State Bank of India, the nation's top lender by assets, reported its first profi

t increase in six quarters on Friday on higher interest income, and said that ba
d loans were largely stable.
SBI, which accounts for about quarter of loans and deposits in India, said stand
alone net profit rose 3.3 percent year-on-year to 33.49 billion rupees ($545.22
million) in its fiscal first quarter to June 30, in line with analysts' estimate
of 33.35 billion rupees.
Interest earned for the quarter rose 15 percent from a year earlier to 364.87 bi
llion rupees.
Net non-performing loans as a percentage of total assets were 2.66 percent in Ju
ne quarter from 2.57 percent in the previous three months, but gross non-perform
ing loans were 4.9 percent compared with 4.95 percent in March quarter, the bank
said.
Slower credit growth and a rise in bad loans have dragged the bank's profits low
er for every quarter since the three-months ended December 2012.
A surge in bad loans has been one of the biggest challenges for the lenders, and
state-run banks have seen bad loans piling up faster than their private sector
peers.
SBI, which is nearly 59 percent owned by the Indian government, this year pledge
d to increase scrutiny of bad loans by doing regular reviews and using technolog
y.
Indian lenders are hoping to see loan growth led by a revival in economic growth
and project approvals after a new government took power this year. The economy
grew less than 5 percent in the past two fiscal years, slowing loan growth and i
ncreasing borrower defaults.
Shares in SBI, valued at nearly $30 billion, were down about 1 percent by 0741 G
MT in a Mumbai market that fell 1.3 percent. The stock has risen more than a thi
rd this year, outperforming the broader Nifty.