SBI loan growth to hit 12% in 2025 whilst capitalisation to improve

Partial stake sale in Yes Bank will improve core capital ratio further.

The State Bank of India (SBI) is expected to lodge a 12% loan growth in 2025 whilst maintaining its sound asset quality, according to Moody’s Ratings.

“SBI's strongest retail franchise amongst Indian banks, access to low-cost deposits, and sufficient holdings of liquid government securities support its funding and liquidity,” the ratings agency said.

Funding and liquidity will continue to be the bank's credit strengths as the largest bank in India with 23% deposit market share.

The Indian bank's internal capital generation, along with opportunistic external capital raise, is expected to improve its capitalization over the next 12-18 months.

Loan growth of 12% will be broady in line with the industry’s average loan growth for the fiscal year ending March 2026. Common equity tier 1 (CET1) ratio improved to 11.1% in March 2025, from 10.3% in March 2022.

“The bank's plan to raise new equity capital and capital gains from the partial sale of its stake in Yes Bank Limited will help improve the CET1 ratio further, supporting balance sheet buffers,” Moody’s said.

SBI's adequate net interest margin, diversified non-interest income and low credit cost support its profitability, Moody’s said.

“We expect the bank's profitability to moderate in the next couple of quarters because of policy rate cuts feeding through its lending rates, although the impact will be offset somewhat with a gradual lowering of funding costs in the later half of the fiscal year,” Moody’s said.

Moody’s also expects the bank's asset quality to remain broadly stable, with a modest uptick in credit costs from cyclically very low levels.