×

UPDATE 1-India's State Bank Q3 net beats f'cast on credit growth

MUMBAI, Jan 22 (Reuters) - State Bank of India, the country's top lender, beat street estimates with a 14 percent rise in quarterly profit, as a surge in credit demand offset higher provisions for bad loans. The bank, which controls a quarter of Indian bank loans and deposits along with its associates, and rivals ICICI Bank and HDFC Bank are seeing strong demand for loans and asset quality improvement on the back of a rapidly growing economy. But rising interest rates are a concern for the sector. India's central bank is widely expected to raise key rates by 25 basis points on Tuesday to cool accelerating inflation. It would be the seventh increase in the past one year. It had raised its main lending rate by 150 basis points in 2010. State Bank posted a net profit of 28.28 billion rupees ($620 million) in the fiscal third quarter ended December, versus 24.79 billion rupees a year earlier. A Reuters poll had forecast profit to grow 10 percent to 27.15 billion rupees. Gross advances grew 22 percent to reach 7.40 trillion rupees as on end-December 2010 from a year ago. The bank's net non-performing asset ratio fell to 1.61 percent in the quarter from 1.88 percent a year ago as improved consumer and business sentiment resulted in slowdown in bad loans pile up. Bank loans in India grew an annual 24.4 percent as at end-December, according to central bank data, compared with 11.3 percent a year earlier and 16.7 percent at end-March last year. The central bank sees non-food credit growth of banks at 20 percent in 2010/11, still below growth rates of above 30 percent in the pre-crisis period. Shares of State Bank of India, valued at $35 billion, rose nearly 24 percent in 2010, compared with a 17 percent rise in the main market and 33 percent gain in the banking sector index. The stock is, however, down nearly 8 percent this month as inflation pressures raised the spectre of higher borrowing costs. ($1=45.6 rupees) (Reporting by Sumeet Chatterjee and Shamik Paul; Editing by Muralikumar Anantharaman and Aradhana Aravindan) ((sumeet.chatterjee@thomsonreuters.com; +91-22-6636 9068; Reuters Messaging: sumeet.chatterjee.reuters.com@reuters.net)) Keywords: STATEBANK/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.