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SBI Q3 net rises to Rs 3,396 crore, below estimates

State Bank of India's third quarter net profit rose 4 per cent year-on-year to Rs 3,396 crore, but was below estimates of Rs 3,580 crore.

State Bank of India, the country's biggest lender, reported a 4 per cent gain in quarterly net profit, the smallest increase in more than a year, as higher provisions for bad loans and slower loan demand hurt growth.

Standalone net profit rose to Rs 3,396 crore in the quarter ended December 31, 2012, from Rs 3,263 crore in the year-ago period, the bank said on Thursday. Analysts, on an average, had expected a net profit of Rs 3,696 crore, according to Thomson Reuters I/B/E/S.

Net interest income (NII), the difference between interest earned on advances and paid on deposits, was down at Rs 11,155 crore from Rs 11,518 crore in the corresponding quarter of the previous year. The decline was on account of a jump in interest expenses on deposits.

"SBI numbers have disappointed the Street. Asset quality woes continue for India's largest bank. Even on the NII front, there's no positive news. It is a reflection of how India's economy is doing," banking analyst Hemendra Hazari said.

SBI's standalone non-performing loan ratio of 2.59 per cent of assets for the quarter compares with 2.2 per cent a year earlier.

"SBI has under-delivered both on earnings and the coverage ratio, which have dipped. This shows they don't have the earnings to meet analyst estimates," Mr Hazari added.

Deposit growth increased 15.56 per cent, while advances grew 16.07 per cent.

Asset quality:

Gross non-performing assets, as a percentage of advances, were up at 5.3 per cent in December 2012 against 4.61 per cent in December 2011. Net NPAs were up 2.59 per cent against 2.22 per cent YoY.

The provision coverage ration came down from 62.52 per cent in the December quarter of 2011 to 61.49 per cent in December 2012.

SBI shares traded 1.6 per cent lower at Rs 2,218 on the BSE as of 2.07 p.m. underperforming the broader BSE Bankex, which was down 0.4 per cent.

(With inputs from Reuters)

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