State Bank of India Reports Lowest NPA Ratio in Over Two Decades in Q1 FY27 as Slippages Improve
State Bank of India (SBI) reported a strong improvement in its asset quality for the quarter ended June 30, 2026, with the country’s largest lender recording its lowest non-performing asset (NPA) ratio in more than two decades. The bank also posted lower slippages and improved profitability during the April-June quarter, reflecting healthier loan performance and stronger balance sheet fundamentals.
According to SBI’s investor presentation, the gross NPA ratio declined to 1.47%, down 36 basis points year-on-year, while the net NPA ratio improved to 0.38%, a decline of 9 basis points from the same period last year. The lender said these were the lowest NPA levels it has reported in over 20 years.
Asset Quality Strengthens Across Key Metrics
The bank’s provision coverage ratio (PCR) stood at 74.20%, while the PCR including AUCA reached 91.82%, indicating a strong cushion against stressed assets. SBI also reported an improvement in international banking asset quality, where the gross NPA ratio declined by 7 basis points year-on-year. 2
Fresh stress formation also moderated during the quarter. SBI’s slippage ratio declined to 0.57%, improving by 18 basis points compared with the year-ago period. The bank reported a credit cost of 0.27%, highlighting continued improvement in loan quality. 3
Q1 FY27 Financial Performance
Alongside better asset quality, SBI delivered double-digit growth in earnings. The bank reported a net profit of ₹21,121 crore for the first quarter of FY27, up 10% from ₹19,160 crore in the corresponding quarter last year. Net interest income (NII), which measures the difference between interest earned and interest paid, increased 12% year-on-year to ₹46,992 crore. 4
Key Q1 FY27 Highlights
- Net Profit: ₹21,121 crore (up 10% YoY)
- Net Interest Income (NII): ₹46,992 crore (up 12% YoY)
- Gross NPA Ratio: 1.47%
- Net NPA Ratio: 0.38%
- Provision Coverage Ratio (PCR): 74.20%
- PCR including AUCA: 91.82%
- Slippage Ratio: 0.57%
- Credit Cost: 0.27%
Key Financial Metrics
| Metric | Q1 FY27 |
|---|---|
| Net Profit | ₹21,121 crore |
| Net Interest Income | ₹46,992 crore |
| Gross NPA Ratio | 1.47% |
| Net NPA Ratio | 0.38% |
| Provision Coverage Ratio | 74.20% |
| PCR including AUCA | 91.82% |
| Slippage Ratio | 0.57% |
| Credit Cost | 0.27% |
Lower Slippages Reflect Improved Loan Performance
SBI’s latest quarterly performance indicates continued improvement in the quality of its loan book. The decline in the slippage ratio suggests that fewer standard loans turned into non-performing assets during the April–June quarter, helping the bank maintain one of its strongest asset-quality profiles in recent years.
The improvement in gross and net NPA ratios, combined with a high provision coverage ratio, reflects the lender’s sustained focus on recoveries, prudent risk management and disciplined lending practices. The stronger provisioning buffer also positions the bank to absorb potential stress while supporting future credit growth.
Earnings Supported by Healthy Core Banking Business
Growth in net interest income contributed significantly to SBI’s quarterly earnings. The increase in NII highlights continued expansion in the bank’s core lending business despite a changing interest-rate environment.
The combination of stronger operating performance, lower credit costs and improving asset quality helped the country’s largest public sector lender deliver another quarter of stable financial results.
Q1 FY27 Performance at a Glance
| Particulars | Q1 FY27 | Year-on-Year Change |
|---|---|---|
| Net Profit | ₹21,121 crore | ▲ 10% |
| Net Interest Income (NII) | ₹46,992 crore | ▲ 12% |
| Gross NPA Ratio | 1.47% | Improved by 36 bps |
| Net NPA Ratio | 0.38% | Improved by 9 bps |
| Slippage Ratio | 0.57% | Improved by 18 bps |
| Credit Cost | 0.27% | Lower YoY |
What the Results Indicate
- Lowest gross and net NPA ratios reported by SBI in more than two decades.
- Fresh slippages declined compared with the same quarter last year.
- Double-digit growth in both net profit and net interest income.
- Strong provision coverage continues to support the bank’s balance sheet.
- Improved asset quality reflects healthier credit performance across the loan portfolio.
Market Perspective
SBI’s first-quarter performance highlights the continued strengthening of its financial position, driven by improving asset quality, lower stress formation and steady earnings growth. With bad loans at their lowest level in over 20 years and slippages continuing to decline, the results underline the bank’s progress in maintaining a healthier loan portfolio while sustaining profitability.
