State Bank of India misses Q4 profit view as treasury income slumps

State Bank of India missed fourth-quarter profit estimates on Friday as a drop in treasury income outweighed stronger core lending income, sending shares of the country’s largest lender to a four-week low.

While credit momentum remained strong during the quarter, the Reserve Bank of India’s curbs on forex arbitrage also hit banks’ trading income, though some of the restrictions were later eased. Rising bond yields weighed on lenders as higher yields reduce the value of their bond holdings.

SBI’s standalone net profit rose to 196.84 billion rupees ($10.59 million) for the January-March quarter from 186.43 billion rupees a year earlier, but missed analysts’ expectations of 203.12 billion rupees, hurt by a near-29% fall in other income.

Income from treasury operations fell to 12.59 billion rupees from 89.91 billion rupees a year earlier.

The bank said it had an arbitrage book of $5 billion, adding that these positions were exited at a loss of 570 million rupees.

SBI closes at record high on profit beat, upbeat loan growth outlook

SBI shares fell as much as 7.43% to 1010.90 rupees apiece after the results, their steepest intraday decline since February 1.

Net interest income, or core lending income, was up 4.1% at 443.8 billion rupees.

The lender’s net interest margin contracted to 2.8% from 2.98% in the previous quarter and 2.99% a year earlier.

In February, SBI raised its credit growth forecast to 13%-15% for fiscal year 2026 from 12%-14%, citing broad-based growth across segments. For the current financial year, it expects credit growth to remain at 13%-15%.

Growth in SBI’s loan book, considered a bellwether for India’s banking sector, is closely watched for signals on broader economic trends in Asia’s third-largest economy.

The bank’s asset quality improved, with gross bad loans as a percentage of total loans dropping to 1.49% as of end-March from 1.57% at the end of December and 1.82% a year earlier.