Leading public sector lender is expected to report muted earnings for the third quarter on Saturday mainly on account of higher operating expenses due to wage revision and pension costs.

Net interest income is likely to grow around 6% year-on-year (YoY) in the December quarter, according to an average estimate of five brokerages. Net profit for the same period is seen declining 12% YoY.

Core operating profit could see a sharp 26% YoY drop in the third quarter, according to Nomura.

Key monitorables include the comments on unsecured loan growth, capital adequacy and loan book traction.

In the preceding September quarter, SBI recorded 8% YoY growth at Rs 14,330 crore and net interest income rose over 12% YoY to Rs 39,500 crore.

Here’s what analysts expect from SBI’s Q3

Axis Securities
Advances and deposits growth to remain healthy. NII growth to be muted, NIMs could see a compression of 5-7bps. PPOP to de-grow on the back of wage revision-related costs. Credit cost to remain benign, Asset quality to continue improvement trend.

Motilal Oswal
Higher OpEx due to increased investment. Expect earnings to decline due to higher wage provisions. Asset quality to improve further, supported by a low-stressed asset pool. Margin and provisions to be the key monitorables.

Kotak Equities
We expect operating profit growth to decline 18% YoY and NIM normalization. We are building 5% YoY NII growth owing to 14% YoY loan growth.

We expect healthy loan growth of 3% QoQ. NIM shall likely decline marginally by 4bp QoQ. SBI has guided for a shortfall of INR100bn towards the new wage agreement, which shall be spread over two quarters of H2FY24. In Q2FY24, SBI had a one-off wage provision of Rs 3400 crore.

Due to a high base, opex for SBI shall grow less sharply than other state banks. Core PPOP (including catch-up wage provisions) shall grow 1% QoQ higher than other state banks due to a high base of opex in Q2FY24. We expect slippage to rise to 0.8% from 0.6% QoQ due to the bank’s Rs 1250 crore funded exposure to BGR but total credit cost shall remain low at 23bp. The bank will not need to provide for BGR because the account is a paying one but has slipped for technical reasons.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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