SBI Q2 Preview: Strong NII growth likely, NIMs expected to be stable

Driven by strong growth in net interest income and improvement in net interest margins, State Bank of India is expected to report a 38% year-on-year (YoY) growth in net profit for the quarter ended September to Rs 10,500 crore, according to ET Now poll.

“We are building in 13% NII growth on the back of strong loan growth of 16% YoY,” Kotak Institutional Equities said in its report.

Brokerage PhillipCapital expects loan growth to have gained momentum as system-wide credit growth has picked up.


Most of its frontline peers in the private sector space have reported double-digit growth in the loan book.

Net interest income is expected to rise 7% on-year to Rs 33,500 crore, the ET Now poll showed.

Kotak Equities expects the country’s largest lender’s operating profit to nearly double, primarily as the base quarter had higher operating costs pertaining to retirement costs.

Asset quality is likely to improve further in the quarter gone by, but analysts expect provisions for bad loans to go up sequentially.

According to the poll, provisions are likely to increase 60% sequentially to Rs 7,000 crore.
While provisions could rise, analysts expect credit costs to remain moderate.

Brokerage Motilal Oswal Securities expects net interest margin to improve to 3.1% in Q2. The operating expenses, fee income, and increase in cost of deposits will be the key monitorables, according to the brokerage.

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