The Hindu Business Line : Higher interest income boosts Oriental Bank net profit in Q1

Bullish performance: The Oriental Bank of Commerce Chairman and Managing Director, Mr Alok K. Misra (left), with the Executive Director, Mr Allen C.A. Pereira, at a press conference in the Capital on Monday. – Kamal Narang

Our Bureau

New Delhi, July 30 Aided by a sharp increase in interest income, Oriental Bank of Commerce (OBC) on Monday reported a 48.03 per cent increase in net profit for the quarter ended June 30 to Rs 139.18 crore compared with Rs 94.02 crore in the same period last year.

The first quarter bottomline performance was also boosted by a substantially lower provisioning for depreciation of investments in government securities and corporate bonds.

“The main driver of net profit growth this quarter has been higher interest income. We hope to sustain this performance in the coming quarters,” Mr Alok K. Misra, Chairman and Managing Director, told reporters here.

Mr Misra also said that net interest margin of the bank as on June 30, 2007 stood at 2.7 per cent, higher than the 2.3 per cent level of end-March 2007. “Our aim would be to have a net interest margin of over 2.7 per cent during the remaining quarters,” he said, while declining to put a number on the expected percentage growth in net profits for the current fiscal.

Interest income for the period under review increased by about 35 per cent to Rs 1,534.14 crore (Rs 1,135. 34 crore). OBC has for the period under review provided about Rs 79 crore towards provision for depreciation of investments in corporate bonds and debentures as against Rs 197 crore in the same period last year.

“The main reason for decline in provisions is the absence of depreciation of investments in government securities this quarter. Last year in the same quarter, we cumulatively provided about Rs 197 crore for depreciation in government securities and corporate bonds,” Mr D.G. Saxena, General Manager of OBC, told Business Line.

Oriental Bank has targeted advances growth of 19 per cent in the current fiscal.

The bank’s cost of borrowings as on June 30 this year increased to 6.64 per cent (5.8 per cent in March 2007) and its yield on advances increased to about 10 per cent.

Operating profit for the period under review stood at Rs 325.11 crore (Rs 350.99 crore).