SBI Q2 Results Preview: PAT Likely To Grow 5.2% YoY, NIM To Be Flat; Asset Quality To Remain Stable

Mumbai is home to the headquarters of the Fortune 500 company State Bank of India (SBI), an Indian multinational with a regulatory role in public sector banking and financial services. The financial results for the quarter that ended on September 30, 2024, are being released by the largest PSU lender in India. Analysts and investors will be eagerly observing the announcement, which is slated for November 8, 2024, to get details on SBI's plans to boost asset quality, loans, deposits, net profit, and interest income. According to the analysts' forecasts of several brokerages listed below, a number of important indicators are anticipated to represent the State Bank of India's (SBI) performance for the July-September 2024 period as the bank gets ready to release its Q2 FY25 results.

SBI Q2 Results Preview By KRChoksey Research

The brokerage expects 5.7%YoY/1.5%QoQ growth in NII, assuming a 16.6% YoY growth in advances. The increase in the corporate loan book will be the main driver of credit growth. It also expects credit growth to exceed deposit growth, which is projected to be 7.9% YoY.

In the base scenario, PPOP is expected to grow by 26.8% YoY while declining by 6.9% QoQ. Lower employee expenses on the high base of the previous year will fuel the YoY growth.

The brokerage is forecasting a 5.2% YoY growth in net profit in the base scenario, assuming normalized credit costs compared to last year's low base.

SBI Q2 Results Preview By Dolat Capital

The brokerage expects healthy loan growth at 15% YoY and 3% QoQ. NIM to be stable QoQ at 3.2%. Slippages to remain sub 1%, with credit costs at 30 bps. Build in RoA of 1%. Delinquency trends in retail unsecured books remain monitorable.

SBI Q2 Results Preview By Yes Securities

As per the brokerage SBI's sequential loan growth will be in the 3.0% ballpark due to its idiosyncratic growth trajectory. NII growth will be slightly slower than average loan growth due to the rise in the cost of deposits outpacing yield on advances. Consequently, NIM will be slightly lower sequentially. Sequential fee income growth will be lower than loan growth due to seasonality. Opex growth would slightly lag business growth. Slippages would be lower on a sequential basis due to seasonality. Provisions will be lower on a sequential basis.

SBI Q2 Results Preview By Prabhudas Lilladher

The brokerage said SBI's NII to increase by 3.0% QoQ with loan growth seen at 3.5%. Margins could fall by 4bps sequentially. PPoP to decline sharply by 7.2% QoQ on account of an increase in opex and flat other income. The broking firm said SBI's provisions are expected to increase by 5% leading to a further fall in PAT. Asset quality in terms of GNPA is likely to improve by 10 bps while credit cost is expected to increase by 1bp.

SBI Q2 Results Preview By Sharekhan

The brokerage said SBI's advances are likely to grow at ~14% y-o-y and NIMs expected to remain marginally lower QoQ. SBI's asset quality to remain broadly stable said Sharekhan.

SBI Share Price Target

"The stock is trading at ~1.15x FY26E core banking business, after adjusting for INR 263 per share of subsidiaries. While we acknowledge that RoA has peaked, we believe the bank could still deliver strong RoE and RoRWA. The stock is trading at closer to 10 years average valuation; however, the expected RoA for the next 2 years is almost double of 10 years' average, with less riskiness in the balance sheet. The valuations should also be seen in the context of the bank gaining credit market share for the next 2 years, and relatively strong positioning on LDR, LCR and regulatory retail. We also believe SBI could sustain its outperformance (vs private peers) in unsecured retail in the current environment, as delivered during pandemic, due to predominant share of less risky government employees. We maintain BUY on the stock with an unchanged target price of INR 1,000. Our target multiple is ~1.6x on FY26E core banking business and we value subsidiaries at INR 263 per share," the technical research team of ICICI Securities said.

Disclaimer

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