analysis reveals a mixed picture. The profit beat was largely driven by a Rs. 4,593.22 crore exceptional gain from the divestment of a 13.18% stake in Yes Bank. Excluding this one-off item, the bank's core profitability would have shown a decline, highlighting the pressure on its core interest income.
Key Financial Highlights for Q2 FY26
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The bank's Net Interest Income (NII) grew by a modest 3.3% YoY, reflecting the pressure on Net Interest Margins (NIM), which contracted by 18 basis points to 3.09% due to the rising cost of deposits outpacing the increase in lending rates.
To evaluate how the stock has responded post its Q2 FY26 results and improved asset quality, check the latest SBI share price, detailed charts, and valuation ratios.
The most significant positive for investors was the continued and marked improvement in the bank's asset quality, which reached multi-year bests.
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Gross NPA (GNPA): The GNPA ratio improved significantly to 1.73%, down from 2.55% a year ago.
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Net NPA (NNPA): The Net NPA ratio stood at just 0.42%, a substantial improvement from 0.53% in the same quarter last year, indicating strong recoveries and disciplined underwriting.
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Provision Coverage Ratio (PCR): The PCR remained strong at 75.79%, providing a healthy buffer against potential bad loans.
This consistent improvement in asset quality reduces the risk profile of the bank and enhances the stability of its future earnings.
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Despite the margin pressure, the bank reported robust credit growth, with total advances increasing by 12.73% YoY. This growth was well-diversified across its key segments:
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SME advances grew by a strong 18.78% YoY.
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Retail Personal advances grew by 14.09% YoY.
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Agri advances grew by 14.23% YoY.
In a major achievement, the bank's total business crossed the Rs. 100 trillion milestone during the quarter, a testament to its massive scale and market leadership.
SBI's Q2 results present a multi-faceted picture for investors.
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Stellar Asset Quality: The sharp reduction in NPA ratios to multi-year lows is the biggest highlight, signaling strong risk management and a healthier loan book.
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Robust Credit Growth: The double-digit growth in advances shows that the bank continues to expand its market share and is a key beneficiary of India's economic growth.
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Margin Pressure is a Key Monitorable: The contraction in NIM is a key concern. Investors will be keenly watching the bank's ability to manage its cost of funds and improve margins in the coming quarters.
While the headline profit was flattered by a one-off gain, the underlying operational performance remains solid. The combination of strong loan growth and a dramatic improvement in asset quality provides a strong foundation for future earnings.
There’s an insightful video by CNBC Awaaz covering SBI’s Q2 FY26 results in detail — including profit growth, one-off gains, and key management commentary. It’s worth watching for a quick summary of the highlights.
1. What was SBI's net profit in Q2 FY26?
SBI reported a standalone net profit of Rs. 20,160 crore, a 9.97% increase year-on-year, which beat market estimates.
2. Why did SBI's profit increase so much?
The profit jump was significantly aided by a one-time exceptional gain of Rs. 4,593.22 crore from the sale of its stake in Yes Bank.
3. How did SBI's asset quality perform?
The asset quality showed remarkable improvement. The Gross NPA ratio fell to 1.73%, and the Net NPA ratio declined to a multi-year low of 0.42%.
4. What is happening with SBI's Net Interest Margin (NIM)?
The domestic NIM contracted by 18 basis points year-on-year to 3.09%, reflecting the pressure from the rising cost of deposits.
5. What is the investment outlook for SBI stock after these results?
For long-term investors, SBI remains a compelling investment, representing a blend of stability, growth, and attractive valuation. The strong asset quality and robust loan growth provide a solid foundation, even as near-term margin pressure remains a key factor to monitor.