State Bank of India (SBI) posted a sharp increase in net profit and provided a steady outlook for the coming quarters, even as the coronavirus crisis ravages the country’s economy.

SBI’s results come as Indian lenders brace for a flood of potential loan defaults, with many small businesses finding it hard to operate as the pandemic crushes demand.

The lender reported an 81% surge in profit and better asset quality as bad loan provisions dropped.

Its provision coverage ratio, or the percentage of funds set aside for loan losses, was 86.32% as of quarter-end compared with 83.62% in the previous quarter.

Gross bad loans as a percentage of total loans eased to 5.44% from 6.15% in the previous quarter.

Provisions for bad loans fell 19%, though the bank set aside 18.36 billion rupees ($245.50 million) in anticipation for loans that could go bad.

Around 9.5% of the bank’s term loan book by value was under moratorium at June end, Kumar said, compared with 23% at previous quarter’s end. The management is confident that loan recoveries will pick up from the September quarter.

Currently, no large accounts are in trouble, Kumar said.

Gains from selling a stake in unit SBI Life Insurance drove SBI’s net profit to 41.89 billion rupees for the quarter from 23.12 billion rupees a year earlier.

Net interest margin, a key indicator of profitability, rose to 3.24% from 3.01%.

The bank’s shares closed up 2.6% after the results in a weak Mumbai market.

SBI touts strong 'immunity' as profit surges in pandemic