SBI Q3 earnings preview | Net interest income expected to hit 10-quarter low

State Bank of India (SBI) is set to disclose its Q3FY24 financial results on Saturday, February 3. According to a recent CNBC-TV18 poll, there will be a potential slowdown in the net interest income (NII) growth, making it the weakest in the last ten quarters when measured on a year-on-year (YoY) basis.

Additionally, profit growth, which traditionally sees an uptick, is anticipated to experience a decline or even register a negative return for the first time in a year-on-year comparison.

The forecasted NII growth is pegged at just 6.3% year-on-year and 2.2% sequentially.

In terms of profits, a decline of 5.9% compared to the previous year and about 7.5% compared to the last quarter is predicted.

An important factor contributing to this uncertainty is the potential need for a special provision for wages due to a recent wage revision, which may impact the overall financial figures.

Analysts also express concerns about a possible reduction in interest earnings on loans, estimating a decline of 18 to 20 basis points compared to last year and five to eight basis points compared to the last quarter.

On a positive note, the bank's lending is expected to grow by approximately 14% compared to last year and 4% compared to the last quarter, indicating potential signs of growth.

Asset quality appears to be holding steady or even improving, with the gross non-performing asset (NPA) ratio expected to improve to 2.4% from the previous quarter's 2.6%.

However, there is a concern about the bank's treasury income, which may not perform as strongly.

Kotak Securities projects an 18.3% decrease in the bank's operating profit compared to the previous year, but a potential increase of 6.2% compared to the last quarter.

Investors and industry experts are eagerly awaiting insights from the bank's management regarding its future growth plans, which will be a crucial element in shaping market sentiment and confidence in SBI's trajectory.