Oriental bank asks govt for Rs10 bn capital infusion

Oriental bank asks govt for Rs10 bn capital infusion

New Delhi: State-run Oriental Bank of Commerce (OBC) has made an application to the government for capital infusion of Rs10 billion, its chairman said on Monday.

“This is to support growth for the next couple of years," T.Y. Prabhu told a news conference after the lender reported a forecast-beating 14% rise in quarterly profit.

OBC has one of the highest proportion of high-cost deposits in the sector and this has squeezed its net interest margin in the low interest regime prevailing since the end of last year.

The bank has said it expects loans to grow by a fifth in the year to March 2010 and net interest margins to rise to 2%.

In the September quarter, OBC’s net profit rose to Rs2.71 billion from Rs2.37 billion a year ago. Total income grew 18.6% to Rs28.01 billion.

Shares in OBC, which the market values at Rs65 billion, were up by a third during the September quarter, outpacing both the sector index’s one-fifth rise and the broader market’s 18% climb.