The Hindu Business Line : Oriental Bank writes off entire losses of GTB

New Delhi, April 23 Oriental Bank of Commerce (OBC) has commenced the financial year 2008-09 on a clean slate. The bank has written off the entire unabsorbed losses of Global Trust Bank (GTB) amounting to 487.72 crore, including the Rs 242 crore earlier slated for 2008-09, in the financial statements for 2007-08 itself. GTB was amalgamated with OBC in the year 2004.

The move to get rid of “all legacy issues of GTB” has resulted in OBC registering a 39- per cent decline in net profit for the year ended March 31, 2008 at Rs 353.22 crore as compared to a net profit of Rs 580.81 crore in the previous fiscal.

“Tough decisions are taken when the times are tough. Despite the external challenges faced by us, we felt it would be better for us to get over the legacy issues of GTB instead of continuing with quarterly provisioning in fiscal 2008-09 also. I did not want to continue explaining quarter after quarter to investors and others what the GTB provisioning was all about”, Mr Alok K. Misra, Chairman and Managing Director, OBC, told a press conference to announce the audited results for 2007-08.

Under the amalgamation scheme approved by the Government in 2004, OBC had an option to absorb the GTB losses amounting to Rs 1,252 crore over a period of five financial years beginning 2004-05. The bank has been providing about Rs 61.5 crore every quarter towards the amalgamation.

In four years

“Rather than absorbing the losses over five years, we have done it in four years itself. We have got over legacy issue of GTB. All GTB issues are behind us. From this quarter itself, there will be no provisioning of GTB impacting financial performance. To that extent, our profits will be more from Q1 this fiscal”, Mr Mishra said.

OBC has also written back excessive provision for bad and doubtful debts to the tune of Rs 143 core (net), said a senior OBC official.

The board of directors, at its meeting today, declared a dividend of 47 per cent for financial year 2007-08, which is the same as declared in previous year. For the year ended March 31, 2008, total income increased to Rs 7,454.84 crore as against Rs 5,652.91 crore.

Q4 results

For the quarter ended March 31, 2008, OBC reported a net loss of Rs 99.44 crore as compared to net profit of Rs 54.86 crore in the same quarter last year.

Mr Misra said that the bank had headroom of Rs 1,500 crore for Tier-II capital and Rs 785 crore for perpetual bonds under Tier-I. He indicated that OBC may raise some Tier-II capital this fiscal. Mr Misra also ruled out a rights issue for now.

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