Investors on Dalal Street were eagerly awaiting the March 2025 quarter results of SBI, the largest bank in the country, and the stock had gained 1.5 % on Friday to close at Rs 800. The quarterly results were declared on Saturday afternoon and it showed in a number of operational factors in which SBI has to catch up with smaller private sector rivals.
Performance in the March 2025 quarter
For a key performance metric, net interest margin (NIM), its domestic NIM was 3.15 % in the March 2025 quarter vis-à-vis 3.47 % a year earlier. Smaller rival, ICICI Bank, its NIM was 4.41 % in the March 2025 quarter vis-à-vis 4.4 % a year earlier. Meanwhile, Kotak Mahindra Bank, which also declared its quarterly results on Saturday, reported NIM of 4.97 % in the fourth quarter of FY25 vis-à-vis 5.28% a year earlier.
Meanwhile, SBI grew its total advances by 12 % y-o-y to Rs 42.2 lakh crore in the March 2025 quarter led by strong demand for credit from SMEs and agriculture sector. ICICI Bank’s total advances grew 13.3 % y-o-y in the March 2025 quarter to Rs 13.41 lakh crore while HDFC Bank, the largest private sector bank, gross advances grew 5.4 % y-o-y to Rs 26.4 lakh crore in the quarter under review.
Asset quality of the leading banks was more or less stable in the March 2025 quarter – SBI’s % of net NPAs was 0.47% in the March 2025 quarter vis-à-vis 0.57% a year earlier. Similarly, ICICI Bank’s % of net non-performing customer assets to net customer was 0.39 % in the fourth quarter of FY25 vis-à-vis 0.42% a year earlier. Kotak Mahindra Bank’s % of net NPA to net advances was 0.31 % in the March 2025 quarter vis-à-vis 0.34 % a year earlier.
SBI, however, grappled with its employee costs rising 10.1% y-o-y to Rs 18,005 crore in the fourth quarter of FY25, and it resulted in its standalone net profit declining nearly 10% y-o-y to Rs 18,642.6 crore in the quarter under review. ICICI Bank grew its standalone net profit nearly 18 % y-o-y to Rs 12, 629.6 crore in the March 2025 quarter while HDFC Bank’s standalone net profit rose 6.7 % y-o-y to Rs 17,616.1 crore in the quarter under review.
SBI also lagged behind its smaller rivals for return on assets (annualized) – for SBI it was 1.12 % in the March 2025 quarter while for ICICI Bank it was 2.52% for the March 2025 quarter and for HDFC Bank it was 1.94% in the quarter under review.
Outlook going forward
The RBI has taken several steps to improve liquidity over the past few months and stimulate the broader economy including cutting the repo rate by 25 basis points to 6 % in its last monetary policy review. Investors on Dalal Street are closely watching the impact of the growth risks from the tariff war that has been waged by the Trump administration over the past few weeks and its impact on the broader banking sector.
The RBI has also projected real GDP growth at 6.5 per cent for 2025–26 for the economy and that is broadly in tune with the previous financial year.
SBI has also got approval for fund raising up to Rs 25,000 crore during FY 26 via QIP or follow on public offer. Investors on Dalal Street will also be monitoring SBI on its effort to improve its various operational parameters and bring them in line with smaller private sector rivals.
SBI has more than 22,900 branches at the end of FY25 and they will play a key role in attracting low-cost deposits as well as growing the loan portfolio, going forward.
Investors on Dalal Street
SBI trades at a P/E of 9.5 times estimated standalone FY26 earnings while ICICI Bank trades at 19 times estimated standalone FY 26 earnings.
No doubt, SBI trades at a reasonable valuation however, investors could wait for lower valuations in this stock before considering a potential long term investment.
Disclaimer
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his dependents do hold the stocks discussed in this article.
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