State Bank of India profit down 32%

Lender's $413mln net profit below analysts' expectations as it allotted more funds for bad loans.

State Bank of India, the nation's largest lender, posted its first drop in profit in more than three years and missed analysts' estimates as it set aside more funds for bad loans. The shares fell.

Net income for the three months ended March 31 fell 32 percent to 18.7 billion rupees ($413 million) from 27.4 billion rupees a year earlier ($605.52 million), according to a filing to the National Stock Exchange on Friday. The profit compared with the 27.3 billion rupee ($603.31 million) average of 21 estimates compiled by Bloomberg.

Chairman Om Prakash Bhatt is increasing provisions for delinquencies at the government-controlled lender, which accounts for almost a fifth of the nation's banking assets, after India's central bank raised interest rates twice since mid-March to curb inflation. The bank's profit on sale of investments also fell 72 percent during the quarter.

View the full story in Business Week.