State Bank of India Q1 results preview: Net profit expected to grow in double digits, led by pickup in loans

State Bank of India is expected to continue its strong earnings growth in the April-June quarter, growing net profit in double digits on an year-on-year basis.

State Bank of India Q1 results preview: Net profit expected to grow in double digits, led by pickup in loans
State Bank of India

State Bank of India is expected to continue its strong earnings growth in the April-June quarter, growing net profit in double digits on an year-on-year basis. Analysts expect SBI to report robust net profit growth in the fiscal first quarter, aided by healthy growth in net interest income and a reduction in provisions. However, SBI’s net profit is widely expected to fall on a quarter-on-quarter basis. SBI share price has risen 11% in the last one month and is now close to its 52-week high. On Friday, SBI share price ended at Rs 532 per share. The country’s largest public sector lender is to announce its results on Saturday.

Loan and deposit growth

Advances by the State bank of India are pegged to grow in double-digits in the fiscal first quarter. “Expect loan growth of 12% from last year to (Rs 2.82 lakh crore) and deposit growth at 10% on-year,” said ICICI Direct in a report. Motilal Oswal believes loan growth will be better at 15.3%, and deposits are expected to grow by 10.9% from the previous year. Analysts at Prabhudas Lilladher and Nirmal Bang see loans growing by 14.1% and 14.7%, respectively. Estimates by brokerage and research firms show that SBI’s loan growth will outpace the deposits growth. The trend was similar in the previous quarter.

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Provisions to scale down

In the January-March quarter, SBI had cut provisions helped by better asset quality. In the April-June quarter, SBI is likely to continue treading on the same path. Prabudas Lilladher expects SBI’s gross non-performing assets (GNPA) to drop 144 basis points to 3.88% from the 5.32% a year ago. This, in their view, will help SBI trim provisions by 28.4%. ICICI Direct sees GNPA dropping 0.4% sequentially. “As slippages are expected to remain contained at ~ Rs 6000 -7000 crore, NPA provisions seen at Rs 4000 crore but investment depreciation to impact overall provisions,” ICICI Direct said.

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Net Profit and NII estimates

Motilal Oswal: Net profit is estimated to touch Rs 7,600 crore, up 16.8% from last year. NII is seen to rise 17.8% to Rs 32,550 crore.

ICICI Direct: SBI’s net profit is anticipated to grow 19% on-year basis to Rs 7,742 crore. Overall NII growth is seen at 16.7% from last year led by a pick-up in loan growth clubbed by higher interest rates. This would put NII at Rs 32,258 crore.

Prabhudas Lilladher: Net profit estimates are pinned at Rs 7,001 crore and NII is estimated to clock in at Rs 32,154 crore. 

Nirmal Bang: Analysts see NII rising 20% from the year-ago period to Rs 33,165 crore and net profit at Rs 7,353 crore, up 13.1%.

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