Shares of State Bank of India (SBI) saw a gain of over 1% on Tuesday, trading at Rs 997.50, as the market anticipates the bank's second-quarter earnings report. Analyst consensus, compiled from 26 estimates by Bloomberg, projects a substantial double-digit increase in net profit for the September quarter.
Key Q2 Earnings Projections for SBI
According to the consensus data, State Bank of India is expected to report a net profit of Rs 22,621 crore for the September quarter. Net Interest Income (NII) is estimated to reach Rs 48,570 crore. Provisions for the quarter are forecast at Rs 5,559 crore, while gross non-performing assets (GNPA) are seen coming in at 1.45% of total advances. Additionally, analysts project a return on assets (RoA) of 1.18%, with the Tier 1 ratio estimated at 14.3% and the capital adequacy ratio pegged at 16%.
MOFSL's Outlook on SBI's Performance
Brokerage firm MOFSL anticipates a slight dip in SBI's Net Interest Margin (NIM), projecting it to decrease by 3 basis points sequentially to 2.83%. This modest decline is attributed to a lower quantum of FCNR(B) deposits as a percentage of its total deposits. MOFSL also suggests that the bank's provisioning buffers could be strengthened through gains from stake sales in SBI Mutual Fund and the National Stock Exchange (NSE).
The firm expects credit growth to be around 3.8% quarter-on-quarter, driven by broad-based expansion across SME, corporate, agriculture, and Xpress credit segments. Deposit growth is forecast at 4.4% sequentially, with expectations for a steady credit cost and RoA trajectory, excluding any one-off events.
Kotak Institutional Equities' Analysis
Kotak Institutional Equities projects SBI's operating profit to grow by 5% year-on-year. They noted that the comparable base quarter included a one-off stake sale in YES Bank. Kotak is building in a 13% year-on-year NII growth, supported by an 18% year-on-year loan growth. They expect NIMs to remain largely flat quarter-on-quarter, with negligible impact from FCNR deposits mobilized.
The brokerage also factors in slower fee income growth and the accounting of stake sale gains from the NSE. Slippages are estimated at 1.1% of loans, with no fresh concerns anticipated across the bank's portfolios. However, Kotak expects lower recovery and upgrades for the quarter, highlighting NIM progression as a key discussion point for the earnings call.