State Bank of India shares declined more than 3 per cent on Monday after the lender reported a weaker-than-expected March quarter performance, with pressure on net interest margins, softer treasury income and moderation in net interest income growth weighing on investor sentiment despite steady asset quality and robust loan growth.

The stock hit a low of ₹984 in early trade after opening at ₹1,007, down from the previous close of ₹1,019.30.

The lender reported a 6 per cent y-o-y rise in standalone net profit for Q4FY26 at ₹19,684 crore. Net interest income rose 3.8 per cent y-o-y but declined 2 per cent q-o-q to ₹44,380 crore as margins compressed sharply during the quarter. Lower provisions and stable credit costs supported profitability, although treasury mark-to-market losses and lower non-interest income impacted earnings.

SBI’s whole bank net interest margin fell 17 basis points q-o-q to 2.81 per cent, while domestic NIM declined 18 basis points q-o-q to 2.93 per cent, reflecting the impact of repo-linked loan repricing, MCLR resets following rate cuts and a higher share of floating-rate loans.

Asset quality remained stable, with gross non-performing assets improving to 1.49 per cent. Slippages rose marginally on a sequential basis due to seasonal factors, while credit costs remained benign at around 24 basis points. Loan growth came in strong at 17 per cent y-o-y, while deposit growth improved to 11 per cent y-o-y. The CASA ratio remained steady at 39 per cent.

Bernstein maintained a market perform rating with a target price of ₹1,300 and described the quarter as mixed, noting that the 18 basis points q-o-q fall in domestic NIM was the steepest among large banks even as loan growth accelerated.

CLSA retained its outperform rating and target price of ₹1,275, stating that while the top line was weak due to margin pressure, the quarter was otherwise healthy with strong loan growth, lower credit costs and stable asset quality.

Kotak Institutional Equities maintained a buy rating with a target price of ₹1,250 and said the earnings miss could lead to a near-term pause in the stock’s re-rating until investors get clearer signs of margin recovery.

JP Morgan maintained an overweight rating with a target price of ₹1,225, saying SBI reported a weaker-than-expected quarter due to moderation in NII growth and sharper-than-anticipated margin compression. The brokerage, however, noted that management remained confident of NIM recovery in FY27.

BofA Securities reiterated its buy rating and target price of ₹1,200, highlighting that profit growth was supported by strong loan growth and lower credit costs, partially offset by NIM compression and softer non-interest income. The brokerage also pointed to management guidance of 13-15 per cent loan growth and domestic NIM above 3 per cent for FY27.

Macquarie maintained an outperform rating with a target price of ₹1,150 and said the earnings miss was driven by weak margins and trading losses. The brokerage added that asset quality continued to remain a bright spot.

UBS retained its neutral rating with a target price of ₹1,080, saying margin trends remained subdued and return on assets could face pressure as treasury gains and credit costs normalise over FY27 and FY28.

Morgan Stanley maintained an equal-weight rating with a target price of ₹980 and said the key focus during the earnings call was the sharp decline in margins. The brokerage trimmed its FY27 and FY28 earnings estimates and lowered NIM forecasts by more than 20 basis points, although it expects some recovery from Q4 levels.

Published on May 11, 2026