SBI net profit rises on reduced provisions; bad loan ratio edges up

MUMBAI (Reuters) - State Bank of India (SBI) on Tuesday said net profit rose 10.2 percent on year in the fiscal first quarter, as bad loan provisions fell at the nation's biggest lender by assets which has been taking steps to reduce its pile of soured debt.

Net profit was 36.92 billion rupees ($575.6 million) for the three months ended June 30, compared with the 34.11 billion rupees average estimate of 20 analysts polled by Reuters.

Gross bad loans as a percentage of total loans marginally rose to 4.29 percent from 4.25 percent in the previous quarter, while SBI's net bad loan ratio rose 12 basis points.

Bad loan ratios at Indian banks have near-doubled in the past four years as weak economic growth hurt companies' ability to repay debt. At the same time, demand for loans has slowed.

The speed at which banks booked new bad loans has eased as lenders such as SBI have strengthened criteria for loan applicants and react quicker to early signs of trouble.

Banks are still wary about lending to stressed sectors such as infrastructure and steel, industry insiders say.

Shares of SBI, valued at more than $33 billion, fell 2.3 percent after the earnings announcement in a Mumbai market that was down 0.6 percent.

($1 = 64.1400 rupees)

(Reporting by Devidutta Tripathy; Editing by Christopher Cushing)