"This is a quarter we would like to forget," SBI Chairman Pratip Chaudhury said at a news conference.

The poor results don't necessarily spell trouble for all Indian lenders. SBI, India's largest bank by assets, was particularly hurt by a rise in provisions to 41.57 billion rupees ($921 million) from 23.49 billion rupees, including 32.64 billion rupees set aside against possible bad loans. Tax expenses also soared to 19.02 billion rupees from 9.78 billion rupees.

Rivals ICICI Bank Ltd. and HDFC Bank Ltd. had much stronger quarters because they didn't have to set aside such large amounts against possible bad loans. Analysts say that they expect bad loans will likely remain steady in coming quarters for most banks.

SBI's provisions jumped after it recently ended a highly popular mortgage program that involved what the central bank called "teaser loans," which charged borrowers below-market rates in the initial years, before rising later.

The program was launched after the global economic crisis hit in late 2008, crimping demand for housing and other loans. State-run SBI was flooded with cash as investors sought to park their funds with the bank, perceiving it to have an implicit guarantee from the government, making the bank eager to lend.

After about a year, the Reserve Bank of India became concerned that teaser loans, which were attracting great demand, would lead to delinquencies once interest rates rose. Several other lenders launched programs similar to SBI's, but discontinued them after the central bank raised the provisioning requirement on such loans to 2% from 0.4%.

SBI initially resisted the requirement to increase provisions, arguing that its mortgages weren't covered by the rules. It set aside the entire 5 billion rupees required by the central bank in the latest quarter.

For the January-March quarter, SBI's net profit plunged to 208.8 million rupees from 18.67 billion rupees a year earlier. A survey of 13 analysts yielded an average forecast of 28.91 billion rupees.

The unwelcome surprise spooked investors, who punished the stock, sending it to an intraday low of 2,401. SBI provisionally closed down 8.2% at 2,403 rupees in a Bombay Stock Exchange market that was 1.1% lower.

SBI's provisions also included funds set aside to create a so-called countercyclical buffer—a cushion of money the Reserve Bank of India requires banks to build up in good times to cover losses when the economic tide turns. For the fiscal year ended March 31, the bank's countercyclical provision totaled 23.30 billion rupees.

"It definitely looks like a cleaning up of the books by setting aside a large amount," said Vaibhav Agrawal, vice president, Angel Broking Ltd. "The negative surprise is not just on provisions, but also on operating parameters."

The bank's net interest income--the difference between interest earned and interest paid—rose 20% to 80.58 billion rupees, lower than the 91.19 billion rupees analysts expected.

Mr. Chaudhury, SBI's chairman, conceded that asset quality was a "challenge" in the just-ended year and said that the bank had appointed a senior executive to rein in bad debts.

The bank's gross bad loans jumped to 253.26 billion rupees from 195.35 billion rupees a year earlier. For the fourth quarter, gross bad loans as a percentage of total loans rose to 3.28% from 3.05% a year earlier.

SBI Chief Financial Officer Diwakar Gupta said the bank needs to provide an additional 11 billion rupees to meet countercyclical buffer requirements over the next two quarters. He said the fact that the RBI has raised loan-loss provisioning requirements for all lender will mean further provisions in the months of come.

In the just-ended year, the bank also took a charge against capital of 79.27 billion rupees to cover rising costs for pensions and wages. That reduced its capital adequacy ratio to 11.98% at the end of March, from 13.39% a year earlier.

"This is a key negative as this has shaved off the bank's net worth by nearly 80 billion rupees, leaving little capital to steer business growth," Angel Broking's Mr. Agrawal said. He added that the house may reduce the bank's target price by 10%-12%.

Still, Mr. Chaudhury said the capital adequacy ratio is good enough for 20% growth in loans outstanding this fiscal year.

For the fourth quarter, the net interest margin—broadly the difference between yields on loans and cost of funds—was 3.07%, compared with 2.96% a year earlier. Mr. Chaudhury said a net interest margin of 3.5% seems feasible because the bank has recently raised its lending rates.

The chairman also said the government, the bank's largest shareholder, is committed to keeping it well capitalized and will fully subscribe to its proposed rights issue of 200 billion rupees. The rights issue is around the corner, he said, without specifying an exact date.