SBI Shares Rise in Anticipation of Q4 Results; Brokerages Warn of Potential Profit Hit from One-Time Wage Costs
Shares of State Bank of India (SBI) rose marginally by 0.8 percent to Rs 817 per share on May 9 ahead of its January-March quarter (Q4FY24) results announcement.
India’s largest lender is likely to see a sharp fall in Q4 net profit due to one-time wage revisions, while moderate loan growth is expected to restrict any rise in net interest income (NII), said analysts.
According to an average estimate of 10 brokerages, SBI’s NII is likely to grow marginally by 0.7 percent YoY to Rs 40,693 crore in Q4FY24 from Rs 40,393 crore a year back. On the other hand, the lender’s net profit is expected to see a sharp fall of up to 20 percent YoY to Rs 13,400 in Q4FY24 from Rs 16,695 crore in the year-ago period.
While analysts expect SBI’s margins to contract by 43 basis points (bps) YoY to 3.2 percent in Q4FY24 due to higher cost of funds, asset-quality picture is expected to remain steady.
With respect to wage revision provisions, SBI has taken an impact of Rs 7,100 crore in Q3FY24 and will take Rs 5,400 crore impact in Q4FY24 as wage increment was finalised at 17 percent against earlier anticipation of 15 percent, said analysts at JM Financial.
Going ahead, the management has guided for employee costs to range around Rs 66,000 crore in FY25 versus Rs 77,000 crore in FY24.
So far this year, SBI shares have surged over 27 percent, outperforming Nifty 50 which rose a paltry 2 percent.
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