SBI Q2 Earnings Preview: Profit to Rise 9-30% YoY; NII Expected to Grow 5-7%
State Bank of India (SBI) Q2 2024 Profit Likely to Surge Amid Strong Loan Growth and Steady Asset Quality
Updated: Nov 08, 2024, 8:13 AM IST
State Bank of India (SBI) is set to report its earnings for the September 2024 quarter, with analysts forecasting a robust year-on-year (YoY) increase in net profit. The state-run lender’s profit is expected to rise between 9% and 30%, driven by a solid growth in net interest income (NII) and healthy loan book expansion. However, some analysts also anticipate a slight contraction in net interest margin (NIM) on a sequential basis.
SBI Q2 Profit Expected to Grow 9-30% YoY
Sharekhan has forecasted that SBI’s net profit for Q2 FY2024 will increase 12.5% YoY to Rs 16,119 crore, up from Rs 14,330 crore in the same quarter last year. The brokerage also projects NII to rise 5.6% YoY, from Rs 39,500 crore in Q2 FY2023 to Rs 41,722 crore in Q2 FY2024. Sharekhan further expects a 34.1% YoY jump in pre-provision operating profit (PPOP) to Rs 26,037 crore from Rs 19,417 crore last year.
Meanwhile, PL Capital forecasts a net profit of Rs 15,603 crore, marking an 8.9% YoY growth. The firm expects NII to increase by 7.2% YoY, reaching Rs 42,362 crore, while PPOP is anticipated to rise 26% to Rs 24,538 crore.
Key Metrics and Analyst Outlook for SBI Q2
Axis Securities projects SBI’s Q2 net profit to grow 12.2% YoY to Rs 16,074 crore, supported by a 4.9% rise in NII, reaching Rs 41,142 crore. According to the brokerage, loan and deposit growth will remain strong, with the credit-deposit (C-D) ratio staying stable on a quarter-on-quarter (QoQ) basis. However, Axis Securities also expects NII growth to soften, and NIM to face slight compression due to rising deposit costs. Operational expenses are likely to see a marginal increase, while PPOP growth could remain flat sequentially.
On the other hand, YES Securities anticipates a stronger performance, forecasting a 30.6% YoY surge in SBI’s net profit to Rs 18,711 crore. The brokerage expects a 6.4% YoY increase in NII to Rs 42,012 crore. YES Securities believes that while loan growth will be in the 3% range, the NII growth rate may be slightly slower due to rising deposit costs outpacing the yield on advances, resulting in a slight sequential decline in NIM.
Capital Adequacy and Loan Book Growth Focus
For analysts and investors, the key focus will be on SBI’s commentary regarding capital adequacy, loan book growth, and return ratios. With a strong emphasis on credit expansion, the bank’s outlook on loan growth for the remainder of the fiscal year is expected to provide further insight into its growth trajectory.
Analysts also expect asset quality to remain steady for the state-run lender. While credit costs may continue to normalize, asset quality indicators are not expected to show any major deviation on a sequential basis, thanks to lower slippages and provisions.
Fee Income and Provisions: What to Expect
SBI’s fee income growth may lag behind loan book growth due to seasonal factors, with lower sequential growth expected in non-interest income. Operating expenses could grow slightly slower than business growth, while provisions and slippages are expected to remain subdued due to seasonality.
Outlook for SBI’s Long-Term Growth
SBI’s strong earnings growth in Q2 comes on the back of consistent loan growth and effective cost management. The bank has managed to maintain a solid asset quality track record, even as it continues to expand its loan book. With the Indian economy showing resilience, SBI’s strategic focus on increasing its retail and corporate lending portfolio is expected to sustain its growth momentum in the coming quarters.
As the largest public-sector lender in India, SBI’s performance will be closely watched by investors and analysts for signs of continued strength in its core operations, including its loan book, deposit growth, and profitability. The bank’s performance in the second quarter will also set the tone for the remainder of the financial year.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
