SBI Q1 Results Preview: Profit may fall 6-10%; NIMs to recover marginally

Analysts said that comments on NIM recovery, the impact of ECL transition, and mobilisation of FCNR deposits for the quarter are the key monitorables that investors must track in SBI's Q1 results.

SBI Q1 Results Preview: State Bank of India (SBI), slated to post its April-June quarter (Q1) earnings on Friday, could see a single-to-low double-digit decline in the profit after tax (PAT) even though the interest income is expected to rise. 

 

The net interest margins (NIMs) are expected to recover from a sharp contraction in the previous quarter ended March. 

 

Here's what to expect from SBI Q1 earnings

 

PAT and NII growth projections

Analysts at Kotak Institutional Equities (KIE) expect SBI's Q1 profit to decline 10 per cent on a year-on-year (Y-o-Y) basis amid lower income growth, while the figure could fall almost 13 per cent compared with the preceding quarter.

 

 

The brokerage added that it is building in ~10 per cent Y-o-Y net interest income (NII) growth despite a 17per cent Y-o-Y loan growth due to higher cost of funds. 

 

Meanwhile, Axis Direct's estimates suggest a profit decline of 5.7 per cent Y-o-Y while NII could grow 12.2 per cent as advances growth would remain strong at 17-18 per cent while deposit growth may lag. 

 

Margins to stabilise

Analysts expect the margins to largely stabilise after a sharp contraction in the March quarter. Motilal Oswal Financial Services (MOFSL) expects NIMs at 2.84 per cent in Q1 FY27 amid term deposit reprising and improvement in corporate spreads. 

 

Systematix Equities did not give a figure but said that the cost of funds and yield on assets are expected to remain stable and hence NIMs are expected to be broadly stable.  CHECK Stock Market LIVE Updates 

 

No concerns around asset quality

Analysts said that India's largest lender might see slippages rise marginally, but that is unlikely to lead to concerns around asset quality. KIE said that it expects slippages at ~1.1per cent of loans (normalization of slippages over time), but no fresh concerns are likely in any portfolio for the bank. We are likely to see lower recovery and upgrades as well, it added. The provisions could rise 20.7 per cent Y-o-Y to ₹5,744.3 crore, the brokerage estimates.

 

Axis Direct said that credit costs may inch up owing to seasonality, but slippages are likely to be under control, with no challenges visible on asset quality.

 

Key monitorables

Analysts said that comments on NIM recovery, impact of ECL transition, and mobilisation of FCNR deposits for the quarter are the key monitorables that investors must track in SBI's Q1 results.

 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.