India's largest lender State Bank of India (SBI) is set to announce its third quarter (October-December) earnings on Friday. The street will watch out for profitability and asset quality of the bank, which both are expected to weaken during the quarter, analysts say.
It has one of the highest non-perfoming assets (NPAs) among large sized peers. Another factor to watch out for is its comments on QIP. The bank raised Rs 8,032 crore through qualified institutional placement in January.
According to CNBC-TV18 poll, analysts expect profit after tax to fall 26 percent to Rs 2,500 crore and net interest income to decline 14 percent to Rs 12,669 crore compared to a year-ago period.
The decline in PAT, which has been continued since Q4FY13, will be on account of higher wage and bad loan provisions. In September quarter, PAT was down 35 percent to Rs 2,375 crore with provisions spiking 66 percent to Rs 3,029 crore.
The bank had provided Rs 600 crore of pension provision in Q2FY14 and said similar quantum would be provided next three quarters.
Also watch out for slippages and restructured assets. Analysts expect restructured assets of Rs 6,000-8,500 crore during Q3FY14 as against Rs 8,585 crore in previous quarter while in case of slippages, it may be similar to Q2 (Rs 8,365 crore).
They feel net interest margin of the bank may jump sequentially due to benchmark prime lending rate revision of 20 basis points (to 10 percent from 9.8 percent). Net interest margin in September quarter was at 3.19 percent, up 3 bps Q-o-Q led by domestic NIM.
Loan growth may come off, but will be in line with industry average at 17-18 percent, analysts say.
Other factors to watch for are other income and FCNR deposits.
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