State Bank of India (SBI), a Fortune 500 company, is a leading Indian multinational public sector banking and financial services institution headquartered in Mumbai. With a legacy spanning over 200 years, SBI is the most trusted bank in India, serving over 500 million customers. The bank boasts an asset base of over ₹61 trillion and operates through a vast network of 22,500 branches, 63,580 ATMs, and 82,900 BC outlets. SBI’s diversified portfolio includes subsidiaries such as SBI General Insurance, SBI Life Insurance, SBI Mutual Fund, and SBI Card. With a global presence across 241 offices in 29 countries, SBI continues to innovate and deliver sustainable, customer-centric banking solutions, upholding its core values of service, transparency, ethics, and sustainability.

 

 

Recommendation	Target Price	Time Horizon
BUY	Rs. 950.00	9-12 Months

Product and Services of the bank

1. Personal Banking: SBI offers loan products, Salary Packages, Digital Loans, NRI Business, and Wealth Management. It disbursed ₹1.97 lakh crore in home loans, ₹2.01 lakh crore in personal loans, and provided financial assistance to 1,26,717 students, serving 29.46 lakh home loan customers.
2. Corporate Banking: SBI’s corporate credit portfolio stands at ₹11.38 lakh crore. In FY2024, it funded 48 large projects through its Project Finance and Structuring SBU, serving the entire corporate ecosystem.
3. SME Banking: SBI’s SME portfolio exceeds ₹4 lakh crore with 20.53% growth in FY2024. The bank serves 20 lakh SME customers via 864 branches and 2,117 dedicated relationship managers.
4. Government Banking: SBI recorded a turnover of ₹65.55 lakh crore and added 2.43 lakh new pension accounts. The bank holds a 63% market share in central government business and supports e-governance initiatives.
5. International Banking: With 241 branches across 29 countries, SBI strengthens its global presence and offers comprehensive banking services internationally.
6. Rural Banking: SBI’s agricultural lending exceeds ₹3 lakh crore, with 20,054 loans under government schemes. The bank holds a 29% market share in NRLM loans and operates 152 Rural Self-Employment Training Institutes.

Indian Economy Overview

India’s economy is projected to grow at 6.5% in FY2025, supported by strong domestic demand, strategic government investments, and growth across key sectors. The industrial sector has shown resilience, with manufacturing and mining activities contributing to an uptick in the Index of Industrial Production (IIP). The services sector, particularly trade, transport, and financial services, continues to play a vital role in driving economic expansion. Inflation has moderated significantly to 3.61% in Q3 FY2025, driven by a sharp fall in vegetable prices, which allows the Reserve Bank of India (RBI) to maintain stable interest rates.

Indian Banking Sector Performance

Net Interest Income (NII) of select Scheduled Commercial Banks (SCBs) grew at a slower pace of 8.7% in Q3FY25, reaching Rs. 1.28 lakh crore, compared to 9.25% in Q3FY24 and the Net Interest Margin (NIM) for SCBs reduced on a YoY basis by 7 bps and stood at 3.36%, This slowdown can be attributed to slow credit growth amidst stress in unsecured loan segments, increased risk weights and a reduction in the interest rate spread.

SCBs reported a rise of 10.3% YoY basis in advances for Q3FY25, compared to 11.8% in Q3FY24. PVBs advances increased by 8.7% YoY basis while PSBs grew comparatively higher at 12.7%. Meanwhile, deposits grew at 11.7% YoY basis in Q3FY25. CASA ratio continued to decline and reached 34.2% in Q3FY25. NII of PVBs grew 8.8% YoY basis however and PSBs increased by 8.3% in Q3FY25. The moderate growth was driven by loan mix and credit expansion, which was partially offset by an increased cost of funds.

 

The banking sector has continued to witness a reduction in NIMs in Q3FY25. In Q3FY25, deposit offtake has continued to outpace credit growth. Lenders continue to grapple with mobilizing low-cost CASA. Despite the slower growth of NII, the banking sector remains resilient. Additionally, regulatory changes and competitive constraints on interest rates have further pressured NIMs. NIMs are expected to remain under pressure in the 4^th quarter Net Interest Margin Squeeze Continues Amidst Slow Credit Growth of the financial year. Further, margins will also be monitored as funding costs continue to remain elevated, and any potential rate cuts would likely dent lending rates, further impacting NIMs.

 

Management Commentary on the business & its future prospects:

1. Credit and Deposit Growth: The bank targets 14-16% credit growth and 10% deposit growth, backed by a strong pipeline of sanctioned loans and proposals, anticipating substantial disbursals in the upcoming months to meet targets.
2. Deposit Costs: Deposit costs rose by 7-8 bps, with a shift towards fixed deposits. While this pressures the CASA ratio, the bank is focusing on improving the ratio by encouraging salary accounts and enhancing deposit mix.
3. Vision for Future Growth: SBI’s management remains committed to achieving long-term, sustainable growth by continuing to strengthen its leadership position across business segments. With a robust capital base, superior asset quality, and a focus on digitization and customer outreach, the bank is well-positioned to maintain its growth trajectory.
4. Economic Impact: The bank anticipates a rise in credit demand, especially in sectors like SMEs and agriculture, driven by budget measures like tax cuts and savings incentives, potentially boosting retail loan growth and personal loan demand.
5. AI and Digitalization: SBI is leveraging AI for customer personalization, risk management, and staff training, with initiatives like “Ask SBI” to enhance operational efficiency. The bank aims for broader AI adoption, positioning itself as a digital leader.
6. International Operations: The bank’s international portfolio, valued at over ₹6 trillion, continues to show resilience. Its focus on trade finance, local credit, and ECBs ensures stable margins, despite global volatility, and supports steady cross-border performance.

Q3FY25 Result Analysis

1. Interest Earned & NII: The bank earned INR 117,426.63 crore in interest in Q3 FY’25, reflecting a 10% growth from INR 106,733.78 crore in Q3 FY’24. On a QoQ basis, interest earned increased by 3.12% from INR 113,870.56 crore in Q2 FY’25. Net Interest Income (NII) rose 4.1% YoY from INR 39,816 crore, but declined slightly by 0.4% QoQ from INR 41,620 crore.
2. Deposits & Advances: Total deposits grew 9.8% YoY to INR 5,229,384 crore from INR 4,762,221 crore in Q3 FY’24, and increased 2.19% QoQ from INR 5,117,285 crore in Q2 FY’25. Total advances saw a 13.5% YoY increase to INR 4,067,752 crore from INR 3,584,252 crore, with a 3.75% QoQ growth from INR 3,920,719 crore.
3. Asset Quality: The Gross Non-Performing Asset (GNPA) ratio improved to 2.07% in Q3 FY’25, down from 2.42% YoY and 2.13% QoQ. The Net Non-Performing Asset (NNPA) ratio declined to 0.53% from 0.64% YoY, remaining flat QoQ from 0.53%.
4. Provision Coverage Ratio: The Provision Coverage Ratio (PCR) increased to 74.66% in Q3 FY’25 from 74.17% YoY, but slightly decreased from 75.66% QoQ, indicating the bank’s strong provisioning for potential loan losses.
5. CASA Ratio: The CASA ratio decreased to 39.20% in Q3 FY’25, down from 41.18% in Q3 FY’24 and 40.03% in Q2 FY’25. Despite this decline, it remains healthy, supporting stable profitability and liquidity.

Profit and Loss Statement:

Particulars (in Cr)	FY24	FY23	FY22
INCOME
Interest Earned	415130.7	332103.1	275457.3
Other Income	51682.16	36615.6	40563.91
Total	466812.8	368718.7	316021.2
Expenditure
Interest  expended	255254.83	187262.56	154749.7
Payments to/Provisions for Employees	78336.98	57291.84	57561.99
Operating  Expenses & Administrative Expenses	16169.29	14639.05	13590.8
Depreciation	3351.92	3297.27	3248.59
Other Expenses, Provisions & Contingencies	31916.84	39022.3	43448.28
Total	385029.9	301513	272599.4
EBT	81782.96	67205.64	43421.84
Tax	20706.34	16973.19	11745.87
PAT	61076.62	50232.45	31675.97

Balance Sheet:

Particulars (In Cr)	FY24	FY23	FY22
SOURCES  OF  FUNDS
Capital	892.46	892.46	892.46
Reserves	376354.07	326715.99	279195.6
Deposits	4916076.77	4423777.78	4051534.12
Borrowings	597560.91	493135.16	426043.38
Other Liabilities & Provisions	301906.03	283523.16	240429.03
TOTAL LIABILITIES	6192790	5528045	4998095
APPLICATION OF FUNDS
Cash & Balances with RBI	225141.7	247087.58	318265.21
Balances with Banks & money at Call	85660.29	60812.04	76287.11
Investments	1671339.66	1570366.23	1481445.47
Advances	3703970.85	3199269.3	2733966.59
Fixed Assets	42617.25	42381.8	37708.16
Other Assets	464060.49	408127.6	350422.05
TOTAL ASSETS	6192790	5528045	4998095

Cash Flow Statement:

Particulars (In Cr)	FY24	FY23	FY22
Cash and Cash Equivalents at Beginning of the year	307899.6	394552.3	343038.7
Net Cash from Operating Activities	19021.89	-91351.82	58415.45
Net Cash Used in Investing Activities	-2264.15	-502.65	-1724.33
Net Cash Used in Financing Activities	-13855.37	5201.76	-5177.51
Net Inc/(Dec) in Cash and Cash Equivalent	2902.37	-86652.7	51513.61
Cash and Cash Equivalents at End of the year	310802	307899.6	394552.3

Outlook:

SBI is the largest public sector bank in India, offering a wide range of banking and financial services. With a strong domestic and international presence, SBI serves millions of customers through its extensive network of branches and digital platforms. The bank’s strong performance in Q3FY25 demonstrates its financial resilience, with a 10% YoY increase in interest earned and a 13.5% growth in total advances, highlighting its consistent revenue generation. SBI’s asset quality has also shown significant improvement, with a decline in both Gross Non-Performing Asset (GNPA) and Net Non-Performing Asset (NNPA) ratios, reflecting effective credit risk management and bolstering its financial stability.
Despite a slight dip in the CASA ratio, SBI’s liquidity and funding position remain solid, supporting its ability to navigate market fluctuations. The bank’s management is confident about sustaining a healthy Net Interest Margin (NIM) and stable credit cost guidance, which reinforces its long-term profitability outlook.
With a diversified portfolio spanning retail, corporate, and government banking, coupled with a strong push towards digital transformation, SBI is well-positioned to capitalize on emerging growth opportunities. The ongoing improvement in asset quality, robust financials, and strategic positioning in key market segments support its growth trajectory.
In the last 9 months, SBI reported an EPS of ₹58.56 and total earnings of ₹342,823.16 crore. The bank is trading at P/Ex of 8.39, the bank is positioned for better performance in FY25. Based on strong fundamentals and growth potential, we recommend a “Buy” on SBI with a target price of ₹950 with time horizon of next 9-12 months.

 Source: Company website, EWL Research

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