Oriental Bank swings to profit in March quarter

Oriental Bank swings to profit in March quarter
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First Published: Mon, Apr 27 2009. 05 16 PM IST
Updated: Mon, Apr 27 2009. 05 16 PM IST
New Delhi: State-run Oriental Bank of Commerce on Monday reported a quarterly profit that bettered market expectations, helped by increased interest income, and forecast improved performance in the 2009/10 fiscal.
The bank had posted a loss in the year-ago period, as it booked a Rs2.42 billion loss to that quarter on account of a state-mandated takeover of a failed bank.
In the March quarter, profit came in at Rs1.96 billion, a swing from a loss of 994.4 million a year ago.
Chairman Alok Misra said Oriental Bank would see better net interest margins and a faster rise in net interest income in the fiscal year that began 1April, by retiring higher interest deposits and as low interest deposits rose.
Banks had raised deposits at rates as high as 11% last year, as they scrambled to shore up cash in response to a liquidity crunch. But with the central bank cutting rates from October, lenders’ net interest margins started getting squeezed.
“Net interest margin has been under pressure because, for one, let me concede, our CASA has been lower,” chairman Alok Misra told a news conference. CASA stands for the low-interest current accounts and savings accounts.
Oriental Bank had a net interest margin of 2.2% in 2008/09, which it would take up to 2.4-2.5% in the current fiscal year that began 1 April, Misra said.
Net interest income, which rose 18.7% to Rs19.96 billion in 2008/09, would rise “over 20%” in 2009/10, he added.
Shares in Oriental Bank closed marginally down at Rs135.25 in a Mumbai market that closed 0.38% up.
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First Published: Mon, Apr 27 2009. 05 16 PM IST