State Bank posts steady Q3 net, meets forecast

The State Bank of India (SBI) on Monday reported steady quarterly net profit, with better loan growth helping the country's top lender.

October-December net profit was Rs4.79 billion ($538 million), compared with Rs24.78 billion a year earlier. A Reuters poll of analysts had forecast a 1.1% drop in net profit to Rs24.5 billion.

A rise in yields on government bonds in the quarter, in contrast to a sharp fall in yields a year earlier, has hit banks' treasury income.

Indian banks were largely insulated from any direct impact of the credit crisis which rocked the global economy in 2008, but the subsequent slowdown hit the country harder than expected and led to a sharp slowdown in credit growth in the current fiscal year.

The revival in the economy and an improvement in customer confidence is expected to boost demand for loans, especially in the housing, retail and automobile sectors.

ICICI Bank, India's No.2 lender, last week posted a 13.4% fall in quarterly profit due to the drop in treasury income, but it said credit quality was improving as conservative lending policies and a strong rebound in activity slowed the rise in loan defaults.

Shares in State Bank, valued at $28.7 billion, are down 8% so far in 2010 and are trading near 4-month lows, underperforming a 3.3% drop in the banking sector index. ICICI shares are down 4.8% so far this year.