Public sector lender Oriental Bank of Commerce (OBC) on Monday reported a marginal increase in net profit at 3.4% to Rs 301 crore for the quarter ended September 30, helped by stronger credit demand and easier deposit costs.
The scrip closed 8% up at Rs 145.85 at the NSE on the back of sequentially improved asset quality. Bad debts, however, worsened year-on-year. Gross non-performing assets (NPAs) rose to 5.7% in September from 4.74% a year ago and net NPA ratio increased to 3.55% from 3.29%.
In the June quarter, gross NPAs were at 5.85% and net NPAs at 3.76%. Net interest margin, which is a key measure of profitability, stood at 2.76%, up from 2.63% a year ago. Animesh Chauhan, MD & CEO of the bank, said stress level in sectors such as roads has eased although the same cannot be said about steel and power. Better economic growth could improve the situation, he added.
Total income rose to Rs 5,454 crore during the September quarter, up from Rs 5,328.58 crore a year ago.
Net interest income, the difference between interest earned and paid, rose 11% to Rs 1,383 crore from Rs 1,246 crore a year ago. Other income rose to Rs 424 crore from Rs 392 crore a year ago.
Deposits grew 6.87%, while advances were up to 6.97%. Chauhan said credit growth should improve further to double digits by the end of this fiscal if corporate demand picks up in the fourth quarter. OBC is one of the banks hit by a forex fraud by some which is currently under an ED probe.
