The State Bank of India (SBI) is likely to report a mid-single digit growth in net interest income (NII) in the fiscal third quarter, led by strong credit expansion but one-time wage costs will drag net profit lower, analysts have said.
The state-owned lender will announce its December quarter numbers on February 3.
According to an average of five brokerage estimates, India's largest lender’s December quarter NII will grow at 5.8 percent on-year to Rs 40,304 crore.
Conversely, net profit is expected to fall 4.7 percent on-year to Rs 13,525 crore due to increased employee costs. SBI had implemented a 17 percent salary hike for bank officers in the latter half of the fiscal year 2023-24.
At a time when the banking industry is hit by higher cost of funds, SBI's net interest margins (NIMs) are also expected to contract slightly by four basis points (bps) to 3.27 percent in Q3FY24, as per analysts at Phillip Capital.
On the positive side, analysts at Motilal Oswal expect SBI's asset quality to improve, bolstered by a low stressed asset pool. Gross non-performing assets (GNPAs) are likely to improve to 2.4 percent in Q3FY24 from 3.1 percent in the previous year, while net NPAs are expected to remain steady at 0.6 percent.
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Operationally, SBI's deposits are projected to grow by 14 percent on-year to Rs 48 lakh crore in Q3FY24, with loans also expected to grow by 14 percent YoY to Rs 34 lakh crore.
Investors should keep an eye on key factors such as management's commentary on unsecured loan growth, capital adequacy and loan book traction.
The SBI stock gained 7 percent in the October-December period, outperforming the Bank Nifty index, which saw a 4 percent rise. On a yearly basis, the share has surged over 23 percent, outpacing the Bank Nifty index's 13 percent increase.
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