BoB Q1 net dives 60% to Rs 424 cr

Back in black after losses in two quarters; slippages in retail book a surprise

Bank of Baroda (BoB) posted a 59.7 per cent drop in net profit at Rs 424 crore in the June quarter, the first one of 2016-17, on a sharp rise in provisioning for bad loans.

The figure was Rs 1,052 crore in April-June a year before. It had reported a net loss of Rs 3,230 crore in the March quarter, the fourth and final one of 2015-16, and one of Rs 3,342 crore in the December one.

Operating profit, however, grew by about 21 per cent year-on-year to Rs 2,670 crore. This growth was supported by a four per cent decline in operating expenses. However, a good boost also came from the 49 per cent surge in other income to Rs 1,440 crore.

Analysts say this surge was largely led by treasury gains, namely sale of bonds (excess statutory liquidity ratio holding of banks). In recent months, there has been a sharp fall in bond yield (leading to higher bond prices). This has helped banks, including BoB, to improve their treasury income.

Despite reporting a net profit, the stock market was unhappy with the higher slippage. Its stock dived by nine per cent to close at Rs 145 a share on the BSE. P S Jayakumar, the government-owned bank’s managing director and chief executive, said the markets had focused on slippage. He said they were in the process of restoring revenue generation and long-term transformation.