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By Siddhi Nayak

MUMBAI/BENGALURU (Reuters) -State Bank of India, the country's largest lender, on Friday reported a near three-fold jump in first-quarter profit, led by a surge in net interest income, healthy loan growth and lower provisions.

Net profit was at a record 168.84 billion rupees ($2.04 billion) for the quarter ended June 30, compared with 60.68 billion rupees a year earlier, the lender said in an exchange filing.

Net interest income, the difference between interest earned and paid out, rose 24.7% to 389.05 billion rupees.

Net interest margin, a key indicator of a bank's profitability, rose to 3.47% from 3.23% a year ago.

Larger rivals HDFC Bank and ICICI Bank have reported double-digit net interest income growth for the fiscal first quarter, spurred by consistent demand for loans.

Indian banks have been reporting double-digit credit growth in recent months, even as the Reserve Bank of India (RBI) raised interest rates by 250 basis points since last May, driven by rising consumption.

SBI's gross loans increased 13.9% from a year earlier, while deposits climbed 12%, led by term deposits that offer better returns.

Provisions and contingencies fell 43% from a year ago to 25.01 billion rupees and lower than the 33.16 billion rupees reported in January-March.

SBI's gross non-performing assets (NPA) ratio - a key metric of asset quality - fell to 2.76% from 2.78% in the previous quarter and 3.91% a year ago. The net NPA ratio rose to 0.71% from 0.67% in the prior three months.

SBI shares were trading down 2.3% after the results. The lender's stock is down 6.2% so far this year, underperforming the bank index which is up nearly 4%.

($1 = 82.7925 Indian rupees)

(Reporting by Siddhi Nayak and Sethuraman NR; Editing by Sonia Cheema)