"Associates were not under-providing , while the parent may have been under-providing for bad loans," said Hemindra Hazari, head of research at Nirmal Bang Institutional Research. SBI on Tuesday shocked markets with a 99% decline in fourth quarter net profit to Rs 21 crore. Newly appointed chairman Pratip Chaudhuri assured investors that this was a one-time quarter with one-off provisioning that will not appear in subsequent quarters. For the full fiscal ended March 2011, consolidated net profit of SBI group - including associates , subsidiaries and SBI - stood at Rs 10,685 crore, down from Rs 11,734 crore a year ago.

However, the group's operating profit for the fiscal was up 34% to Rs 33,240 crore. Associate banks reported a 22% growth in net profit for the full fiscal at Rs 3,598 crore while SBI's profit for the fiscal fell 10% to Rs 8,265 crore. SBI merged two of its associates - State Bank of Saurashtra and State Bank of Indore - with itself over the past three years.

Indicating that consolidation of associate banks with SBI will continue, Mr Chaudhuri had said in April: "This path of M&A would continue. We have experience and enough learning, and seen that merger does deliver value and synergy of scale." The subsidiaries of SBI also outperformed the parent. SBI Card and Payment Services, which provides credit cards in partnership with GE Capital, made a turnaround after three years of losses. It reported net profit of Rs 7.10 crore against a net loss of Rs 150 crore a year ago.

SBI Capital Markets , the investment banking arm of SBI, reported a 156% rise in net profit at Rs 385 crore. SBI Life, the life insurance venture with BNP Paribas , reported a 33% increase in net profit at Rs 366 crore.