What factors contributed to SBI’s 40% growth last year (factual clarification)!

The 40% growth in SBI’s stock last year can be attributed to several key financial and operational factors showing strong performance in FY25:

• Robust Profit Growth: SBI reported a net profit of ₹70,901 crore for FY25, up 16% year-over-year. This strong earnings growth improved investor confidence and supported stock price appreciation1.

• Healthy Credit and Deposit Growth: The bank achieved whole-bank credit growth of 12% YoY and deposit growth of 9.5% YoY, underpinned by 27% growth in current account deposits and over 6% growth in CASA (Current Account Savings Account) deposits, with a CASA ratio close to 40%. Higher CASA ratios generally imply a stable and low-cost deposit base, which strengthens margins and profitability1.

• Good Asset Quality and Risk Management: SBI maintained strong asset quality with low slippage ratios (0.55%) and credit cost (0.38%) in FY25. This stability reduced provisioning costs and boosted profitability1.

• Operational Efficiency and Scale: The bank demonstrated sustainable operational scale and performance with a return on assets (RoA) above 1% and a strong return on equity (RoE), which analysts expect to remain above 15% through business cycles. Maintaining a low cost-to-income ratio by increasing income also contributed to margin expansion1.

• Strategic Growth and Diversification: SBI continues to leverage its leadership in multiple lending and liability pools in India, supported by a large customer base and extensive branch network. Its diversified retail and corporate lending growth contributed to earnings momentum1.

• Capital and Market Confidence: The bank’s solid fundamentals and growth prospects allowed it to maintain strong credit ratings and investor confidence, encouraging capital inflows and supporting share price gains1.

In summary, SBI’s 40% stock growth last year was driven by strong profit and credit growth, stable and high-quality asset base, an improving deposit franchise with high CASA ratios, operational efficiency, and overall market confidence in the bank’s scalable and profitable franchise in the Indian banking sector.

These factors combined to create robust financial performance and investor optimism fueling the significant share price appreciation.