BoB net plunges 48% on provisioning;stock up 17% on asset qlty

Despite improvement in asset quality and a massive rise in the treasury income, state-owned Bank of Baroda today reported 48 per cent plunge in net profit at Rs 598.36 crore for the quarter ended March 31 as its tax and other statutory provisions soared.
Higher provisionings have whittled down the spike in treasury income. During the fourth quarter of 2014-15 fiscal, the bank reported a healthy 69 per cent rise in treasury gains to Rs 605 crore from Rs 359 crore a year-ago. But the fee income growth was tepid with an increased to Rs 429 crore from Rs 419 crore.

In spite of such a fall in net income, the market lapped up the BoB counter, which topped the gainers chart today. The scrip rallied a massive 16.9 per cent to Rs 169.65 on the BSE which jumped 1.5 per cent to 27,507.30. During the intra-day the BoB stock had rallied 22 per cent.
Traders said investors are happy about the improvement in the asset quality of the bank, which showed marginal improvement during the quarter.
"There was a deferred tax liability on our bad debts. This has been disallowed now. Consequently our effective tax rate has moved to 28 per cent which used to be 17-18 per cent earlier, and this led to higher provisioning," BoB managing director and chief executive Ranjan Dhawan told reporters.

Accordingly, the bank's tax provision increased by 9.50 per cent to Rs 277.68 crore in the quarter, against Rs 253.58 crore in the year-ago period.

Gross non-performing assets marginally improved to 3.72 per cent from 3.85 per cent in the previous quarter, while net NPAs were down 1.89 per cent from 2.11 per cent.
"There was a more-than-expected improvement in the asset quality during the quarter," Dhawan said. However, he expects pressure on the asset quality to remain for the next six months.
In fact, the lender's non-tax provisions jumped more, eating into its bottomline. Non-tax provision soared 58 per cent to Rs 1,818 crore in the quarter as against Rs 1,153 crore last year, the bank said.

For the full year, the bank's net profit declined by 25 per cent to Rs 3,398 crore from Rs 4,541 crore year ago.
Total income rose 3.81 per cent to Rs 12,057 crore in the fourth quarter from Rs 11,615 crore in the same period last year.