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SBI Q2 PAT may rise up to 98% QoQ, asset quality could improve: Analysts

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Q2 preview: Loan-loss provisions, and growth in other income will sway State Bank of India’s (SBI’s) net profit in the September quarter (Q2FY23), brokerages said. Estimates for PAT vary in the range of Rs 9,478 crore to Rs 12,063.6 crore, up 56 per cent to 98 per cent quarter-on-quarter (QoQ). This would be a yearly growth of up to 58 per cent.

Ahead of the results, the stock of the lender hit an all-time high of Rs 591 apiece on the BSE in Friday’s intra-day trade. It has surged over 20 per cent so far this calendar year (CY2022), as against around 2 per cent gain in the benchmark indices.


The bank, which is scheduled to report its July to September quarter results on Saturday, November 5, had reported net profit of Rs 7,626.6 crore last year (Q2FY22), and Rs 6,068.1 crore in Q1FY23.


Net interest income, margin


SBI’s NII — the difference between interest income earned, and interest expended — is expected to grow less than 10 per cent both, yearly and sequentially. It may come in the range of Rs 32,681 crore to Rs 33.537.6 crore.


Brokerages said the growth would hinge on the lender’s loan book, which is expected to be in-line with industry at 3 per cent QoQ/19 per cent YoY at Rs 28.99 trillion. Deposit, meanwhile, is projected at Rs 41.4 trillion, up 2 per cent QoQ/9 per cent YoY.


“Advances are likely to grow led by uptick in retail, corporate and overseas advances. Moreover, in terms of loan mix, 75 per cent of the lending book is linked to MCLR/EBR or T-Bills and reset happens on 1st of the next month. As deposits will reprice with a lag, NIMs are expected to improve further,” said ICICI Securities.


NIM is expected to come around 3-3.1 per cent this quarter, staying flat sequentially but up 10 bps YoY.


SBI’s treasury income would be among the key monitorables for investors as the state-owned lender is a major holder of government securities.


For the quarter under review, it is seen around Rs 1,000 crore as against a treasury loss of Rs 6,549 crore in the previous quarter, and treasury gain of just Rs 429 crore in Q2FY22.


Overall, other income is seen between Rs 8,950 crore and Rs 10,185.2 crore, up 287 per cent to 340 per cent QoQ.


Asset quality


Brokerages expect asset quality to improve in the quarter, with gross non-performing asset (GNPA) ratio likely improving to 3.8 per cent from 3.9 per cent QoQ, and 4.9 per cent YoY.


NNPA ratio, on the other hand, is seen steady at 1 per cent.


“We expect slippages at around 1.5 per cent of loans (Rs 11,000 crore), mostly driven by SME and retail, while corporate will continue to hold up relatively well. The positive trends on recovery, and upgradation will continue in Q2FY23. Most of the provisions will be toward the reduction in headline NPL ratios,” said Kotak Institutional Equities.


Provisions are projected in the range from Rs 4,436.3 crore to Rs 7,781.5 crore, up 1 per cent to 77 per cent QoQ. They were Rs 4,392.1 in Q1FY23, and Rs 189.3 crore in Q2FY22.

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