SBI Q2 preview: NII, profit to grow in double-digits YoY amid healthy loan, deposit growth

The public lender will report the second-quarter performance on November 8, 2024.

India's largest lender, State Bank of India, is likely to clock solid set of July-September quarter (Q2FY25) earnings due to healthy loan as well as deposit growth. The public lender will report the second-quarter performance on November 8, 2024.

According to Moneycontrol's poll of 7 brokerage estimates, SBI is expected to register healthy 10 percent year-on-year (YoY) growth in net interest income (NII) to Rs 43,464 crore in Q2FY25 from Rs 39,500 crore in the year-ago period. Profit is pegged to grow by 18 percent YoY to Rs 16,953 crore in Q2FY25 versus Rs 14,330 crore in Q1FY25.

What factors are driving the earnings?

Stable CD ratio: Brokerages expect credit-to-deposit ratio to be largely stable amid healthy loan and deposit growth in the second quarter. According to Motilal Oswal analysts, loans are expected to grow 16 percent YoY to Rs 38 lakh crore in Q2FY25, whereas deposit is expected to grow 9 percent YoY to Rs 51 lakh crore.

Improving asset quality: SBI's gross non-performing assets (GNPA) is projected to improve to 2.16 percent in Q2FY25 from 2.55 percent in the year-ago period, said Motilal Oswal analysts. Its net NPA is also expected to improve to 0.55 percent in Q2FY25 versus 0.64 percent in Q2FY24.

Margin moderation: Analysts at Emkay Global expect SBI's net interest margins (NIMs) to remain largely flat at 3.2 percent in Q2FY25 versus 3.3 percent in the year-ago period.

What to look out for in the quarterly show?

Management's commentary on capital adequacy, outlook on loan book growth, and return ratio will be keenly watched out by market participants.

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