Despite improvement in asset quality and a massive rise in the treasury income, state-owned Bank of Baroda on Monday 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 Rs605 crore from Rs359 crore a year-ago. But the fee income growth was tepid with an increased to Rs429 crore from Rs419 crore.
In spite of such a fall in net income, the market lapped up the BoB counter, which topped the gainers chart. The scrip rallied a massive 16.9 per cent to Rs169.65 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 Rs277.68 crore in the quarter, against Rs253.58 crore in the year-ago period.