SBI: pros and cons of buying shares in India's largest state-run bank

what happened

Shares of State Bank of India have disappointed investors over the past year, according to a piece published by Moody's. The stock fell from above 1,200 rupees in February to about 950 rupees and has barely recovered since. The author ties this to weak overall market sentiment, selling by foreign institutional investors and worries that higher rates will slow lending.

Net interest income climbed from 2.9 trillion rupees in FY22 to 5.15 trillion rupees in FY26, a compound annual rate of 15.4%. Growth has cooled in the last two fiscal years as loan expansion slowed. Net profit has outpaced income thanks to fewer bad loans and lower provisions. In the first quarter of FY27, interest income rose 15% year on year to 47,000 crore rupees, net profit reached 12,120 crore rupees (up 10.2%), gross NPAs eased to 1.47% and net NPAs to 0.38%. The second-quarter report is expected on November 5, 2026.

The Reserve Bank of India recently raised rates and has signaled more increases ahead. That is a headwind for large lenders: borrowers find repayments harder, new loans cost more, and income and profit growth may slow. If investors start pricing in weaker earnings, the stock could come under pressure.

why it matters

SBI matters to markets as India's largest state-owned lender, with assets above 61 trillion rupees, more than 22,500 branches and over 500 million customers. Its designation as a domestic systemically important bank implies an expectation of state support, yet the bank still faces regulatory risk and competition from private lenders. This is an informational piece, not a stock recommendation.

market impact

Indian banks: RBI rate hikes weigh on SBI's loan growth and profit outlook

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