Country's largest lender State Bank of India (SBI) will announce its quarterly earnings on November 6. Analysts expect profit growth, which may be better than June quarter, to be dependent on provisions while net interest income and loan growth may be muted due to weak corporate loan demand during the quarter.
According to average of estimates of analysts polled by CNBC-TV18, profit is seen rising 15.5 percent year-on-year to Rs 3,581 crore and net interest income may increase 6.21 percent to Rs 14,099 crore in July-September quarter.
In June quarter, profit had grown 10.2 percent and net interest income increased 3.6 percent. Provisions climbed 14.4 percent on yearly basis but fell 39 percent sequentially to Rs 3,999.73 crore. Loan growth was 6.6 percent with corporate advances up 13 percent year-on-year.
Net interest margin will be closely watched during the quarter as SBI slashed its base rate by 40 basis points to 9.3 percent on September 29. Analysts feel the impact is likely in Q3FY16. In June quarter domestic net interest margin declined 25 basis points Q-o-Q to 3.29 percent as base rate was cut by 30 basis points.
In asset quality, 5:25 scheme, sale of loans to asset reconstruction companies (ARCs sale in Q1 was just Rs 29 crore) and slippages will be closely watched.
Analysts expect slippages for September quarter at around Rs 6,000-7,000 crore. So slippages anything higher than Rs 7,500 crore or higher than June quarter (and Q2FY15) may be negative. In Q1FY16 and Q2FY15, slippages stood at Rs 7,318 crore due to seasonality and Rs 7,700 crore, respectively.
As far as 5:25 scheme is concerned, SBI had refinanced around five accounts worth Rs 6,000-6,500 crore in June quarter. Post Q1, pipeline of nine accounts worth Rs 12,300 crore warrants closer monitoring for SBI under 5:25, feel analysts.
In sale of loan to ARCs, Bhushan Steel, Essar, ABG, Abhijit Group and Amtek accounts would be closely watched.
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