Q3FY23 Preview: State Bank of India: NII seen at Rs 372.1 billion, PAT at Rs 134.7 billion

31 Jan 2023 , 12:30 PM

Result date: 3^rd February, 2023

Recommendation: Buy

Target price: Rs 750

State Bank of India (SBI) is likely to post loan growth of 19% over the year-ago quarter and ~3.6% sequentially, believe analysts at IIFL Capital Services. They expect 21% year-on-year growth in Net Interest Income (NII) of the bank.

SBI should post sequential improvement in Net Interest Margins. Pre-provisioning Operating Profit (PPOP) is likely to grow 19% over the year-ago quarter, reflecting strong NII growth.

Slippages ratio in the quarter should remain <1% annualized, and analysts at IIFL Capital Services build in credit cost of ~0.5% on an annualized basis.

Profit After Tax (PAT) could grow 60%, partly due to halving of provisions over the year-ago quarter. 

Important management insights to watch out for:

• Trend in credit demand across segments
• Operating expense, cost of funds and margin drivers
• Traction in deposits

Rs Billion	December 2022 estimates	YoY change	QoQ change
Net Interest Income (NII)	372.1	21%	6%
Total Income	468.9	19%	6%
PPOP	220.0	19%	4%
Provisions	35.2	(50)%	16%
Profit After Tax	134.7	60%	2%

Source: IIFL Research