State Bank of India on Tuesday reported a stronger-than-expected rise in net profit in the second quarter ended September 30, 2025 (Q2FY26), aided by improving credit growth and income from the sale of stake in Yes Bank.

Net profit of the country’s largest bank was ₹20,160 crore in Q2FY26, up 9.97 per cent from ₹18,331 crore in Q2FY25. Net interest income at ₹1,19,654 crore was up 5.08 per cent from ₹1,13,871 crore in Q2FY25. Non-interest income at ₹19,919 crore during Q2FY26 was up 30.44 per cent from ₹15,271 crore in Q2FY25, including a one-time profit of ₹4,593 crore from stake sale in Yes Bank during the quarter and a 25 per cent rise in fee-based income, as per investor disclosure.

SBI had said on September 17 that it completed the divestment of a 13.18 per cent stake in Yes Bank to Sumitomo Mitsui Banking Corp. of Japan.

Domestic net interest margin (NIM) for the bank during Q2FY26 was 3.09 per cent compared to 3.27 per cent in Q2FY25, but saw a sequential improvement from 3.02 per cent in Q1FY26.

SBI chairman CS Setty told analysts at the earnings call that the bank has focused on balancing resource cost. “Cost of borrowing and cost of deposits have come down, and we have not only focused on reducing the reliance on wholesale deposits, but we also also focused on improving the daily average balance in current and savings bank accounts. So the NIM uptick is basically on account of that, despite a 100 basis point reduction in interest rate,” Setty said.

Gross NPA ratio during the quarter was 1.73 per cent against 2.13 per cent during Q2FY25. The bank’s capital adequacy saw an improvement to 14.62 per cent in Q2FY26 from 13.76 per cent in Q2FY25. The bank has raised ₹25,000 crore equity capital by way of QIP, following which the government holding has reduced from 56.92 per cent to 55.03 per cent.

Acquisition finance

SBI is open to collaborating with foreign banks once the Reserve Bank makes it possible for local banks to do acquisition finance, Setty said.

Speaking to reporters, weeks after the central bank announced its intent to allow Indian banks to fund companies for executing domestic acquisitions, Setty acknowledged that the “MNC (multinational companies) banks” are dominant in the space.

Setty said SBI has always been doing outbound acquisition finance and has also gained considerable expertise in this aspect.

“Yes, I think some of the MNC banks are very well into this activity. We don’t mind collaborating with them,” he said. SBI can also use its in-house investment banking unit SBI Capital Markets’ expertise for such deals, he said.

Credit growth

SBI posted a credit growth of 12.73 per cent during Q2FY26, an improvement from 11.61 per cent in Q1FY26. This was led by a retail credit growth of 14.09 per cent, aided by festive demand and tax rate rationalisation. Corporate credit growth also saw an improvement, growing at 7.10 per cent during Q2FY26 from 5.7 per cent in Q1FY26.