State Bank of India Q4 results: Profit surge likely in seasonally strong quarter, loan growth to lag peers

State Bank of India (SBI) is expected to report a profit growth of 40-70 per cent for the March quarter on year-on-year(YoY) basis on a sharp fall in provisions and healthy fee income in a seasonally strong quarter for the lender. Net interest income (NII) may jump 20-30 per cent while net interest margin (NIM) may expand with MCLR (marginal cost of funds) repricing, analysts said who see credit cost for the state run bank staying below 1 per cent.

Loan growth may come in lower than other large banks, analysts warned. All eyes would be on opex, traction in deposits, and increase in deposit costs.

Prabhudas Lilladher expects SBI to report 69.8 per cent YoY rise in net profit for the quarter at Rs 15,477 crore against Rs 9,113 crore YoY. It sees NII growing 29.5 per cent YoY to Rs 40,386 crore compared with Rs 31,198 crore in the same quarter last year. NIM is seen at 3.48 per cent against 3.01 YoY.

Loan growth for SBI is expected at 4.7 per cent QoQ and 17 per cent YoY, said Prabhudas Lilladher while expecting NIM to expand 7 basis points sequentially. SBI should continue to report better NII growth of 29.5 per cent YoY, it said. Slippages to go up, but credit cost may stay below 1 per cent, it said.

JM Financial made a similar profit projection at Rs 15,424 crore, up 69.2 per cent. It sees NII at Rs 40,561 crore, up 30 per cent. Pre-provision operating profit (PPoP) is seen at Rs 25,837 crore, up 31 per cent.

Emkay Global pegs profit figure at Rs 12,817 crore, up 40.6 per cent. It sees NII growing 23.5 per cent YoY to Rs 38,544 crore. NIM is seen at 3.5 per cent. Some softness in NIM and higher opex, including PLI, are expected to soften profit sequentially. Moderate slippages and better recoveries are likely to drive down non-performing assets, it said.

This brokerage expects NPA at 2.9 per cent of advances against 3.1 per cent in December and 4 per cent in the March quarter of last year.

"SBI’s core PPoP growth will be strong, especially sequential growth driven by higher NIM and seasonally strong fees. However, loan growth could be lower than reporting banks," Nuvama Institutional Equities said.