An improvement in the State Bank of India’s asset quality came as a major relief for the country’s largest lender, helping it to post better-than-expected profits for the third quarter ended December 31, 2018.

Fresh slippages during the October-December period fell to Rs 4,523 crore from Rs 10,725 crore in the preceding three months, a drop of almost 58 per cent.

In absolute terms, the gross non-performing assets (NPAs) also declined to Rs 1,87,765 crore from Rs 1,99,141 crore during the same period.

In the third quarter of 2017-18, it had gross NPAs of Rs 2,05,864 crore. Similarly, the gross NPA ratio came down to 8.71 per cent from 10.35 per cent in the year-ago period, while the net NPA ratio also improved to 3.95 per cent from 5.61 per cent. The period also saw recoveries & upgradation improving to Rs 6,617 crore from Rs 4,327 crore in the second quarter.

The SBI expects its asset quality to improve further following resolution in more stressed accounts.

According to SBI chairman Rajnish Kumar, there are eight stressed accounts, including three from the power sector, which are in very advanced stages of resolution.

“If all these accounts get resolved in the next two months, we are looking at a situation where our gross NPAs will slip below 7 per cent and the net NPA to under 3 per cent,” he told reporters at a conference call on Friday.

The SBI had posted a standalone net profit of Rs 3,955 crore compared with a net loss of Rs 2,416.37 crore in the year-ago period. Analysts had expected the lender to report a net profit of a little over Rs 3,000 crore.

“The December-quarter performance shows excellent improvement in all parameters, including profit, business growth and asset quality,” the SBI chief added.

Reflecting the overall improvement in credit offtake, the net interest income grew a strong 21.42 per cent to Rs 22,691 crore over the same period last year.

Kumar disclosed that an effort was on to resolve cash-strapped Jet Airways to which it has over Rs 1,500-crore exposure as the lead banker.

“We are working on a resolution plan. Under Project Sashakt, Jet Airways would be the first case to be taken under resolution,” he said.

The bankers are planning to convert their Rs 8,200-crore loans into equity, which will see them owning around 30 per cent of the airline.