No capital raising till 2014, says OBC chief

Oriental Bank of Commerce (OBC) expects a 20 per cent growth in bottomline this fiscal on the back of robust credit growth and enhanced focus on average interest bearing assets, its Chairman and Managing Director, Mr Nagesh Pydah, has said.

“It is not unreasonable to expect a 20 per cent growth in bottomline this fiscal,” Mr Pydah told Business Line .

This 20 per cent net profit growth will be after providing for the transitional pension liability of about Rs 170 crore for the current fiscal. OBC had closed last fiscal (2010-11) with a net profit of about Rs 1,500 crore.

Mr Pydah said that he does not want to run a balance-sheet that was focused on topline growth. “I would like to run a balance-sheet that is good on profits. We are aiming at a net interest margin of over 3 per cent,” he said.

Capital infusion

On capital raising, Mr Pydah said that OBC had no plans to raise capital till 2014. The bank had last received capital infusion from the Government in March 2011, amounting to Rs 1,740 crore. “I now have surplus liquidity of Rs 6,000 crore. My SLR is 27.3 per cent. There is comfortable standby liquidity. I also have headroom to raise Rs 6,800 crore of Tier-II capital,” he said.

Mr Pydah also said that he wants to change the proportion of term loans and working capital advances in the asset book of the bank, placing more emphasis on working capital. “When I assumed charge (as CMD), the asset book consisted of 60 per cent term loans and 40 per cent working capital. I am working to make it 55:45 (term loan: working capital). Currently, term loan is 57 per cent and working capital is 43 per cent. Higher working capital will translate into higher fee-based income for us.”

In the coming days, OBC intends to enhance its focus on logistics (including warehousing) and also look at pharma as a thrust area, he added.

Overseas plans

On overseas expansion, Mr Pydah said that he expects the RBI to soon give its nod for conversion of OBC's representative office in Dubai International Financial Centre (DIFC) to a full-fledged branch. After RBI nod, OBC will approach the regulatory authorities in the UAE, he said.

“Once I have a full-fledged international branch, I have the advantage of parking my assets there. Today I don't do any external commercial borrowing lending. At the most I give guarantees for which I get a fee. Once the foreign branch is there, I can do direct lending,” he said.

On the domestic front, OBC plans to open 175 branches this fiscal, of which 60 have already been opened so far in 2011-12.

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