State Bank of India (SBI) reported a smaller-than-expected quarterly profit on Friday, partly due to provisions for bad loans that the country’s largest lender by assets set aside in the quarter.

Shares of the Mumbai-based lender slipped as much as 2.3% to 292.45 rupees.

The Indian banking sector has been plagued by record levels of bad loans for years, and state-run lenders including SBI account for the biggest share of the pile.

Net profit came in at 8.38 billion rupees ($120.04 million) for the three months ended March 31, compared with the loss of 77.18 billion rupees reported last year that was caused by a surge in bad loans, SBI said.

Analysts had estimated a profit of 43.93 billion rupees, I/B/E/S data from Refinitiv showed.

Provisions for bad loans jumped 24% quarter-on-quarter to 173.36 billion rupees, but was still lower than the 240.80 billion rupees set aside in the year-ago period.

SBI is the biggest creditor to Jet Airways Ltd, once India’s largest private carrier which defaulted on its loans and folded its operations last month as it ran out of funds. The bank did not give an update on its exposure to Jet in its earnings release. Revenue from SBI’s retail banking business grew 15.3% to 336.62 billion rupees. Gross bad loans as a percentage of total loans, a measure of asset quality, eased 118 basis points at quarter-end, compared to the previous quarter.

($1 = 69.8110 Indian rupees)

First Published: May 10, 2019 14:52 IST