SBI's Q4 results unlikely to throw up negative surprises

State Bank of India's fourth-quarter results are unlikely to throw up any negative surprises like last year when chairman Pratip Chaudhuri presents them on Friday afternoon.

Analysts expect the country's largest lender to report a net profit of Rs 3,400 crore to Rs 3,550 crore and net interest margin (NIM) of about 4%, but concerns over asset quality are likely to remain. Last year, the bank was forced to make some exceptionally high provisioning to cover rising bad loans and create a counter-cyclical buffer that pulled down net profit to a mere Rs 21 crore.

"Fresh slippages will continue but SBI is expected to be back on the normal profitability path as exceptional provision burden like last year will not be there this time," Vaibhav Agrawal, vice-president for banking research with Angel Broking told ET.

According to Angel Broking's estimates, SBI is likely to post a net profit of Rs 3,549 crore for the quarter to March 2012 and its operating profit is likely to be at Rs 8,732 crore. Motilal Oswal expects the lender to report a net profit of Rs 3,416 crore with operational profit at Rs 8,518 crore. The bank's operational profit for the corresponding quarter last fiscal was Rs 6,080 crore.

Both the firms expect SBI to maintain NIM at over 4% like in the third quarter. Vishal Narnolia, a banking analyst with SMC Global Securities, said it was a challenge for SBI to maintain NIM at the last quarter's level as banks in general had to mobilise high-cost deposits amid tight liquidity to fund credit growth. The bank is expected to announce 18% growth in advances, in line with the industry, and a 14% growth in deposits.

Angel Broking sees fresh slippages of about Rs 8,500 crore for SBI, while Motilal Oswal said improvement in upgrades and recoveries should contain the rise in gross non-performing assets to 4.9% from 4.6% a quarter ago. Public sector banks that have already announced results have shown higher slippages.

SBI is expected to see the same trend due to its exposure to power, aviation, and SME sectors, as the economic growth has slowed.

Source: EconomicTimes