SBI expects slower loan growth of 12-13% in FY26 amid tariff-related risks

“Our earlier (loan growth) guidance was 14-16 percent and we are moderating that to 12-13 percent (for FY26). The system level credit growth probably would be 10-11 percent,” Setty told reporters after announcing the quarterly results.

Last month, US President Donald Trump had announced sweeping reciprocal tariffs on America’s major trading partners. The announcement, which sent ripples through financial markets across the globe, including in India, has increased the risk of global growth slowdown and an escalation of trade wars.

Setty said that the Indian economy is less impacted by the tariffs as it is primarily a domestic consumption driven economy and its exports to the US is also limited.

“But I think uncertainty on tariffs is going to impact the overall economic and investment scenarios. So from that background, we believe that there would be some moderation in the credit growth (in FY26),” Setty said.

In the financial year ended March 31, 2025, the bank’s gross advance grew by 12.03 per cent and deposits rose by 9.48 per cent.

The bank’s corporate loan book expanded by 9 per cent and its retail portfolio grew by 11.4 per cent.

Its corporate loan pipeline stands at Rs 3.4 lakh crore. Setty does not see any change in investment strategy of corporates on account of imposition of tariffs by the US.

“Everybody is watching how the global environment unfolds. The new investment announcement may not come immediately. But whatever commitments are there, we are seeing that nobody is going back on that,” he said.

The bank reported a 10 per cent drop in its net profit to Rs 18,643 crore in the quarter ended March 2025, compared to Rs 20,698 crore in the year-ago period. In the Q4 FY2024, the bank had a one-time write back on account of provisions in non-performing assets (NPA), which was not there in Q4 FY25. This resulted in a decline in profit in the March 2025 quarter.

For fiscal 2025, its net profit increased by 16.08 per cent to Rs 70,901 crore, compared to Rs 61,077 crore in FY2024.

The bank’s net interest income (NII) grew 2.69 per cent to Rs 42,775 crore, compared to Rs 41,655 crore. Domestic net interest margin (NIM) declined by 32 basis points to 3.15 per cent from 3.47 per cent. Setty sees some pressure on margins going ahead as the Reserve Bank of India (RBI) is expected to cut the repo rate in the upcoming policies.

The bank’s loan loss provision grew by 20.35 per cent to Rs 3,964 crore in the March 2025 quarter compared to Rs 3,294 crore in the same quarter of the previous fiscal.

Gross non-performing assets improved to 1.82 per cent from 2.24 per cent. Net NPA eased to 0.47 per cent from 0.57 per cent. The bank expects to maintain gross NPA at 2 per cent going forward.

The lender has received is board’s approval to raise equity capital for an amount up to Rs 25,000 crore in one or more tranches during FY26 through various modes, including qualified institutions placement (QIP) or follow-on public offer (FPO).

For FY2025, the bank’s board has declared a dividend of Rs 15.9 per equity share.