Will ensure RoA over 1 pc in FY26 despite margin pressure due to easing rate cycle: SBI Chairman

The State Bank of India (SBI) will ensure a return on assets (RoA) of over 1% during the current financial year despite the challenge of a declining rate cycle, the bank's Chairman C S Setty said.

RoA is a profitability ratio that shows how much profit a company would generate from its assets.

There would be further repo rate cuts during the year that would put pressure on the net interest margin, he said, adding that there would be a realignment of rates on the deposit side because without that effective monetary transmission would not happen.

"We will ensure that the readjustment of interest rates on the deposits are aligned broadly with repo rate cuts so that margins are protected," he said while addressing analysts after announcing the SBI's quarterly numbers.

"We still will be able to maintain 1% RoA guidance for the current financial year... our goal is to consistently achieve an RoE of over 15% through the business cycles," he said.

RoA of the bank improved from 1.04% to 1.10% in FY25 while RoE remained flat at around 20% during the financial year ended March 2025.

Without giving a target on NIMs, Setty said it will take up to 12-18 months for the policy rate actions to translate into the deposit costs for the bank.

During FY25, the SBI's balance sheet size increased to ₹66 lakh crore and operating profit crossed ₹1 lakh crore and to ₹1,10,579 crore during the financial year.

SBI's net profit during the financial year also touched a record high of ₹70,901 crore as against the previous high of ₹61,077 crore in FY24, witnessing a growth of 16%.

"We continue to focus on increasing our share, our leadership in current account while maintaining the leadership position in savings deposit by further strengthening our customer service and branch network," he said.

On the asset quality front, the bank has shown improvement with the gross non-performing assets (NPAs) ratio declining to 1.82% and net NPAs easing to 0.47% at the end of March 2025.

"The asset quality of the bank has continued to remain strong over the last five years, which demonstrates the quality of our loan portfolio, the robustness of our underwriting processes, effective collection efficiency, and the leadership of the bank across business lines," he said.

"For the first time you see two important ratios, the gross NPA ratio coming down below 2% and net NPA ratio below 0.5%, and with a loan book of 42 lakh crore plus, we believe that we have done a good job on the asset quality front," he said.

The fresh slippages came at ₹4,222 crore during the quarter with a bulk of them coming from SME, agriculture and personal loan portfolios, the bank said, adding that ₹572 crore of the loans have already been pulled back into performing advances through payments in April.

The bank's board approved an enabling provision to raise up to ₹25,000 crore in equity capital at its meeting on Saturday, Setty said, adding that it can support loan growth of up to ₹8 lakh crore from the current buffers and it does not need capital for business growth.

Overall capital adequacy stood at 14.25% as of March 31, with the core buffer at 10.81%, which is lower than many banks in the system.

"Based on the current profitability and growth profile of the bank, we believe we have sufficient headroom to take care of business growth requirements," he said.

However, he said that the bank would be open to capital raise but such action would be contingent upon business needs and market conditions.