India's largest lender, the State Bank of India (SBI) has reported a 30 per cent increase in net profits during the second quarter of the financial year. The growth of 30 per cent is the smallest growth recorded this year and is mainly due to a large provision for bad loans that affected earnings.

The bank's net profits increased to 36.58 billion rupees or about $671.13 million in the second quarter till September 2012, compared to 28.1 billion rupees recorded in the second quarter of the previous year. Analysts were expecting a net profit of 35.69 billion rupees, according to Thomson Reuters I/B/E/S.

The total non-performing loans of the bank increased to 5.15 percent of total assets as of September, 2012 compared to 4.19 percent a year earlier. Bad loans increased by nearly 45 percent to 492 billion rupees in the September quarter, SBI said.

The total net interest income, which is the difference between interest earned and interest paid out to customers, increased 63 percent during the second quarter compared to the same quarter of the previous year.

The shares of the bank fell 3.77 percent in Mumbai and were trading down 2.64 percent at 2,183.1 rupees at the time of reporting.