State Bank of India Maintains Credit Outlook Despite War Risks, Warns of Demand Pressure
State Bank of India has reaffirmed its credit growth and net interest margin guidance for the current fiscal year, saying that ongoing geopolitical tensions in the Middle East have not yet disrupted loan demand. However, the bank cautioned that a prolonged conflict could impact economic activity in India, especially if inflation rises above the Reserve Bank of India’s 4% target. Chairman C.S. Setty noted that a war lasting five to six months could slow consumption and borrowing demand.
The lender maintained its loan growth forecast of 13%–15% and expects net interest margins around 3%. It continues to see strong credit demand in the April–June quarter, supported by both retail and corporate borrowing. However, SBI’s quarterly profit missed estimates, sending its shares down sharply, as broader markets also weakened amid global tensions linked to U.S.–Iran hostilities.
The bank’s March quarter performance was affected by a sharp decline in treasury income due to rising bond yields and forex-related losses after RBI curbs. Treasury income fell significantly year-on-year, while core lending income grew 4.1%. Net profit rose 5.6% to 196.84 billion rupees but still fell short of analyst expectations. Asset quality improved, with gross bad loans declining to 1.49%.
Pic courtesy: google/ images are subject to copyright
