State Bank of India, the nation’s largest lender by assets, posted third-quarter profit that missed analysts’ estimates as bad debts rose.
Net income climbed 4 percent to 34 billion rupees ($630 million), or 50.61 rupees a share, for the three months ended Dec. 31, from 32.6 billion rupees, or 51.39 rupees, a year earlier, the Mumbai-based lender said in an exchange filing today. That missed the 36.1 billion rupee median of analysts’ estimates compiled by Bloomberg.
Shares of State Bank slid on concern that defaults by borrowers may continue to erode earnings while interest-rate cuts by the central bank curtail the profitability of lending operations. The nation’s gross domestic product may expand as little as 5 percent in the year through March, according to the government, which would be the slowest pace in a decade.
“Profit growth slowed on rising bad loans and provisions,” Hatim Broachwala, a Mumbai-based banking analyst at Karvy Stock Broking Ltd., said by telephone. “With the economic growth lagging, all expect the lender to take more time to bring down bad loans in a meaningful manner.”
State Bank fell as much as 3.5 percent before trading down 0.5 percent to 2,242.70 rupees at 1:21 p.m. local time. The stock has dropped 6 percent this year. The shares gained 47 percent in 2012, compared with a 57 percent advance in the Bankex Index of 14 lenders.
The net soured debt at the Mumbai-based bank widened to 2.59 percent of outstanding loans by the end of December, from 2.22 percent a year earlier, according to the filing. The bank increased provisions by 10 percent.
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