Mumbai: Bank of India, the country's third-biggest state-run lender by assets, reported a sharply bigger-than-expected 84 per cent fall in quarterly profit as bad loans surged.

Net profit fell to Rs 130 crore ($20.3 million) for its fiscal first quarter to June 30, from Rs 806 crore reported a year earlier, the Mumbai-based lender said.

Analysts on average had expected a net profit of Rs 331 crore, according to data compiled by Business intelligences.

Gross bad loans as a percentage of total loans rose to 6.8 per cent in the June quarter from 5.39 per cent in the previous three months and 3.28 per cent a year earlier.

As of 12:55 p.m., shares in Bank of India were trading nearly 3 per cent lower at Rs 159 apiece on the BSE, underperforming the broader markets.