Earnings Outlook
SBI PAT seen down 18% QoQ on rise in provisions
This story was originally published at 15:29 IST on 30 July 2024
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By Kshipra Petkar
MUMBAI – State Bank of India's bottomline is expected to remain flat on year, and fall over 18% on a sequential basis to 168.80 bln rupees in Apr-Jun, as per the average of estimates by 12 brokerage firms. SBI is scheduled to announce its earnings for the quarter-ended June on Saturday.
India's largest public sector bank's net profit is expected to take a hit on the back of higher provisions, brokerage firms said in their pre-earnings report. Prabhudas Lilladher expects provisions to increase by nearly 68%. The bank's provisions for non-performing assets rose 157.7% on year to 32.94 bln rupees in Jan-Mar. The provision coverage ratio of the bank was at 75.02% as of Mar 31.
Net interest income is expected to rise 8.9% on year to 423.53 bln rupees for the quarter under review. Sequentially, it is expected to rise by 1.7%. "NII (net interest income) growth will be slightly slower than average loan growth due to relatively higher recoveries and interest on income tax refunds in 4Q (Jan-Mar). Consequently, NIM (net interest margins) will be slightly lower sequentially," YES Securities said in its pre-earnings report.
Brokerages expect margins to moderate by 5-10 basis points on a sequential basis. In Jan-Mar, the lender reported a net interest margin of 3.30%. Domestic net interest margin rose to 3.47% from 3.34% a quarter ago. While announcing the earnings for Jan-Mar, Chairman Dinesh Khara had said he expects the bank to maintain the net interest margin at current levels.
Kotak Institutional Equities expects the decline in margins to be led by a rise in slippages in the priority sector lending segment and higher cost of funds. In the previous quarter, the bank reported fresh slippages of 38.67 bln rupees, lower as compared to 49.60 bln rupees seen in Oct-Dec.
Commentary by the bank's management on loan growth and deposit growth will be a key monitorable. In the post-earnings press-conference, Khara also said that State Bank aims to grow advances by 15-16%, and deposits by 12-13% in 2024-25. Axis Securities expects the credit-to-deposit ratio to remain broadly stable sequentially.
The growth in the operating expenditure will be lower than loan growth due to wage related provisions taken in Jan-Mar, YES Securities said in its pre-earnings report.
In terms of asset quality, Prabhudas Lilladher expects the gross non-performing asset ratio to rise by four basis points sequentially. The gross non-performing asset ratio was at 2.24% and the net non-performing asset ratio was at 0.57% in Jan-Mar.
The impact of the Reserve Bank of India's draft guidelines on liquidity standards on the bank's liquidity coverage ratio would also be under watch. At 1425 IST, shares of the bank were 0.7% higher at 877.80 rupees on the National Stock Exchange.
Following are the Apr-Jun earnings estimates of State Bank of India, in million rupees, from 12 brokerages:
| Brokerage | Net Interest Income | Net Profit |
| Anand Rathi Share and Stock Brokers Ltd | 4,30,237.00 | 1,84,487.00 |
| Axis Securities Ltd | 4,23,000.00 | 1,68,960.00 |
| Emkay Global Financial Services Ltd | 4,21,183.00 | 1,71,907.00 |
| Kotak Institutional Equities | 4,22,419.00 | 1,50,874.00 |
| KR Choksey Research | 4,33,276.00 | 1,79,678.00 |
| Motilal Oswal Financial Services Ltd | 4,27,200.00 | 1,68,600.00 |
| Nirmal Bang Equities Pvt Ltd | 4,25,084.00 | 1,71,204.00 |
| Nomura Equity Research | 4,22,800.00 | 1,70,100.00 |
| Nuvama Wealth Management Ltd | 4,21,100.00 | 1,50,800.00 |
| Prabhudas Lilladher Pvt Ltd | 4,09,048.00 | 1,61,509.00 |
| Sharekhan Ltd | 4,18,160.00 | 1,65,770.00 |
| YES Securities (India) Ltd | 4,28,911.00 | 1,81,748.00 |
| Average | 4,23,534.83 | 1,68,803.08 |
End
Edited by Vandana Hingorani
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