State Bank of India (SBI), the country's largest bank, on Friday announced a 30% year-on-year rise in its net profit to Rs. 3,658 crore for the second quarter ended September, against Rs. 2,810 crore net profit in the corresponding quarter last year as loans showed strong growth while costs came down due to lower provisioning for bad loans.

But a rise in bad loans continue to remain a major concern.

The state-owned bank that has exposure to debt-laden firms such as Kingfisher Airlines, Air India and Deccan Chronicle Holdings, said bad loans rose to 5.15% of its loan book till September end from 4.19% a year earlier. Shares of the bank closed at Rs. 2,156, down 4%, on the Bombay Stock Exchange on Friday, disappointed by the rise in bad loans.

Provisions for bad loans in the quarter fell by 37% to Rs. 1,837 crore as the bank had made provisions for bad loans in the previous year in anticipation of rise in bad loans. Advances also grew by 18% to Rs. 956,000 crore as of September 2012 from Rs. 810,612 crore as of September 2011.