SBI Q2 preview: Profit estimated to rise just 3% YoY on marginal loan growth and increased expenses

State Bank of India (SBI), the country’s leading state-run lender, is set to report its July-September earnings on November 4. Zee Business Research estimated standalone profit at the lender to go up by 2.95 per cent year-on-year (YoY) to Rs 13,650 crore. The figure was Rs 13,264.5 crore in the corresponding quarter of the fiscal year 2022–23. Analysts believe that operational expenses at the bank will soar on the back of increased investments, which will have a bearing on the bank’s profits.

Net interest income (NII), the difference between the interest earned and interest paid, is also likely to see a surge by 11.25 per cent to Rs 39,111 crore as against Rs 35,183.4 crore in the same quarter of the previous year.

Furthermore, analysts see the bank posting only a marginal uptick in loan growth for the reporting quarter at 13 per cent as against 12 per cent logged in the same period last year. A similar trend is anticipated in deposit growth, which is estimated to come in at 10 per cent in the quarter ended September as against 9 per cent in Q2 FY23.

Net interest margin, or NIM, a measure of a bank’s profitability and growth, is seen to take a hit and come in at 3.1 per cent versus 3.33 per cent registered in the June-ended quarter.

Asset quality improvement

The gross net performing assets, or GNPA will decrease to 2.58 per cent, marking an 18-bps reduction over the previous quarter when it stood at 2.76 per cent. Likewise, net NPA will decrease to 0.66 per cent as compared to 0.71 per cent in the June-ended quarter.

Analysts also pointed out that PPOP, or pre-provision operating profit, at the lender, will be reduced due to reduced Treasury income during the quarter.

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