State Bank of India shares surged after reporting stronger-than-expected first-quarter results, with improved margins, resilient asset quality, and optimistic growth forecasts bolstering investor confidence.
State Bank of India shares were set to stay in focus on Monday after the lender posted a stronger-than-expected first-quarter result that pointed to firmer margins, resilient asset quality and steady loan growth. Motilal Oswal said the numbers suggested the bank had regained some operating momentum after a softer March quarter, with domestic net interest margins back at 3% and management aiming to hold that level through FY27.
The June quarter net profit rose 10.23% year on year to ₹21,121 crore, while net interest income climbed almost 15% to ₹46,992 crore. Operating profit increased 9.77% to ₹33,529 crore, and return on assets and return on equity came in at 1.11% and 17.87%, respectively. The bank’s whole-bank net interest margin improved by 5 basis points to 2.86%, supported by stronger treasury gains and tighter control over costs.
Analysts said the improvement in margins was helped by a better funding mix and easing pressure from deposit repricing. Motilal Oswal said SBI expects to protect spreads by shifting floating-rate corporate loans towards MCLR-linked lending, while also leaning more heavily on retail and MSME loans to support both margins and fee income. The brokerage also pointed to healthy credit growth and asset quality, with the lender’s loan book expanding briskly and slippages remaining manageable for the season.
Market watchers have also been watching SBI’s deposit franchise closely, because slower growth in low-cost CASA deposits than in advances could push the bank towards more expensive term deposits. Even so, analysts have remained constructive. Motilal Oswal kept a Buy rating and lifted its target price to ₹1,370, while other brokerages have also turned more positive on the stock after the earnings beat and the relatively limited pressure on margins compared with peers.
The upbeat tone around the quarter helped the stock trade firmer in early dealings, after it had already closed nearly 3% higher on Friday at ₹1,096.05 on the BSE. With the bank guiding for domestic margins above 3% and a credit-growth outlook of 14% to 15%, investors will now be watching whether SBI can sustain the recovery through the rest of the financial year.
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