Why SBI Share Price is Falling

The benchmark indices, BSE Sensex and Nifty 50, are experiencing a pause after a strong rally in late April 2025.

Market movements have been influenced by global economic signals, sectoral performance differences, and active foreign institutional investor (FIIs) participation.

The markets today are once again seeing a rise with the BSE Sensex hitting the 81,000 mark. However, not all stocks are rising. One stock seeing a drop in trade today is State Bank of India (SBI).

Let's take a closer look at the factors leading to the fall in the stock of SBI.

#1 Fall in Net Interest Margins

The net interest margin (NIM) of SBI dropped significantly in the quarter ending March 2025 to 3.15%, compared to 3.47% in the same quarter of FY24. This indicates a pressure on the bank's core lending margins.

The NIM measures the difference between the interest income earned on loans and other interest-earning assets and the interest expense paid on deposits and borrowings, expressed as a percentage of average interest-earning assets.

The fall in the NIM has gone down well with investors leading to a fall in the share price.

#2 Net Profit Falls 10%

The second reason for the fall in the stock price is drop in net profits at the bank.

SBI reported a 10% year-on-year (YoY) decline in net profit for the quarter ending March 2025. The bank saw net profits at Rs 186.4 billion (bn) compared to Rs 206.9 bn in the same quarter last year.

The fall was largely on account of a compression in the net interest margins, despite a rise in the net interest income.

However, for the fully year 2024-25 the bank reported a record net profit of approximately Rs 709 bn, marking a solid YoY growth of about 16% compared to Rs 610.7 bn in FY24.

#3 CASA Ratio Drops

The third reason for the fall in stock price could have been a fall in CASA (current account savings account). The bank saw its CASA ratio drop to 39.97% as of 31 March 2025. This was down from 41.11% a year ago.

The CASA ratio is important for banks because it measures the proportion of low-cost deposits relative to the bank's total deposits.

What Next?

Going forward, SBI is focusing on improving its CASA ratio and bringing it back to 40%.

This will help the bank to lower funding costs and protect margins. The bank's NIM contracted in the fourth quarter of 2025, partly due to a declining CASA ratio, which increased the cost of funds.

Growth in the economy should lead to loan growth in the coming quarters. Being the largest lender in India, a boost to the economy will benefit SBI.

The recent cuts in the repo rate by the Reserve Bank of India and the forthcoming cuts should also help SBI. The repo rate is the rate at which the RBI lends money to commercial banks. When the RBI cuts the repo rate, banks like SBI can borrow funds from the RBI at a cheaper rate, reducing their overall cost of funds.

A factor that could weigh on performance is operational efficiency. The management of SBI has highlighted their commitment to improve operational efficiency, compliance, and sustainable value creation for stakeholders.

The board of the bank has approved raising up to Rs 250 bn in equity capital during FY26, depending on business needs and market conditions. This should help support growth of the bank going forward.

Also, SBI's large size and government backing provide stability, though investors will have to watch for growth and margin improvement going forward.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

How Shares of SBI have Performed Recently

Over the last one month, the share price of SBI has gained about 3%. In the past one year, shares of the SBI have lost 3.6%.

The stock hit a 52-week high of Rs 912.1 on 3 June 2024. The stock also hit a 52-week low of Rs 679.65 on 3 March 2025.

About SBI

State Bank of India is India's largest public sector bank and a Fortune 500 company. The bank serves over 500 million customers through more than 22,500 branches and a vast network of ATMs and digital platforms.

SBI offers a wide range of banking and financial services through its subsidiaries including insurance, mutual funds, and credit cards.

It also has a significant international presence, with operations in 29 countries, including the United States, Canada, the United Kingdom, Australia, and several Asian and African nations. This global footprint supports Indian businesses and the diaspora with cross-border banking services.

The bank has an asset base exceeding around US$ 810 bn and is the largest bank by assets in India.

To know more, check out SBI fact sheet and latest quarterly results. You can also compare SBI with its peers on our website.

SBI vs HDFC Bank

SBI vs Bank of Baroda

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...