Bank of Baroda top gainer

Bank of Baroda is the top gainer on the BSE. The stock is up currently at Rs.165, up almost 14%, with an intra day high at Rs.167.20. Volumes are up over 5 times.

The market has reacted positively to the stock despite the drop in profitability because it is enthused with the improvement in asset quality. The Bank’s Net NPA was at 1.89% v/s 2.11% (QoQ) and Gross NPA also reduced from 3.85% to 3.72%. Provisions for bad loans in the quarter rose to Rs.1817 crore, up 44% (QoQ) and up 57% (YoY), this was on account higher restructuring – it restructured assets to the tune of Rs.4000 crore, up 150% (QoQ); this stood at Rs.7843 crore in FY15 of which major came from the infra and steel sector. Its provision coverage ratio was at 64.99%. During the year, the Bank has sold financial assets with net book value of Rs.185 crore to assets reconstruction companies on cash and security receipt basis v/s NIL in previous quarter.

In terms of profitability, net profit for the quarter was down 48% (YoY) at Rs.598 crore and this was due to an increase in non-performing loan (NPLs) provision. Its NII was up 1.5% at Rs.3171 crore.