State Bank of India Q1 Earnings Snapshot: Net Profit Expected to Grow Double-Digit, Driven by Lending Recovery

State Bank of India is expected to continue its strong profit growth in the April-June quarter, increasing its net profit by double digits on an annual basis. Analysts expect SBI to post robust net profit growth in the fiscal first quarter, helped by healthy growth in net interest income and a reduction in provisions. However, SBI’s net profit is expected to fall significantly quarter over quarter. SBI stock price has risen 11% in the past month and is now near its 52-week high. On Friday, SBI share price ended at Rs 532 per share. The country’s largest public sector lender is due to announce its results on Saturday.

Growth in loans and deposits

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

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Provisions to reduce

During the January-March quarter, SBI had reduced its provisions thanks to better asset quality. In the April to June quarter, the SBI is expected to continue on the same path. Prabudas Lilladher expects SBI’s gross non-performing assets (GNPA) to fall 144 basis points to 3.88% from 5.32% a year ago. This, they believe, will help SBI reduce provisions by 28.4%. ICICI Direct sees ARPG fall 0.4% sequentially. “As slippages are expected to remain contained at ~Rs 6,000 -7,000 crore, NPA provisions are estimated at Rs 4,000 crore but impairment of investments will impact overall provisions,” ICICI Direct said.

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Net profit and NII estimates

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

ICICI Direct: SBI’s net profit is expected to increase by 19% on an annual basis to Rs 7,742 crore. Overall NII growth is estimated at 16.7% year-on-year, driven by a recovery in loan growth pummeled 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 at Rs 32,154 crore.

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

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