Earnings Outlook
SBI's Oct-Dec PAT seen up 79% YoY on steady loan growth
This story was originally published at 23:06 IST on 4 February 2025
Register to read our real-time news.Informist, Tuesday, Feb. 4, 2025
By Kshipra Petkar
MUMBAI – Steady loan growth and stable asset quality will maintain State Bank of India's net profit growth Oct-Dec, according to brokerages. The average of estimates from 15 brokerages shows the bank's bottom line rising 79.2% on year to INR 164.19 billion in December quarter. Sequentially, it is seen falling over 10%. The largest state-owned bank will announce its results for the quarter ended December on Thursday.
Brokerages expect the on-year credit growth to be in a range of 14-15% and deposit growth a tad lower at 9-11% as on Dec. 31. In the previous quarter, SBI Chairman C.S. Setty guided for 14-16% credit growth and 10-11?posit growth for the second half of the current financial year. Analysts will be watchful for commentary on growth guidance.
On asset quality, the bank, in December invited eligible participants for the transfer of stressed loans amounting to INR 27.33 billion. The bank had also declared the Mahanagar Telecom Nigam Ltd's loan account as a non-performing asset. The state-owned bank has an exposure of INR 3.26 billion to MTNL through the term loan account. Motilal Oswal has pegged the gross NPA ratio at 2.04% and the net NPA ratio at 0.50% as on Dec. 31 for the state-owned bank.
Brokerages expect slippages to rise quarter-on-quarter due to agricultural slippages. "We expect slippages at around 1.5% of loans (normalisation of slippages over time) but no fresh concerns are likely on unsecured loans for the bank. We are likely to see lower recovery and upgrades as well," Kotal Institutional Equities said.
Consequently, the provisions are likely to inch up in the reporting quarter, limiting the growth of the bank. Last quarter, the bank's provisions rose sharply to INR 45.06 billion, from INR 1.15 billion reported a year ago. Prabhudas Lilladher expects provisions to increase by 5% on quarter leading to a further fall in profit by 15.6% on quarter.
As on Sept. 30, the gross non-performing asset ratio was 2.13% and the net non-performing asset ratio stood at 0.53%. The bank's management in the analyst call last quarter had given guidance for slippage ratio and credit cost to maintain below 60 bps and 40 bps, respectively.
The net interest income is seen rising merely 6.7% on year and over 2% sequentially to INR 424.68 billion for the reporting quarter, as per the average of estimates from 15 brokerages. Most of the brokerages expect the net interest margins to remain stable on quarter for Oct-Dec. "We expect NIMs to remain largely flat which, coupled with contained staff costs, should support profitability," Emkay Global said in its report. On year-on year basis, Nomura expects margins to fall by 10 basis points.
The management's commentary on return on assets sustainability and capital raising will also be monitored. Since the earnings last quarter, the shares of the bank have fallen by 7.6% on the National Stock Exchange. On Tuesday, the shares of the bank closed 2.4% higher at INR 779.20 on NSE.
Following are the Oct-Dec consolidated earnings estimates for State Bank of India based on reports from 15 brokerage firms in descending order by estimate of net profit:
| Brokerages | Net Interest Income (in INR million) | Net Profit (in INR million) |
| Anand Rathi Share and Stock Brokers Ltd | 4,28,128.00 | 1,81,648.00 |
| Axis Securities Ltd | 4,22,600.00 | 1,64,730.00 |
| Elara Securities (India) Pvt Ltd | 4,25,193.00 | 1,66,181.00 |
| Emkay Global Financial Services Ltd | 4,28,458.00 | 1,72,930.00 |
| JM Financial Institutional Securities Pvt Ltd | 4,21,719.00 | 1,60,940.00 |
| Kotak Institutional Equities | 4,23,000.00 | 1,45,300.00 |
| KR Choksey Research | 4,21,984.00 | 1,63,128.00 |
| Motilal Oswal Financial Services Ltd | 4,22,800.00 | 1,62,400.00 |
| Nirmal Bang Equities Pvt Ltd | 4,29,545.00 | 1,65,854.00 |
| Nomura Equity Research | 4,25,600.00 | 1,70,100.00 |
| Nuvama Wealth Management Ltd | 4,21,200.00 | 1,70,900.00 |
| Prabhudas Lilladher Pvt Ltd | 4,27,952.00 | 1,54,632.00 |
| Sharekhan Ltd | 4,22,900.00 | 1,47,480.00 |
| Systematix Shares and Stocks (India) Ltd | 4,24,000.00 | 1,66,000.00 |
| YES Securities (India) Ltd | 4,25,155.00 | 1,70,633.00 |
| Average | 4,24,682.27 | 1,64,190.40 |
End
Edited by Deepshikha Bhardwaj
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