India’s largest lender State Bank of India (SBI) is expected to post a net profit of 3,689 crore in the Q2FY21, up 22% from 3,012 crore in the same period last year, according to an average of estimates by four analysts polled by Bloomberg.

The bank will declare its Q2 FY21 results on Wednesday.

Analysts at Emkay Research believe SBI should report higher profits, but the new management needs to accelerate the provisioning buffer even it means sacrificing near-term profits. According to Emkay, SBI’s net interest income (NII) will be around 27,100 crore in the September quarter of FY21, an increase of 10.2% on a year-on-year (y-o-y) basis. The public sector lender is also expected to post an operating profit of 16,170 crore in Q2, down 11.1%, y-o-y.

“Healthy treasury gains and lower operating expenses will keep operating profit but the bank needs to build higher covid provisioning buffer and fraud-related provisions. Slippages should remain moderate in Q2,” the Emkay report said on 8 October.

Meanwhile, ICICI Securities said in a research report on 9 October that industry-wide improvement in collection efficiency will play out for SBI too. It added that SBI’s relatively lower vulnerability on asset portfolio as the bank has notably transitioned towards better profile assets, will finally contain the flow from phase two of moratorium to restructuring.

“Best-in-class deposit rate will help it improve market share and gain balance sheet scale with further operating efficiencies kicking-in,” it said, pointing out that SBI is making noteworthy progress in digital adoption with over 21 million registered Yono users.

Shares of SBI on the NSE closed at 204.35 on Tuesday, up 4.23% from its previous close.

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