MUMBAI (Reuters) - State Bank of India (SBI), the nation's top lender by assets, reported its second straight quarter of profit on Friday after more than a year in the red, though profit lagged analyst estimates as provisions for bad loans increased.
SBI and peers such as ICICI Bank Ltd
Signs of revival in economic indicators have made banks optimistic, though a high level of bad loans is widely expected to persist for the next few quarters while credit growth continues to hover near its slowest in a decade.
SBI, which accounts for about a quarter of loans and deposits in India, reported a 52 percent rise in provisions for bad loans in July-September at 40.28 billion rupees ($653.47 million).
That led to net profit of 31 billion rupees, an increase of 30.5 percent from the same period a year earlier but short of the 32.54 billion rupees average estimate of analysts in a Reuters poll.
More than two dozen state banks account for over 70 percent of advances - and also the bulk of the bad loans. Analysts estimate banks will need as much as $110 billion over the next four years to comply with global rules for bank reserves, designed to prevent bad loans crippling the banking system.
SBI's net non-performing loans as a percentage of advances was 2.73 percent in the fiscal second quarter, from 2.66 percent in the previous three months. Interest earned in the quarter rose 10 percent from a year earlier to 372.63 billion rupees.
Shares of SBI were 2.8 percent higher after the earnings announcement, versus a 0.4 percent rise in BSE Sensex.
($1 = 61.6400 rupee)
(Reporting by Devidutta Tripathy; Additional reporting by Tripti Kalro in BANGALORE; Writing by Sumeet Chatterjee; Editing by Christopher Cushing)
