SBI’s $569.5mln profit is below expectations

The bank’s profit short of $83.3mln as provisions for bad loans surged and staff costs climbed.

State Bank of India, the country's largest lender by assets, posted a lower-than-expected rise in net profit for its fiscal second quarter, after provisions for bad loans nearly doubled and staff costs climbed.

Net profit for the July to September period rose to 25.01 billion rupees ($569.5 million) from 24.90 billion rupees ($562.33 million), it said in a filing to the stock exchanges Monday.

Interest income grew to 198.08 billion rupees ($4.47 billion) from 177.76 billion rupees ($4.02 billion) in the year-earlier period, and interest expenses fell to 116.93 billion rupees ($2.64 billion) from 121.67 billion rupees ($2.75 billion).

The earnings fell below the estimates of seven analysts polled by Dow Jones Newswires, who had anticipated net profit at 28.89 billion rupees ($652.8 million) on net interest income of 76.17 billion rupees ($1.72 billion).

The state-run lender's quarterly provisions more than doubled to 26.21 billion rupees ($592.25 million) from a year earlier, as provisions for bad loans rose 96% to 21.62 billion rupees ($488.53 million) from 11.02 billion rupees ($249.01 million).

Net bad loans as a percentage of the total book fell slightly to 1.70% from 1.73% in the year-earlier period. However, the percentage of gross bad loans to total advances rose to 3.35% from 2.99% a year earlier.

View the full story in The Wall Street Journal.