Money & Banking

Oriental Bank of Commerce eyes net profit of ₹1,000 crore in FY20

Our Bureau New Delhi | Updated on May 13, 2019 Published on May 13, 2019

Oriental Bank of Commerce

Lender posts ₹55-cr net profit in FY19

Encouraged by the turnaround in its financial performance in 2018-19, Oriental Bank of Commerce (OBC) is now eyeing a net profit of at least ₹1,000 crore in 2019-20, on the back of high credit growth and large write-back to profit and loss account from four big-ticket NCLT cases.

The public sector bank, on Monday, reported a net profit of ₹55 crore in 2018-19, a turnaround of sorts, given that the lender had posted net losses in the previous two years. In 2017-18, OBC had recorded a net loss of ₹5,872 crore.

For the fourth quarter ended March 31, 2019, OBC had reported a net profit of ₹201.50 crore, compared to a net loss of ₹1,650 crore in the same quarter last fiscal. “We are confident of not only sustaining this financial performance of 2018-19, but even bettering it in the coming years. We hope to come back to the dividend list this fiscal,” Mukesh Kumar Jain, MD and CEO, told BusinessLine after the announcement of the results. Jain attributed the turnaround to three main factors – containment of slippages; sharp increase in total recoveries (108 per cent jump year-on-year), and strong 41 per cent growth in retail advances.

OBC, which will focus on lowering its share of corporate advances in its overall advance mix to 25 per cent over the next four to five years from 50 per cent now, is eyeing an overall credit growth of 10-12 per cent this fiscal, against 15.75 per cent in 2018-19, the year in which the bank came out of the RBI’s prompt corrective action (PCA) framework.

Capital-raising plans

As on date, the Centre has 87.58 per cent stake in OBC. Jain said that OBC will look to raise ₹1,000 crore capital in 2019-20 and next fiscal. The main objective of this capital-raising from public markets is to bring down the Centre’s holding to 75 per cent to comply with SEBI’s minimum public shareholding norm for listed entities.

Jain also said that OBC was now open to acquiring a bank. He, however, declined to name the bank that OBC has shortlisted. With a total business mix of over ₹4-lakh crore – a recent milestone achieved by the bank – OBC is now a mid-sized bank that is focussed on growing its retail book and mid-corporate and MSME portfolio, he said.

“We are now a strong bank, well capitalised and poised for growth,” Jain told BusinessLine.

Net non-performing assets (NPAs) have decreased to 5.93 per cent (₹9,440 crore) as of March 31, 2019, compared to 10.48 per cent (₹14,282 crore) as of March-end 2018.

 

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Published on May 13, 2019
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