SBI Q4 preview: Will Bhushan Power resolution help SBI post stellar numbers for Q4?

MUMBAI: (SBI) is projected to report a 77 per cent year-on-year rise in net profit for the quarter ended March 31 at Rs 6,342.2 crore, according to an average of estimates from seven brokerages polled by ETMarkets.com.

The state-owned lender’s performance will be boosted by the resolution of Bhushan Power during the quarter, a long-running bankruptcy case in the National Company Law Tribunal. In March, JSW Steel implemented the Rs 19,350 crore resolution plan for Bhushan Power where SBI was the lead banker.

With the payment for the resolution received, SBI will be able to reverse a large chunk of the provisions made for the company account that will boost its bottom line, analysts said.

The public sector bank is expected to report a 9 per cent year-on-year growth in net interest income at Rs 24,874 crore for the reporting quarter. SBI will report its March quarter numbers on Friday.

“SBI appears well positioned to report a strong uptick in earnings, as the uncertainty ushered by the Covid-19 pandemic has receded significantly. Over the years, SBI has strengthened its balance sheet and increased its PCR to 86%,” said brokerage Motilal Oswal Financial Services.

Analysts believe the lender would post sequential growth in loans and report above industry rise in loan book on a year-on-year basis. SBI is also expected to report a more than 16 per cent on-year rise in pre-provision operating profit to Rs. 21,587.3 crore.

On the asset quality front, brokerage firm Emkay Global Markets expects the state-owned lender to report a gross non-performing assets ratio of 5.2 per cent. However, the uptick in provisions in the quarter for the lender will be moderate compared to its peers despite the end of the Supreme Court’s standstill on reporting of bad loans till August 31.