Mumbai: The country’s largest lender State Bank of India on Friday posted a net profit of 3,954.81 crore, the highest ever in seven years. Net profit rose on account of improved asset quality and strong net interest income (NII) growth.

The bank posted a net profit 3,954.81 crore for the three months ended 31 December compared to a loss of 2,416.37 crore in the year-ago period. Profit was higher than 3,270 crore estimated by a Bloomberg poll of 18 analysts.

Net interest income, or the difference between interest earned on loans and that paid on deposits, rose 21.42% to 22,690.99 crore from 18,687.52 crore in the corresponding period last year. Other income, which includes core fee income, dropped 0.61% to 8,035.23 crore in the three months from 8,084.17 crore a year ago.

Gross non-performing assets (NPAs), as a percentage of total advances, fell to 8.71% in the December quarter compared to 9.95% in the previous quarter and 10.35% in the year-ago December quarter.

Net NPA ratio was at 3.95% against 4.84% in the July-September quarter and 5.61% in the year-ago quarter.

Provisions during the quarter fell 68.18% to 8670 crore as against 14171 crore crore in the year-ago quarter. In the July-September quarter, the bank had set aside 12,960 crore in provisions. The bank said it’s working to bring down gross NPA to below 7% and net NPA to below 3% by March end.

“The slippages are under control. The net profit of the quarter which is 3,955 crore has to be viewed in the light of accelerated provisioning, which we made during the quarter. As a result of that, net NPAs have come down to below 4 per cent. We are working in the direction in bringing down the net NPAs and we should be below 3 per cent by the end of March 2019," said Rajnish Kumar, chairman, SBI.

Kumar also said that the bank has an exposure of 900 crore to Infrastructure Leasing & Financial Services at the holding company level and has made 50% provisioning against the exposure.

According to Kumar, the bank currently has 8 loan accounts which are in the advance stage of resolution and will help the bank recover 34,000 crore.

On Friday, shares of the bank gained 0.22% to Rs294 apiece, while the benchmark Sensex index gained 0.82% to 36552.19 points.