Pegs additional capital requirement to meet Basel-III norms at Rs 800 cr

Oriental Bank of Commerce (OBC) has received board approval to raise capital of Rs 1,200 crore, its Chairman and Managing Director, Mr S. L. Bansal, said.

The bank would need additional capital of Rs 800 crore to meet the Basel-III requirements, which would come into force from January 1, 2013.

Mr Bansal said that OBC would go in only for tier-II capital as there was enough headroom on this front. The bank was comfortable on the tier-I front (at 9.92 per cent) even under Basel-III norms, he added.

OBC would raise the required capital of Rs 800 crore before the end of the current calendar year, said Mr S. C. Sinha, Executive Director, OBC, who will demit office on Tuesday on superannuation.

For the June quarter this fiscal, OBC reported a 10 per cent increase in net profit at Rs 391 crore (Rs 355 crore). Mr Bansal attributed this financial performance to increased interest income and better recoveries — from delinquencies — during the quarter under review.

“NPAs will continue to happen. But we are trying to ensure they have minimal adverse impact on our profit and loss account,” he said, adding that the bank was already facing the heat on farm loans.

A write-back of Rs 132 crore of depreciation in investments also helped boost the bottomline.

In the June quarter, the bank went in for restructuring of loans worth Rs 2,035 crore, which include Rs 1,434 crore to UP State Electricity Board.

Gross NPAs as a percentage of gross advance stood at 2.97 at end-June, lower than 3.17 per cent in end-March. Mr Bansal is confident of taking this to 2.80 by the end of the current fiscal.

Net NPAs also fell from 2.22 per cent in end-March this year to 2.05 per cent at end-June.

As regards debt-laden Kingfisher Airlines, Mr Bansal said this account had been upgraded and was now a standard asset as far as the bank was concerned.

The private carrier has serviced debt up to June 30 this year, said bank officials.

The bank’s net interest margin at end-June 2012 stood at 2.79 per cent, 11 basis points higher than the 2.68 per cent in the last quarter.

srivats.kr@thehindu.co.in

(This article was published on July 30, 2012)
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