SBI Targets Sustained Over 1% Return on Assets in FY26 Amid Margin Pressures
The State Bank of India (SBI) is poised to sustain a return on assets (RoA) exceeding 1% in the fiscal year 2026, despite anticipated challenges from a declining interest rate environment. Chairman C S Setty made this announcement during a recent briefing with analysts, where he also emphasized the bank’s commitment to achieving a return on equity (RoE) of over 15%. Setty noted that while the easing of the repo rate could affect net interest margins, SBI plans to adjust its deposit rates accordingly to safeguard its margins.
Financial Performance and Profitability
In the financial year 2025, SBI reported an improvement in its return on assets, rising from 1.04% to 1.10%. The bank’s return on equity remained stable at approximately 20%. SBI’s balance sheet expanded significantly, reaching โน66 lakh crore, with operating profits surpassing โน1.1 lakh crore. The net profit for the year hit a record โน70,901 crore, marking a 16% increase from the previous year’s โน61,077 crore. Setty reiterated the bank’s strategy to enhance its leadership in current and savings accounts, focusing on customer service and strengthening its branch network.
Asset Quality and Non-Performing Assets
SBI has made notable progress in improving its asset quality, with gross non-performing assets (NPAs) declining to 1.82% and net NPAs falling to 0.47% as of March 2025. Setty highlighted that this marks the first instance of both the gross and net NPA ratios dipping below 2% and 0.5%, respectively, amidst a loan book exceeding โน42 lakh crore. The bank reported fresh slippages amounting to โน4,222 crore for the quarter, primarily from the SME, agriculture, and personal loan sectors. However, it successfully recovered โน572 crore of these loans in April, reclassifying them as performing assets.
Capital Adequacy and Future Growth
The SBI board has approved a provision to raise up to โน25,000 crore in equity capital. Setty clarified that the bank does not currently require additional capital for loan growth, as it can support up to โน8 lakh crore with existing buffers. He expressed confidence in the bank’s profitability and growth profile, stating that there is sufficient headroom to meet business growth requirements. As of March 31, the overall capital adequacy ratio stood at 14.25%, with a core Tier-1 buffer of 10.81%. Setty acknowledged that this buffer is slightly lower than that of some peers but indicated that the bank remains open to raising capital if market conditions and business needs necessitate such action.
Observer Voice is the one stop site for National, International news, Sports, Editorโs Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
