OUR MONITORING DESK MUMBAI - The State Bank of India shocked the market Tuesday by posting a 99pc drop in its fourth-quarter net profit, hurt by a sharp rise in provisions and tax expenses, says The Wall Street Journal. The unwelcome surprise from Indias largest lender by assets spooked investors, who punished the stock, sending it to an intraday low of 2401 rupees ($53.2). The stock provisionally closed down 8.2pc at Rs2,403.00 in a Bombay Stock Exchange market, that was 1.1pc lower. This after the lender said its January-March net profit plunged to Rs208.8 million from Rs18.67 billion a year earlierway below the Rs28.91 billion profit estimated in a poll of 13 analysts. Provisions jumped to Rs41.57 billion from Rs23.49 billion, of which the amount set against bad loans was Rs32.64 billion. For the fiscal year ended March 31, provision against bad loans was Rs87.92 billion - it included a countercyclical provisioning buffer of Rs23.30 billion. In April, the Reserve Bank of India asked banks to create such buffers in good times to use if the tide turned. The negative surprise is not just on provisions, but also on operating parameters, said Vaibhav Agrawal, vice president of Angel Broking. The surge in provisions was partly because the lender set aside Rs5 billion of additional capital against a home loan scheme the RBI dubbed as teaser loans. The scheme received overwhelming response from customers as it offered lower interest rates in the initial years. But the central bank, concerned that the scheme may lead to delinquencies once interest rates are set higher later, increased the provision on such loans to 2pc from the earlier 0.4pc. The State Bank of India initially resisted the moves, with its then-chairman locking horns with the central bank on the issue. But, bowing to the regulators pressure, the bank recently ended the nearly 20-month long scheme and had to provide the entire additional amount in the quarter. Of its total outstanding home loans of about Rs860 billion, its special home loan book is worth about Rs370 billion, the bank said in April. The banks net interest income - the difference between interest earned and interest paid - rose 20pc to Rs80.58 billion from Rs67.21 billion a year earlier. Analysts on average had estimated a quarterly net interest income of Rs91.19 billion. Agrawal is still positive on the stock as the bank has raised interest rates in recent weeks to align itself with the industry and is focused on protecting its margins. The bank didnt provide its net interest margins for the just-ended quarter. Margins for the year ended March 31 was at 3.32pc compared with 2.66pc a year earlier. For the quarter, the asset quality of the bank showed signs of stress with gross bad loans as a percentage of total loans rising to 3.28pc from 3.05pc a year earlier while net profit was further hurt after tax expenses soared to Rs19.02 billion from Rs9.78 billion.