OBC net falls 8% on provisioning

Written by fe Bureau | Mumbai | Updated: Jan 26 2013, 07:02am hrs
Public sector lender Oriental Bank of Commerce (OBC) reported a 7.85% year-on-year (y-o-y) fall in its October-December quarter net profits to R326.4 crore. SL Bansal, chairman & managing director (CMD), OBC, attributed the fall in net profit to the R600-crore provisions towards non-performing assets (NPAs), restructured accounts and wage revisions.

The net interest margin (NIM) of the bank was up sequentially from 2.79% to 2.85%, thanks to the easing cost of funds. The asset quality of the bank showed deterioration with the gross NPA levels rising sequentially from 2.92% to 2.98%, and net NPAs rising from 2.04% to 2.14%. The fresh slippages during the third quarter stood at at R813 crore. OBC also restructured assets to the tune of R714 crore in the quarter. Bansal said the restructuring pipeline for the fourth quarter stands at R2,000 crore with three large accounts including the Punjab SEB, Suzlon and Moser Baer to be recast.

The net interest income during the quarter rose by 6% to R1,204.44 crore from the R1,139.89 crore in the corresponding quarter last year. Non-interest income for the quarter grew by 28% to R377.80 crore from the R295.27 crore reported in the same period last year.

The total income during the quarter increased by 8% to R4,846.54 crore from the R4,491.76 crore in the year-ago quarter. The advances book of the bank grew 12% and deposits were up 8%. Bansal said that though the bank has begun easing lending rates, the cost of deposits will take some time to come down.