New Delhi: Oriental Bank of Commerce (OBC) on Thursday reported a more-than-expected 62.5% rise in quarterly profit on higher interest and commission income and forecast profit would grow 20% in 2010-11.
The state-run bank expects a 23% credit growth and a 25% rise in deposits in FY11. “We will focus on agriculture, mid- corporate, infrastructure and retail credit in the cuurent fiscal,” chairman TY Prabhu told reporters.
The central bank sees non-food credit growth of commercial banks at 20% in 2010-11, still a far cry from growth rates of above 30% in the pre-crisis period.
Prabhu said the bank was targetting a net interest margin of 2.70% in FY11, which is lower than 3.27% for the fourth quarter, which benefitted from cost saving as some of the high-cost bulk deposit matured in the quarter.
The non-performing assets (NPAs) at the bank rose and 4.75% of the restructured loans turned sour in FY10, but Prabhu said the rate of loans turning bad was not a concern for the bank and a higher provision has been made for this.
“There are some segments in the restructured portfolio still facing stress. Some more accounts may slip into NPAs,” Prabhu said, adding real estate, infrastructure and exporters still faced pressure.
The gross non-performing assets increased by Rs410 crore to Rs1,468 crore as on March-end, or to 1.74% of total advances.
The bank plans to open 175 branches and hire 1600 staff in the current fiscal.
Shares in OBC, which the market values at Rs8,400 crore, closed 3% up at Rs346.15 on Thursday. Broader benchmark index closed up 0.71%.
Interest, commissions rise
Earlier in the day, the bank reported a net profit of Rs317 crore for the fourth quarter. Analysts polled by Reuters, on average, estimated profit to rise 55.74% to Rs304 crore.
“The profit has come out of core operation,” said Prabhu. Net interest income, an indicator of the bank’s core performance, rose 115% to Rs989 crore.
The bank’s cost of deposit declined to 6.57% as on 31 March 2010, compared with 7.52% a year-ago. The share of low-cost CASA (current account and saving account) in total deposits went up to 24.97% as of March-end.
Prabhu said the bank was targetting to take the share of CASA in total deposits to 27.5% in FY11.