SBI sees profit from bond sale

Will profit substantially from rupee plunge.

State Bank of India, the nation’s largest lender, expects to profit after the rupee’s plunge prompted it to accelerate selling its government debt holdings. It sold the securities since the rupee’s depreciation will stop the further easing of bond yields after the biggest drop since 2008.

Pradeep Kumar, SBI head of global markets, said that for the next three months, bond yields below 7% don’t look possible. He noted that the depreciating rupee makes inflation stubborn, resulting in SBI booking substantial profits. The rupee is Asia’s worst-performing currency this quarter.

The Reserve Bank of India, the central bank, yesterday kept its benchmark rate at 7.25% and flagged upside pressures on consumer prices from a further fall in the rupee.

Gains from selling part of its debt holdings will help SBI return to profitability from the first slump. Analysts forecast profit to fall for a second straight quarter in the period ending June 30 on rising bad loans. Profit fell 18% in the three months to March.