MUMBAI— State Bank of India , the country's largest lender by assets, Friday reported a fourth consecutive decline in quarterly profit hurt by increased provisions for bad loans and higher staff costs.

Net profit for the three months to Dec. 31 fell 34% to 22.34 billion rupees ($359 million) from 33.96 billion rupees a year earlier, the bank said in a statement.

The sharp decline in profit soured investor sentiment, sending its shares down as much as 2.6%. They recovered slightly to close 1.6% lower. The S&P BSE Sensex ended up 0.9%.

Profits of most banks in India have come under pressure due to rising bad loans amid a sharp slowdown in the economy. Delays in government approvals for industrial projects are also leading to cost and time overruns, pushing up defaults in loan repayments.

Besides, increases in interest rates by the central bank to control inflation are also hurting profit margins of banks, analysts say.