State Bank of India reports strong Q3FY25 results with 84% surge in net profit

State Bank of India (SBI), India’s largest public sector bank, reported a remarkable financial performance for the third quarter of the fiscal year 2024–25 (Q3FY25), showcasing robust growth across key financial metrics. The bank recorded a net profit of ₹16,891 crore, marking an 84.32% year-on-year (YoY) increase, highlighting its strong profitability trajectory despite challenging macroeconomic conditions.

This significant growth was underpinned by higher operating income, prudent cost management, and improved asset quality. The operating profit rose to ₹23,551 crore, reflecting a 15.81% YoY increase, although it showed a sequential decline of 19.6% compared to the previous quarter. These figures position SBI as a dominant player in India’s banking landscape, driven by both traditional and digital banking growth strategies.

What drove SBI’s profitability growth in Q3FY25?

The bank’s Net Interest Income (NII), a key indicator of its core banking operations, grew by 4.09% YoY to ₹41,446 crore in Q3FY25. Despite the modest growth, there was a slight sequential decline of 0.42% compared to Q2FY25. This decline can be attributed to the compression in the Net Interest Margin (NIM), which stood at 3.01% for the whole bank and 3.15% domestically, reflecting a dip from the previous year’s figures.

However, SBI’s Return on Assets (ROA) and Return on Equity (ROE) improved significantly, with ROA reaching 1.04%, up 42 basis points (bps) YoY, and ROE soaring to 21.46% for the nine-month period ending December 31, 2024. This reflects the bank’s efficiency in generating profits from its asset base and shareholders’ equity, indicating strong operational performance.

How did SBI’s loan book and deposits perform?

SBI’s credit growth remained robust, with gross advances surpassing ₹40 lakh crore, marking a 13.49% YoY increase. This growth was driven by diversified lending across various segments:

• Domestic Advances grew by 14.06% YoY, reflecting strong demand in the Indian economy.
• SME Advances witnessed a stellar growth of 18.71% YoY, highlighting SBI’s focus on supporting small and medium enterprises.
• Agricultural Advances grew by 15.31% YoY, while Corporate Advances and Retail Personal Advances rose by 14.86% and 11.65% YoY, respectively.

On the deposit front, whole bank deposits grew by 9.81% YoY to ₹52.29 lakh crore. The Current Account Savings Account (CASA) deposits saw a modest growth of 4.46% YoY, with the CASA ratio declining to 39.20% from 41.18% a year earlier. This decline suggests a shift in depositor preference towards term deposits amid rising interest rates.

How did SBI manage its asset quality in Q3FY25?

SBI demonstrated commendable improvement in its asset quality, reflecting prudent risk management and effective recovery strategies. The Gross Non-Performing Asset (GNPA) ratio improved to 2.07%, down by 35 bps YoY, while the Net NPA ratio stood at 0.53%, improving by 11 bps YoY.

The bank’s Provision Coverage Ratio (PCR), including accounts under collection (AUCA), improved by 25 bps YoY to 91.74%, indicating a strong buffer against potential credit losses. The slippage ratio, which measures the rate at which loans turn into NPAs, also improved to 0.39% for Q3FY25, down from 0.58% in Q3FY24.

Furthermore, the credit cost—the cost of maintaining provisions for bad loans—stood at 0.24%, reflecting a stable risk environment and efficient credit monitoring mechanisms.

What role did digital channels play in SBI’s growth?

SBI’s digital transformation initiatives continued to gain traction, with the bank leveraging its flagship digital platform, YONO (You Only Need One), to acquire 64% of new savings bank accounts digitally. This reflects the growing adoption of digital banking services among customers.

Moreover, the share of alternate channels in total transactions increased from approximately 97.7% in 9MFY24 to 98.1% in 9MFY25, underlining SBI’s commitment to enhancing customer convenience and operational efficiency through digital innovation.

How strong is SBI’s capital position?

SBI maintained a healthy capital position, with the Capital Adequacy Ratio (CAR) standing at 13.03% as of December 31, 2024. The Common Equity Tier-1 (CET-1) ratio was at 9.52%, while the Tier-1 ratio stood at 10.85%. Although there was a slight decline in the CAR compared to the previous quarter, the ratios remain well above the regulatory requirements, ensuring the bank’s resilience against financial shocks.

What’s ahead for SBI?

SBI’s Q3FY25 performance highlights its strong fundamentals, diversified growth strategy, and effective risk management. The bank’s ability to deliver robust profitability, maintain healthy asset quality, and drive digital transformation positions it well for sustained growth in the coming quarters.

However, challenges such as narrowing NIMs, fluctuations in deposit growth, and potential macroeconomic headwinds could test the bank’s resilience. SBI’s focus on technology-driven growth, prudent lending, and cost optimisation will be key to navigating these challenges and maintaining its leadership in the Indian banking sector.