Amid the Iran war, how does India’s largest lender SBI see the year ahead? Here’s what chairman CS Setty said

State Bank of India expects a credit growth of 13-15 per cent in the year-ending March 2027, buoyed by strong demand across segments, whether it’s the corporate or the retail segment.

“We have grown across the segments and corporate advance is in double digits. We are continuously seeing the credit growth in the current quarter also, which gives us confidence that 13-15 per cent credit growth is imminently possible,” said CS Setty, chairman of SBI. 

The country’s largest lender hasn’t seen any cause of concern just yet amid the US and Israel war against Iran. However, Setty warned that should the conflict in West Asia drag on for another 5-6 months, he sees two downside risks – supply chains could get impacted and a rise in inflation could lead to consumption moderating. 

“Domestic consumption is what is the driving force for us. So, we assume that, if inflation is at 4 per cent, the domestic consumption may not be badly impacted. But if it goes beyond that, and if the war lingers for a longer time, the consumption demand moderation will impact the credit growth,” he stated. 

Shares Slump

SBI on Friday, April 8, reported a net profit of Rs 19,684 crore in the January-March quarter, up 5.6 per cent from a year ago profit of Rs 18,643 crore. Net interest income rose 4.1 per cent year-on-year to Rs 44,380 crore from Rs 42,618 crore. 

On a quarter-on-quarter basis, however, profit after tax was down 6.4 per cent and net interest income fell 1.4 per cent. 

The bank’s domestic net interest margin also declined 21 basis points from a year ago and 18 bps sequentially to 2.93 per cent. This drove the stock sharply lower, in a weak broader market. 

SBI shares closed over 6.6 per cent lower at Rs 1,019.55, while the broader BSE Sensex ended about 0.7 per cent lower. 

The lender saw a drop in other income, which Setty pointed was due to an impact on the treasury side. Overall, treasury losses were around Rs 4,500 crore in the quarter. 

“On the NDF related guidelines, we were able to unwind the portfolio of $5 billion what we had with minimal loss. The loss on account of unwinding was Rs 57 crores only. So that has not contributed to any major forex income losses. But, we did have valuation of derivatives and swaps what we normally do for proprietary requirements. That has resulted in forex losses,” noted Setty. The sharp movement in bond yields too had added in to the treasury losses, he added. 

The Reserve Bank of India had last month barred banks from offering rupee non-deliverable forward (NDF) contracts to corporate clients, a measure it took to stabilise the rupee amid a sharp depreciation against the US dollar. Prior to that, in March, it had directed lenders to cap their net open rupee positions in the onshore deliverable market within $100 million at the end of each business day. 

SBI has still guided for NIMs to be around 3 per cent this 2026-27 financial year.