Shares of State Bank of India (SBI) plunged nearly 7% on Thursday after the country’s largest lender reported weaker-than-expected Q4 earnings, with pressure on treasury income overshadowing otherwise stable core banking performance.
The stock closed 6.74% lower at Rs 1,018.40 on the NSE, emerging as one of the biggest drags on benchmark indices during the session.
The sharp decline came despite SBI reporting steady loan growth and stable operating performance, as investors focused instead on weaker treasury income and pressure on profitability.
Analysts said the market reaction was driven largely by a sharp fall in treasury gains during the quarter. Rising bond yields impacted the value of SBI’s government securities portfolio, hurting treasury income significantly compared to the year-ago period.
The results also highlighted pressure on margins and earnings quality, which remain key concerns for investors tracking the banking sector.
Brokerages had already warned ahead of the earnings announcement that treasury losses could weigh on SBI’s quarterly performance despite healthy loan growth.
Investor sentiment toward banking stocks also remained weak because SBI’s results came at a time when markets are already cautious about slower earnings growth, foreign investor selling and uncertainty linked to global crude oil prices and geopolitical tensions.
The fall in SBI also dragged broader banking stocks lower. HDFC Bank, Axis Bank, Bajaj Finance and Shriram Finance all ended the session in the red as investors turned cautious on financial stocks.
Market experts said investors were expecting stronger profitability numbers from SBI given its size and dominant position in the banking sector.
The sharp decline in the stock suggests markets were disappointed more by the quality of earnings and treasury performance than by the headline profit figure itself.
Despite Thursday’s sell-off, analysts said SBI’s core banking business remains stable, with investors likely to closely monitor margin trends, deposit growth and treasury recovery in coming quarters.