The Economic Times daily newspaper is available online now.

    SBI Q3 Results Preview: Five key things to watch out for

    Synopsis

    The state-owned lender's net profit is likely to zoom by a massive 60-70%, compared with the last-year period, while net interest income (NII) too, is expected to grow in healthy double digits.

    SBI Q3 Results Preview: Five key things to watch out forReuters
    India's largest lender State Bank of India (SBI) is expected to report a solid set of numbers for the third quarter ended December, driven by stable asset quality, strong free income and dominant loan growth.

    The state-owned lender's net profit is likely to zoom by a massive 60-70%, compared with the last-year period, while net interest income (NII) too, is expected to grow in healthy double digits.

    Brokerages are expecting operating profit growth of 20% year on year, led by a strong NII increase. NIM is likely to see 10 basis points improvement quarter-on-quarter.

    “We expect SBI to deliver over 17% RoE aided by growth build-up, contained credit cost and improving margin profile. Absence of treasury knock is likely to support operating profit growth," ICICI Securities said.

    On Thursday, SBI stock closed 0.90% higher at Rs 532.10 apiece on NSE. So far this year, the shares lost 13.08%.

    Some of the key monitorables include profit and NII, deposit growth, asset quality outlook, loan book traction, slippages. Here are five key things to watch out for in the third quarter report card.

    Profit growth and NII
    Analysts are pricing in massive profit growth of anywhere between 60 and 79% for the December quarter on the back of strong NII and fee income growth. For instance, Nomura sees profit rising by 79% to Rs 15,108 crore, while Axis Securities estimates the profit to rise by 62% to Rs 13,679 crore.

    The lender had reported a net profit of Rs 8,432 crore in the December quarter of last year and Rs 13,265 crore in the September quarter this year.

    Meanwhile, NII is seen to grow over 20%. Brokerage Sharekhan sees NII at Rs 37,187 crore, higher by 21% year on year. The company had reported an NII of Rs 30,687 crore in the same quarter of last year.

    Loan Book
    Given the strong corporate lending pipeline and retail credit momentum, analysts expect healthy traction in the loan book the quarter under review. For instance, ICICI Securities is building in loan growth of 20% year-on-year and 4% quarter-on-quarter. Another brokerage Nomura expects loan growth to be solid at 22% year-on-year, continuing the momentum seen in the first and second quarters of the current fiscal year.

    Asset quality outlook
    Brokerages are pricing in more or less a stable asset quality during the quarter with some marginal improvement. ICICI Securities sees the net non performing assets (NPAs) to decline 58 basis points to 0.8% in the third quarter from 1.3% in the same quarter last year. Meanwhile, the gross NPAs too are seen dropping 115 basis points to 3.4%.

    Slippages
    Given seasonal agri stress, brokerages are building higher slippage run-rate of over 1%, though upgrades and recoveries will aid gross NPAs to be stable. Slippages would be seen largely from SME and retail books. Nomura expects slippages to increase to 1.3% of loans, while Axis Securities sees moderation quarter-on-quarter.

    Deposit growth
    Deposit growth is an important monitorable for the state-owned lender and Motilal Oswal is estimating significant traction in this segment. SBI had deposits at Rs 41.9 lakh crore as of September, and they are expected to clock growth of 10% to Rs 43.2 lakh crore.

    Apart from the above, other key monitorables in the quarter report card include international loans and credit costs.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)






    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more


    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

    Stories you might be interested in