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State Bank of India's upcoming Q4 FY26 results, due May 8, 2026, are expected to show a contrast between temporary impacts on its investment portfolio and the strength of its core banking business. Investors will look past the anticipated drop in profits from treasury income to assess how well the bank can manage its profit margins amid rising costs and maintain its loan growth. The report will examine both the immediate financial numbers and underlying trends affecting SBI's future.
Analysts expect SBI's Q4 FY26 profits to be affected by a significant drop in treasury income, stemming from higher yields on government securities. This raises the value of new bonds but lowers the market value of existing ones in the bank's portfolio. Profit forecasts vary, with some expecting a decline while others see an increase, but the treasury impact is a key factor. Nomura predicts an 11% sequential profit drop, and Kotak Institutional Equities forecasts a 22% fall. SBI's stock has seen recent price swings, trading between ₹1,059.90 and ₹1,078 in early May 2026, within its 52-week range. While the broader NIFTY Bank index recently rose, SBI's stock fell 3.9% in the week leading up to May 5, 2026. Beyond treasury impacts, rising costs for deposits are a growing concern, potentially squeezing the bank's net interest margins (NIMs) even with strong loan expansion.
Despite these challenges, SBI's core banking operations are expected to show resilience. Net Interest Income (NII) is projected to grow around 9% year-on-year, fueled by strong loan growth estimates of 14% to 17%. In the previous quarter (Q3 FY26), SBI reported loan growth of 15.14% and deposit growth of 9.02%. This loan expansion outpaced deposit growth, a factor that will require careful management of NIMs. For comparison, HDFC Bank saw loan growth of about 11.9% and deposit growth of 11.6% in the same period. SBI's valuation, measured by its Price-to-Earnings (P/E) ratio around 10.8x to 12.3x, is in line with the public sector bank average but lower than private peers like HDFC Bank (21.29x). This suggests investors value SBI more cautiously than some private lenders. While public sector banks typically have NIMs between 2.7% and 3%—lower than private banks—all are experiencing margin pressure. SBI's Q3 FY26 NIM was 3.12%. The bank's Price-to-Book (P/B) multiple has also risen to about 2.41x, closing the gap with private banks.
Beyond treasury impacts, the sustained pressure on SBI's Net Interest Margins (NIMs) is a more significant worry. Competition for customer deposits is intensifying, pushing up funding costs. Fitch forecasts that average NIMs for Indian banks could decrease by about 10 basis points in FY26. While new loans might offer slightly higher yields, existing loan rates are mostly fixed, offering little immediate help. The gap between SBI's loan and deposit growth also adds to funding cost pressures. A year ago, SBI's Q4 FY25 net profit fell 10% and NIMs dropped 32 basis points, causing its share price to drop, showing that investors react negatively to shrinking margins. Separately, SBI faces substantial contingent liabilities of about ₹27.42 lakh crore. Allegations of financial misconduct involving former senior executives and issues like misuse of CSR funds introduce governance risks. A case where an SBI manager was accused of embezzling over ₹2.78 crore also points to potential internal control weaknesses. Even with a strong rally over the past year, SBI's P/E valuation might be high if the margin squeeze continues, especially given that the general industry P/E is lower than some estimates.
Looking ahead, investors will be watching for the board's decision on a dividend for FY26, which could boost the stock. Management's comments at the analyst call on May 8, 2026, will be important. Key points will be the expected path for NIMs amid changing interest rates, the bank's plans for attracting deposits, and its outlook on loan defaults and asset quality. Analysts generally hold a positive view, with many recommending 'Buy' or 'Strong Buy' ratings and average 12-month price targets suggesting potential upside of 13-20%. However, SBI's future earnings growth will depend on its success in managing margin pressures while continuing its strong loan growth and maintaining good asset quality.