India’s largest lender State Bank of India (SBI) is expected to report a net profit of 4,106 crores in the three months to June 2019 compared to a net loss of 4,875 crores in the same period last year, according to an average of estimates of 16 analysts polled by Bloomberg
In the June quarter of FY19, the bank had reported a net loss for the third consecutive quarter after setting aside funds to cover losses on its bond portfolio and increased gratuity.
Analysts at Kotak Institutional Equities expect slippages at 1.6% of its loans as recognition of large accounts is complete, while gross bad loans could decline led by higher write-offs. The bank’s provisions would be high due to the ageing of non-performing assets (NPAs), it said. The brokerage also expects loan growth of 12% y-o-y and net interest margin (NIM) sequentially unchanged at 2.9%.
“Non-interest income growth will be higher due to higher treasury income and income from written-off loans," said Kotak Institutional Equities.
Meanwhile, brokerage Prabhudas Lilladher expects SBI to report a net interest income – the difference between interest earned and expended – of 23,905 crores, up 9.7% from the June quarter of FY19. It also sees the bank’s pre-provisioning operating profit (PPOP) at 14,533 crores, down 14% year-on-year.
“SBI to see sharp earnings recovery and while we build slippages of 8,000-8,200 crore and credit cost of 200 bps (annualized) which should improve provision coverage ratio (PCR) to 70% but also help in higher write-off," said a report by Prabhudas Lilladher
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