 "SBI Q1FY24 preview: Analysts see profit surging up to 169% YoY; here's why")
State Bank of India (SBI) Q1FY24 results preview: State Bank of India (SBI)'s April-June quarter (Q1) net profit may decline up to 18 per cent on a sequential basis as the country's biggest government-owned lender may create higher provisions and record muted operational performance during the quarter, analysts said.
The net profit estimates for Q1FY24 range from Rs 13,760 crore to Rs 16,340 crore, slipping anywhere between 2 per cent and 17.5 per cent quarter-on-quarter (QoQ). PAT was Rs 16,694.5 crore in the March quarter of FY23 (Q4FY23).
That said, on a yearly basis, the profit could more-than-double, surging up to 169 per cent, from Rs 6,068.1 crore clocked in the corresponding quarter of the previous fiscal (Q1FY23).
SBI is scheduled to report its Q1FY24 earnings on Friday, August 4.
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Provisions and asset quality
According to analysts at Motilal Oswal Financial Services, SBI's provisions may increase 34 per cent QoQ to Rs 4,450 crore, while those at Kotak Institutional Equities peg the same at Rs 3,978.9 crore (up 20 per cent).
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During Q4FY23, loan-loss provisions were Rs 3,315.7 crore, while in Q1FY23, they were Rs 4,392.4 crore.
"We expect slippages at 1.5 per cent of loans (priority sector lending slippages are high in Q1FY24) mostly driven by agriculture. Retail and corporate will continue to hold up relatively well. Q1 usually tends to have negligible change or marginally higher non-performing asset (NPA) ratios given the high slippage," said analysts at Kotak Institutional Equities.
MOFSL expects gross NPA ratio to ease to 2.6 per cent from 2.7 per cent QoQ, and NNPA to stay unchanged at 0.6 per cent.
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Loans and Net Interest Income
Brokerages, on average, expect SBI's loan book to grow around 16 per cent-16.5 per cent YoY/2 per cent-2.5 per cent QoQ to Rs 32.79 trillion, up from Rs 28.15 trillion in Q1FY23 and Rs 31.99 trillion in Q4FY23.
Deposits, on the other hand, are seen rising 12 per cent YoY/2 per cent QoQ to Rs 45.2 trillion as against Rs 40.5 trillion YoY/Rs 44.2 trillion QoQ.
Against this, NII growth estimates for the quarter under study range from 24.4 per cent to 32 per cent YoY. In absolute terms, it would be anywhere between Rs 38,815.5 crore and Rs 41,208.7 crore.
"NII might fall by 2.1 per cent QoQ even when loan growth is seen at 2.5 per cent. Net interest margin (NIM) could moderate by 12bps sequentially to 3.22 per cent; pre-provision profit to decline by 7.8 per cent QoQ to Rs 22,701.8 crore on account of lower fees (due to seasonality)," noted Prabhudas Lilladher.
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NII was Rs 31,195.9 crore in Q1FY23 and Rs 40,392.5 crore in Q4FY23. NIM during the respective quarters were 2.83 per cent and 3.34 per cent.
Meanwhile, Nomura sees cost of credit rising 5 bps QoQ/down 18bps YoY to 0.5 per cent. Return on Asset (RoA), too, is projected to slip 3bps/rise 69bps to 1.2 per cent in Q1FY24.