India's top lender SBI Q4 profit misses, new bad loans rise

By Nupur Anand

MUMBAI (Reuters) -State Bank of India (SBI) missed fourth-quarter profit estimates despite record earnings as higher overhead costs and interest expenses weighed, with a rise in new bad loans sending shares falling to lowest levels in over two months.

Shares of SBI, India's biggest lender widely seen as a bellwether bank, reversed course and closed 3.9% lower at 444.65 rupees ($5.74) apiece - the lowest level since March 8 2022, after rising as much as 3.1% earlier.

SBI's net profit for the quarter ended March 31 was 91.14 billion rupees, up from 64.51 billion a year earlier but short of the 101.60 billion expected by 14 analysts on average, Refinitiv IBES data showed.

Slippages, or new bad loans, increased to 0.43% of SBI's overall loan portfolio, versus 0.37% in the previous quarter. Interest expenses grew 4% while overhead costs were 6% higher.

"On a sequential basis, slippages were slightly higher and broader markets are under pressure, so all of that dragged the stock down," said an analyst with a Indian brokerage firm.

The decline in SBI shares dragged the broader indices including the NSE Nifty 50 and the S&P BSE Sensex, which closed lower after rising more than 1% earlier in the session.

Chairman Dinesh Khara attempted to calm investors in a post-earnings address, saying the bank was "fully insulated" against future shocks, adding that he expected to keep slippages in check.

Khara pointed to higher net interest margin, a key indicators of bank's profitability, as evidence of "improved asset quality."

Its net interest margin rose by 1 basis point compared with the last quarter to 3.36%. Higher interest rates - which the central bank raised by 40 basis points last week - would have a "positive impact" on its margins, he said.

India's central bank is expected to consider more interest rate hikes, as it wants to keep rising inflation in check.

SBI set aside 32.62 billion rupees to account for soar loans, two-thirds lower than the same period a year earlier. Interest income grew 8.65%, while overall lending grew 11% driven by growth in retail loans.

($1 = 77.4330 Indian rupees)

(Reporting by Nupur Anand; writing by Sudarshan Varadhan; editing by David Evans, Jason Neely and Louise Heavens)