SBI bracing for a squeeze on margins from further RBI rate cuts: Chairman CS Setty

State Bank of India, the country’s largest public lender, is bracing for a squeeze on margins as it anticipates another 50 basis points cut in policy rates by the Reserve Bank of India. Chairman CS Setty flagged this looming pressure during the bank’s post-earnings press conference, attributing the squeeze to the lag between loan repricing and deposit cost adjustment.

Setty explained that a portion of SBI’s lending portfolio gets repriced immediately following a policy rate cut, while deposits take around 12 to 18 months to reflect the change. “This lag impact will be having some margin pressure,” he said.

Despite the margin concerns, Setty noted that credit growth remains healthy across all segments, albeit with some moderation. He emphasized that SBI continues to lead the industry in asset quality.

SBI reported a 10% decline in standalone net profit for Q4FY25 at ₹18,642.59 crore, compared to ₹20,698.35 crore in the same quarter last year. Its net interest income stood at ₹42,774 crore for the quarter.

On a full-year basis, the bank’s operating profit crossed ₹1 lakh crore, growing 17.89% year-on-year to ₹1,10,579 crore. For the quarter, operating profit rose 8.83% YoY to ₹31,286 crore. SBI’s net profit for FY25 stood at ₹70,901 crore, marking a 16.08% YoY increase.

The bank also reported an improvement in asset quality. Its gross NPA ratio stood at 1.82%, down 42 basis points YoY, while net NPA dropped 10 bps YoY to 0.47%.

Looking ahead, SBI has revised its credit growth guidance for FY26 to 12-13%, down from 14-16% earlier. The bank maintained that its net interest margin outlook is closely tied to the direction of interest rates and expects further easing in the months ahead.