India’s leading public sector lender State Bank of India (SBI) is likely to see a moderation in earnings for the first quarter ended June 2024 due to higher provisions.
Net profit for the April-June 2024 period may decline 3% year-on-year, according to an average estimate of six brokerages. Net interest income for the same period, meanwhile, is seen rising around 10% year-on-year.
Analysts estimate the provisions to rise anywhere between 30-70% year-on-year during the quarter.
In the preceding March quarter, SBI‘s net profit rose 24% year-on-year to Rs 20,698 crore and the net interest income (NII) was up 3% year-on-year.
Here’s what analysts expect from SBI’s Q1
Axis Securities
Advances and deposits growth to remain healthy and C-D Ratio to remain broadly stable QoQ. NII growth to be soft, NIMs likely to witness marginal compression sequentially. Opex ratios to remain under control, PPOP growth expected to disappoint.
Credit costs to inch-up QoQ, Slippages likely to be higher sequentially though asset quality to remain largely stable. Key monitorables include comments on capital adequacy and outlook on loan book growth and return ratios.
YES Securities
Sequential loan growth will be in the 2.5% ballpark due to idiosyncratic growth trajectory. NII growth will be slightly slower than average loan growth due to relatively higher recoveries and interest on income tax refunds in 4Q. Consequently, NIM will be slightly lower sequentially.
Sequential fee income growth will be lower than loan growth due to seasonality. Opex growth will be lower than loan growth due to wage related provisions taken in 4Q. Slippages would be broadly stable on a sequential basis. Provisions will be stable on a sequential basis.
Motilal Oswal
Earnings to moderate led by higher provisions. Expect cost ratios to remain under control. Asset quality expected to improve further. Margin to witness a slight compression.
Kotak Securities
We expect operating profit growth to decline 6% YoY (higher operating expenses), NIM normalisation and lower recovery from written-off pool. We are building 9% YoY NII growth on the back of 14% YoY loan growth. We are building NIM to decline ~10 bps qoq mostly led by slippage (PSL loans) and higher cost of funds. Operating expenses growth is coming under control post the normalisation of staff costs related revisions.
We expect slippages at 1.5% of loans with 1Q being higher on account of PSL (agriculture). We are likely to see lower recovery and upgrades as well. Key discussion would be NIM, RoE, unsecured loans and CAR for the quarter.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
