SBI Q4 net profit beats estimates, bad loans down

MUMBAI (Reuters) - State Bank of India, the nation's top lender by assets, reported a better-than-expected 23 percent rise in quarterly profit on Friday and said its bad loan ratio declined sharply, sending its shares up by more than 5 percent.

The bank's gross bad loans ratio stood at 4.25 percent in its fourth quarter ended March, compared with 4.9 percent in the December quarter. The net non-performing loan ratio fell to 2.12 percent in the March quarter from 2.80 percent a quarter earlier.

Two straight years of weaker economic expansion and stretched corporate balance sheets have led to a surge in Indian banks' bad loans. Government-owned lenders led by the SBI, which dominate India's banking sector with more than 70 percent share of loans, have amassed bad loans at a faster pace than their private sector rivals.

The bank said earlier that it had increased scrutiny and improved monitoring systems to contain bad loans.

SBI, which accounts for about a quarter of Indian loans and deposits, said net profit in the quarter rose to 37.42 billion rupees ($589 million) from 30.41 billion rupees a year earlier.

Analysts on average had expected a net profit of 37.23 billion rupees, according to Thomson Reuters data.

Weaker economic activity has also taken a toll on loan growth for banks. SBI reported a 7.25 percent rise in total loans for the year to March compared with the overall banking sector's loan growth of 12.6 percent. Retail loans grew almost 15 percent, faster than corporate loans.

Local net interest margin for the bank rose 5 basis points for the fiscal year to 3.54 percent.

SBI shares were trading 2 percent higher at 296.05 rupees in a Mumbai market that was up 0.6 percent. The stock rose as much as 5.1 percent after the results.

($1 = 63.5200 rupees)

(Reporting by Devidutta Tripathy; Editing by Biju Dwarakanath and Prateek Chatterjee)