India leading public sector bank, the State Bank of India's (SBI) has recorded a 4 per cent increase in net profit to Rs 3,400 crore during the third quarter of the financial year.

The increase in net profit of just 4 per cent was mainly due to lower net interest income, which is the difference between interest earned and paid out. The bank's net interest income fell about 3 per cent to Rs 11,154 crore during the third quarter from October to December, 2012 compared to the same quarter of the previous year.

Industry analysts were expecting a 10 per cent growth in net profit and a fall of 1 per cent in NII during the quarter. SBI's other income increased more than75 per cent to Rs 3,648 crore and its net interest margin (NIM) fell from 3.77 per cent during the second quarter to 3.72 per cent during the third quarter of the year.

The bank's loan book grew by about 16 per cent to Rs 9.78 lakh crore and its gross non-performing asset ratio increased to 5.30 per cent to at Rs 53,460 crore compared to 5.15 per cent in the July-September quarter. The bank also said that the bank's net NPA ratio increased to 2.58 per cent compared with 2.44 per cent. SBI also said that its provisions for bad loans rose 46 percent to Rs 2,766 crore from the period quarter.