Bank of Baroda (BoB) shares rallied 17% on Monday, erasing losses clocked last week, after its March quarter results showed it had stopped bad loans from piling up, in contrast to other state-owned banks that have reported their earnings so far.
Slippages or fresh addition to bad loans declined by more than half to Rs.1,359 crore in the March quarter from the December quarter and was much lower than the management guidance. “While asset quality has improved, too much cannot be extrapolated from the March quarter earnings because we are going through a chunky corporate non-performing asset (NPA) cycle. In some quarters when a big account does not turn sour or is restructured, the slippage number tends to be lower,” said Vaibhav Agrawal, an analyst at Angel Broking Pvt. Ltd.