* SBI posts profit after 3 qtrs of losses
* One-time gain, lower provisioning help
* SBI has complete control of "demon" of NPA - chairman
* Exposure to IL&FS not cause of concern to SBI as of now - chairman
* SBI shares post 2-mth closing high (Adds chairman comments, details on one-time gain)
By Chris Thomas and Abhirup Roy
BENGALURU/MUMBAI, Nov 5 (Reuters) - State Bank of India (SBI) SBI.NS expects to increase its profits and has "complete control" over its non-performing loans, its chairman said after the country's top lender by assets reported its first quarterly profit in four.
The results come at a time when rising levels of soured assets, which hit a record $150 billion at the end of March, have pushed the nation's lenders to make more provisions. State-run banks, led by SBI, account for the bulk of Indian banks' non-performing loans.
However, at the end of the September quarter, gross bad loans as a percentage of total loans eased to 9.95 percent, compared with 10.69 percent in the previous quarter. It was still higher than 9.83 percent in the year-ago period.
"There is an all-round improvement on the NPA (non-performing asset) front and I can say that we have now complete control on this "demon" of NPA," SBI Chairman Rajnish Kumar said on a conference call.
Shares of SBI ended up 3.4 percent at a two-month closing high after the results, against a weaker broader market .NSEI .
Net profit of 9.45 billion rupees ($129.33 million) in the second quarter ended Sept. 30 was around 40 percent lower than the 15.82 billion rupees reported a year ago. Still, it beat analysts' expectations of a profit of 5.65 billion rupees, according to Refinitiv data.
This was helped by lower provisions and a one-off 15.61 billion rupee gain from the sale of investments in the bank's general insurance and merchant acquiring businesses.
"Though the (net profit this quarter) is modest, I can assure you there is no looking back," Kumar added. "This number is going to be bigger and bigger hereafter."
Provisions for bad loans fell 39.1 percent to 101.85 billion rupees, while the slippage ratio, or the proportion of loans which turned bad in the quarter, eased by 159 basis points from a year earlier to 2.02 percent.
The bank said its exposure to special purpose vehicles of debt-laden Infrastructure Leasing and Financial Services (IL&FS) was 40 billion rupees.
A string of debt defaults at IL&FS, a major infrastructure financing and development company, has triggered fears of contagion across India's financial system. said the IL&FS exposure was not a cause for concern.