OBC posts Q3 net profit of Rs289 cr on better loan growth

OBC posts Q3 net profit of Rs289 cr on better loan growth
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First Published: Thu, Jan 28 2010. 05 05 PM IST
Updated: Thu, Jan 28 2010. 05 05 PM IST
New Delhi: State-run Oriental Bank of Commerce (OBC) smartly beat market forecasts to report a rise in quarterly profit, helped by better loan growth and a rise in commission income, sending shares up as much as 11%.
The lender on Thursday said it expected to grow its loan-book 2-3 percentage points faster than the sector in the fiscal year to March and would not see bad loans or surplus liquidity rise beyond manageable levels.
Indian banks have been saddled with costly deposits they cannot lend as credit demand remains sluggish. Loans have also gone sour as borrowers hit by the economic downturn were unable to service their debt.
“As far as OBC’s portfolio is concerned, there is no concern,” chairman TY Prabhu said in response to a question on bad loans. “It is not a concern for the reason the economy has started its revival.”
Most of OBC’s restructured loans were in sectors such as infrastructure, which have picked up on the back of the improving economy, Prabhu told a news conference.
On Monday, top lender State Bank of India had forecast stable loan growth but warned of a possible profit hit during the March quarter from surplus liquidity and rising bad loans.
Shares in OBC, which the market values at close to $1.4 billion, ended up 9.7% at Rs251.80 in a flat stockmarket.
They had risen 5% in the December quarter, faster than the 1.8% rise in the sector index and the broader market’s 2% climb.
Interest, commissions rise
For the December quarter, OBC had a net profit of Rs289 crore, up from Rs252 crore a year ago. Analysts on average had forecast a decline in profit to Rs184 crore during the bank’s fiscal third quarter.
Net interest income, an indicator of the bank’s core performance, rose by more than half to Rs873 crore, helped by a 21.2% rise in loans and an increase in the proportion of cheaper deposits. While treasury income fell more than third to Rs51 crore, commission income rose 44% to Rs144 crore on sales for an insurance joint-venture OBC has with HSBC and peer Canara Bank.
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First Published: Thu, Jan 28 2010. 05 05 PM IST