Top Indian lender State Bank of India (SBI) reported an 81% jump in quarterly profit on Friday, helped by a one-time gain from selling a stake in its life insurance unit and a drop in provisions for bad loans.
The bank's shares rose as much as 4.1% in a weak Mumbai market as investors cheered the numbers and looked past a provision of 18.36 billion Indian rupees ($246 million) to cover for an expected wave of loan defaults stemming from the coronavirus pandemic.
Indian lenders are bracing for a surge in bad loans in a pandemic-ravaged economy, with the central bank's relief measures including deferments of loan and interest payments as well as low interest rates expected to hurt the health of banks.
In the June quarter, however, SBI's asset quality improved, with gross bad loans as a percentage of total loans easing to 5.44% from 6.15% in the previous quarter and 7.53% a year earlier.
Provisions for bad loans fell 19% to 94.20 billion rupees ($1.26 billion).
A gain of 15.40 billion rupees from selling a stake in unit SBI Life Insurance helped push SBI's net profit to 41.89 billion rupees for the quarter from 23.12 billion rupees a year earlier.