MUMBAI: India’s largest lender State Bank of India (SBI) is expected to post a net profit of 3,375 crore in the three months to June 2020, as against a profit of 2,312 crore in the same period last year, according to a Bloomberg average of estimates of 15 analysts. The bank will declare its Q1 FY21 results on Friday.

Analysts at Motilal Oswal said SBI appears well-positioned to report strong uptick in earnings.

“The bank’s NPL formation run-rate has moderated significantly from the highs witnessed during FY18. This, along with the expected uptick in core operating performance will further propel earnings growth, in our opinion,” the Motilal Oswal note said.

For state-owned banks in general, analysts at Motial Oswal estimated weakness in the earnings. Besides the dreadful impact of covid-19, sluggish loan growth due to merger integration, higher proportion of moratorium and delay in the resolution of national company law tribunal (NCLT) accounts are additional earning dampeners, the report said.

SBI is expected to post a net interest income of 24,356 crore in the June quarter of FY21, up 6.2% from the same period last year, according to Motilal analysts.

Credit Suisse said in a note on 7 July that June quarter earnings of banks will highlight “widening growth divergence among various lenders”.

“However, asset quality disquiet is likely to remain unresolved even as share of moratorium loans is likely to moderate from 15%-50% to 10%-30% of loans,” it said, adding that over the past few months, the resumption of economic activity and collection efforts, loans under moratorium for the lenders have started to moderate.

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