The State Bank of India (SBI) reported a bigger-than-expected quarterly loss on Friday, as country's biggest lender by assets made higher provisions for treasury losses although its improved bad loan ratio sent its shares higher.
SBI's third consecutive quarterly net loss came in at 48.76 billion rupees ($707.28 million) for the three months to June 30, compared with a profit of 20.06 billion rupees a year ago, and a record loss of 77.18 billion rupees in the March quarter.
The latest loss was much larger than analysts' estimates of a loss of 1.71 billion rupees, according to Thomson Reuters I/B/E/S.
SBI, which accounts for more than a fifth of India's banking assets, recognized net mark to market losses on investments of 58.93 billion rupees in the June quarter, instead of availing a central bank option to spread the losses over four quarters.
But its gross bad loans as a percentage of total loans slipped to 10.69 percent from 10.91 percent in the previous quarter. That was, however, still above 9.97 percent posted a year ago.
Its bad-loan provisions for the quarter rose 7.5 percent to 130.38 billion rupees, but fell more than 45 percent from the March quarter.
Indian banks have been plagued by record levels of non-performing loans over recent years, and held 10.36 trillion rupees in soured assets at the end of March, with state-run banks including SBI accounting for more than 86 percent of the pile.
Last month, more than 20 Indian lenders signed a pact aimed at faster resolution of bad loans.
SBI shares reversed early losses to rally as much as 2.8 percent to the highest in six months following the results. They have since fallen, trading down 1.7 percent at 0918 GMT.