State Bank of India, the country's largest lender, is expected to report profit at more than Rs 3,500 crore for the quarter ended September 2020 amid elevated loan loss provisions.
Loan as well as net interest income (NII) growth could be slowed to 7 percent and around 8-12 percent respectively YoY, while pre-provision operating profit (PPoP) may be lower YoY as year-ago numbers lifted by life insurance business stake sale.
"We expect slower growth in NII (8 percent YoY) given the recent cuts in lending yields and deposit rates. Loan growth could be subdued at around 7 percent YoY and NIM (core) unchanged QoQ at around 3.2 percent," said Kotak Institutional Equities which sees profit at Rs 3,823.1 crore in Q2FY21 (against Rs 3,012 crore YoY) and 17 percent fall YoY in PPoP.
Prabhudas Lilladher also feels loan growth could remain constricted (to 7.4 percent YoY) with deposit growth, also remaining in lower double digit, while lower rates and slower loan growth is expected to impact NII (up 10.4 percent) and NIM (2.99 percent).
Provisions and contingencies are expected to remain elevated due to elevated slippages and moratorium book, though declined on year-on-year as well as quarter-on-quarter basis, while asset quality may see some improvement in Q2FY21 against June quarter.
Kotak expects slippages at 1.6 percent of loans (subject to court ruling) as the moratorium has now been lifted but the restructuring option would keep this quarter's slippages on the lower side.
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The strategy of the new chairman, commentary on growth and provisions, and commentary around restructuring and potential impact on asset quality would be key key things to watch out for, brokerages feel.
The stock price has not seen any major movement in the current financial year so far as it was around Rs 200 levels now against the closing of Rs 196.85 on March 31, while during the September quarter, it gained just 4 percent, largely due to NPA concerns.
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