BENGALURU: Top Indian lender State Bank of India (SBI) reported an 81% jump in quarterly profit on Friday, helped by a one-time gain from selling a stake in its life insurance unit and a drop in provisions for bad loans.
The bank’s shares rose as much as 4.1% in a weak Mumbai market as investors cheered the numbers and looked past a provision of Rs 1,836 crore ($246 million) to cover for an expected wave of loan defaults stemming from the coronavirus pandemic.
Lenders are bracing for a surge in bad loans in a pandemic-ravaged economy, with the central bank’s relief measures including deferments of loan and interest payments as well as low interest rates expected to hurt the health of banks.
In the June quarter, however, SBI’s asset quality improved, with gross bad loans as a percentage of total loans easing to 5.44% from 6.15% in the previous quarter and 7.53% a year earlier.
Provisions for bad loans fell 19% to Rs 9,420 crore ($1.26 billion).
A gain of Rs 1,540 crore from selling a stake in unit SBI Life Insurance helped push SBI’s net profit to Rs 4,189 crore for the quarter from Rs 2,312 crore a year earlier.