The State Bank of India on Friday reported its first profit in the last six quarters due to the higher interest income and stability of bad loans.
It said that the net profit surged 3.3 percent year on year to 33.49 billion rupees ($545.22 million) in its fiscal first quarter to 30 June, while the interest gained in the quarter rose 15 percent from a year earlier to 364.87 billion rupees.
The bank's gross non-performing assets (NPAs) declined to 4.90 percent of overall advances at the end of June versus the 5.56 percent in the previous year.
Net non-performing loans as a percentage of total assets were 2.66 percent in the June quarter from 2.57 percent in the previous three months but gross non-performing loans were 4.9 percent compared with the 4.95 percent in March quarter, the bank said in a press release.
But the stocks plunged after it reported its quarterly growth. Stocks fell 21 rupees lower at Rs 2415 per share during trading hours on Friday.
Slower credit growth and rise in bad loans dragged the bank's profits lower for every quarter since the three months ended in December 2012.
The bank accounts for nearly 59 percent owned by the Indian government have pleaded this year to raise scrutiny of bad loans by doing regular reviews, reported Reuters.
On Thursday, the Reserve Bank of India directed Asset Reconstruction Companies to invest 15 percent in security receipts issued by them. This regulation has been formulated by the RBI to consolidate the sale of bad loans in the banking system.
In April, SBI sold off its NPAs worth Rs 3, 500 to Rs 4, 000 crore of the financial year 2013-14 to asset reconstruction companies.
Indian lenders have been in hope of growth led by new government, RBI regulations and approvals of new projects. The economy grew less than five percent in the past two fiscal years, which led more borrower defaults and declination.
