Does SBI merit higher valuation?

State Bank of India’s (SBI) fee income growth Q2 of FY26 stands out as the best, even among all the leading private sector banks that do well on this parameter.

- Manish Joshi

SBI’s fee income grew 25% year-on-year (yo-y) to ₹8,574 crore, much higher than the second-best growth of 10% posted by ICICI Bank.

The growth rate assumes even more significance as most of the fees, excluding third-party distribution products, are generally linked to processing fees on advances. So, it is impressive that the fee income growth rate outpaced the 13% growth in advances.

SBI’s net interest margin (NIM) got a 2 basis points (bps) quarter-on-quarter (q-o-q) benefit due to interest income on equity funds worth ₹5,000 crore raised through QIP in July. Also, a small component of interest on income tax refund had a positive impact of 2 bps q-o-q.