State Bank of India, the country's largest lender, reported a rise in second-quarter profit on Friday, helped by healthy core lending income.
The state-run lender's net profit rose 28 per cent to Rs 18,331 crore compared with Rs 143,30 crore a year ago.
That exceeded analysts' expectations of Rs 16,189 crore, as per estimates compiled by LSEG.
State Bank of India's interest income rose 12.3 per cent to Rs 1.14 lakh crore
While demand for loans remains strong, lenders have made higher provisions during the quarter for loans that become non-performing.
State Bank of India's provisions and contingencies rose sharply to Rs 4,506 crore in the quarter, from Rs 115 crore a year ago, while provisions for bad loans doubled to Rs 3,631 Crore.
Its gross bad loans as a proportion of total loans stood at 2.13 per cent at the end of September, versus 2.21 at the end of June.
Private sector lenders Kotak Mahindra Bank, IndusInd Bank and RBL Bank also raised their provisions towards bad loans in the second quarter, amid rising credit card and microfinance delinquencies.