India's biggest lender, State Bank of India, will report its third quarter earnings today. The bank has been struggling with poor asset quality, reporting slippages over the last two quarters.
SBI has classified Kingfisher Airlines (KFA) as a non-performing asset (NPA). SBI's exposure to KFA is around Rs 1,580 crore and it will have to set aside Rs 250-280 crore as provisioning against KFA account. SBI's total slippages are expected to be at Q2 levels (or slightly lower).
"Slippages have improved... SBI has seen elevated slippages in the last two quarters. Despite Kingfisher Airlines being classified as NPA, slippages could be lower on a sequential basis,” Rajiv Mehta, AVP (Research) at IIFL told NDTV Profit ahead of results.
Shares of the company underperformed the banking index on the Bombay Stock Exchange and traded 2% lower at Rs 2,128 at 1020 hours. The Sensex was down 0.20% at 17,712.
Net interest income (NII) is seen rising 19.88% at Rs 10,848.6 crore against Rs 9,049.76 crore year-on-year. Profit after tax (PAT) is seen rising 7.7% at Rs 3,046.25 crore against Rs 2,828.06 crore (YoY).
Here's what to watch out for:
Net interest margin (NIMs) likely to remain stable or improve marginally
Loan growth likely to be 14-15% (YoY)
Deposit growth seen around 13%
Provisioning expected to be lower sequentially
Restructured loans will be watched
SBI's exposure to GTL is Rs 430 crore
Expect fee income to grow 7% YoY and remain flat on a sequential basis
Treasury gains seen improving sequentially