Shares of State Bank of India (SBI) surged by nearly 3 per cent in early trade on the Bombay Stock Exchange today after the lender posted a 14 per cent jump in third quarter profit, which analysts said was above the expectations on Dalal Street.

Driven by a smart rise in net interest income, SBI reported a 14.08 per cent increase in profit for the October-December, 2010, quarter to Rs. 2,828 crore.

Cheering the numbers, SBI shares rose by 2.92 per cent to an early high of Rs. 2,674 on the BSE.

The stock witnessed a similar upswing on the National Stock Exchange, where it jumped 3 per cent to a high of Rs. 2,675.

“The numbers were above our expectations. The kind of performance SBI has displayed has surprised the street in a positive way. It has also uplifted investors’ confidence in banking stocks,” Unicon Financial Services CEO Gajendra Nagpal said.

On the volume front, over 15 lakh shares of SBI changed hands on the two bourses within the first hour of trade.

“We believe SBI has ample levers to deliver healthy operating income growth even in the rising interest rate environment,” Angel Broking said in a note.

The upsurge in SBI’s shares was also significant in lifting the sentiment of the BSE benchmark Sensex, which was trading 84 points higher at 19,091.53 at 1027 hours.