SBI Q2 results preview: Analysts expect lender's profit to drop; here's why

State Bank of India is scheduled to report its September quarter results on Saturday, November 4

State Bank of India (SBI) Q2FY24 results preview: The July to September quarter (Q2FY24) results of State Bank of India (SBI) may see decline in the lender's profitability on a quarter-on-quarter (Q-o-Q) basis on the back of lower treasury gains, pressure on margins, and some uptick in provisions.
 

The Q2FY24 profit, analysts said, could be flat year-on-year (Y-o-Y).
 

The bank is scheduled to report its September quarter results on Saturday, November 4. 
 

"We see 10 per cent Y-o-Y rise in net interest income (NII), but flattish growth Q-o-Q. Moreover, we model-in higher opex Q-o-Q as we believe the bank could step-up on wage bi-partite provisions while lower treasury gains would limit other income growth. Overall, we see roughly 3 per cent Y-o-Y rise in pre-provision operating profit (PPOP), but 14 per cent dip Q-o-Q (off high base) for SBI," said analysts at ICICI Securities.
 

Here's a lowdown of what key brokerages expect from SBI's Q2FY24 results:
 

BNP Paribas

The brokerage pegs SBI's net profit at Rs 13,260 crore, unchanged from Rs 13,264.5 crore seen in Q2FY23. Moreover, on a sequential basis, this would be a dip of 21.5 per cent from Rs 16,884.3-crore profit seen in Q1FY24. 
 

Operationally, it expects NII to grow 17.5 per cent Y-o-Y/6 per cent Q-o-Q to Rs 41,353 crore, and sees PPOP at Rs 26,533 crore, up 25.6 per cent Y-o-Y/5 per cent Q-o-Q.
 

Prabhudas Lilladher

The brokerage sees 11 per cent yearly growth in NII at Rs 39,090 crore, up from Rs 35,183.4 crore. Sequentially, it would be a 0.5 per cent increase over Rs 38,905 crore.
 

PPOP is estimated to drop 8.5 per cent Y-o-Y and 23.6 per cent Q-o-Q to Rs 19,329 crore, while net profit is seen falling 6 per cent Y-o-Y and 26 per cent Q-o-Q to Rs 12,471.6 crore.
 

Margin (NIM) could moderate by 11bps sequentially to 3.1 per cent, while provisions may rise 8 per cent Q-o-Q to Rs 2,700 crore in Q2FY24. 
 

Asset quality could improve with gross non-performing asset (GNPA) ratio moderating 19bps sequentially to 2.58 per cent with stable credit costs.
 

JM Financial

This brokerage, too, sees nearly 23 per cent decline in PAT, to Rs 13,062 crore, on a quarterly basis on the back of 20 per cent Q-o-Q dip in PPOP to Rs 20,296.4 crore. 
 

PPOP was Rs 21,120 crore in Q2FY23 and Rs 25,296.9 crore in Q1FY24. 
 

Emkay Global

It expects profitability to moderate in Q2Y24 led by contraction in margins by 6bps Y-o-Y/7bps Q-o-Q, coupled with lower treasury gains to. On the other hand, it expects slippages to moderate Q-o-Q, and recoveries from Q1 NPAs to help in overall moderation in NPAs.
 

It forecasts PAT at Rs 14,860 crore, PPOP at Rs 22,410 crore, and NII at Rs 38,808 crore.