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Kamal Narang

Upbeat forecast: Mr Alok K. Misra (right), CMD, Oriental Bank of Commerce, and Mr S.C. Sinha, Executive Director, in the Capital on Wednesday. —

Our Bureau

New Delhi, Oct. 22 Aided by buoyant growth in core operations, surge in treasury incomes and a write-back of income-tax provision of Rs 147 crore, Oriental Bank of Commerce (OBC) on Wednesday reported a 35.5 per cent increase in net profit for the second quarter ended September 30, 2008 at Rs 237 crore (Rs 175 crore).

OBC had reported a net profit of about Rs 220 crore in the first quarter this fiscal. The second quarter bottomline performance was also boosted by the absence of the Rs 61 crore amalgamation adjustment write-off relating to the erstwhile Global Trust Bank, which was amalgamated with the bank. All excess liabilities over assets taken over on account of the amalgamation were fully written off by March 31, 2008.

Total income for the period under review increased to Rs 2,361 crore (Rs 1,788.21 crore). The treasury income was Rs 140 crore (Rs 68 crore).

During the second quarter, the bank also transferred securities to the tune of about Rs 1,800 crore from available-for-sale (AFS) to Held-to-Maturity (HTM) category, thereby taking a depreciation hit of about Rs 122 crore.

The OBC Chairman and Managing Director, Mr Alok K. Misra, said that he was “optimistic” about the bank’s performance in the coming quarters despite the ripple effects of the global financial turmoil being felt in the country.

He saw deposits and credit growing by 20-22 per cent this fiscal. Last fiscal till October, deposits grew by 27 per cent and advances by about 30 per cent.

“So far, there is no impact on credit. It is anyway now a busy season. So far, we have not seen advances being impacted and we have not stopped lending”, Mr Misra told a press conference.

He also said that the bank would look at any reduction in its benchmark prime lending rate (BPLR) only when the cost of deposits come down and market condition improves. “At a right time, when market condition improves, we will take the call. Let the cost of deposits come down. Once our cost of deposits come down, our BPLR will come down”, he said.

OBC’s cost of deposits was 7.33 per cent for July-September 2008 and 7.19 per cent for April-September 2008. The yield on advances was 11.08 per cent in Q2 and 10.68 per cent for the first half of the current fiscal.

The scrip closed at Rs 155.60 on the National Stock Exchange on Wednesday, down 3.6 per cent over the previous day’s close. The bank also plans to soon open a representative office in Dubai.

On capital raising, Mr Misra said that the bank had enough headroom for Tier-II capital and would raise such capital if required in the coming months.

More Stories on : Financial Performance | Public Sector Banks | Oriental Bank of Commerce

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