Oriental Bank of Commerce (OBC) expects to close current fiscal with a net profit of Rs 1,100 crore, S.L.Bansal, Chairman & Managing Director, said here on Friday.
This profit guidance is lower than the net profit of Rs 1,328 crore recorded by the bank in fiscal 2012-13
"Our bottom-line performance this year will be lower than last fiscal. The economic environment is tough", Bansal said after releasing the third quarter financial performance of the bank.
For the third quarter ended December 31, 2013, OBC has reported a net profit of Rs 224 crore, reflecting a 31 per cent decline over net profit of Rs 326 crore in same quarter in previous fiscal.
Total income for the quarter under review increased 4.5 per cent to Rs 5,064 crore (Rs 4,846 crore).
The bottomline performance was weighed down by lower yield on advances, fall in treasury profits and spike in provisions for taxes and depreciation on investment, Bansal said. The provision for non-performing assets stood at Rs 281 crore (Rs 351 crore).
The third quarter net profit performance was lower than the second quarter net profit of Rs 251 crore.
For the nine months period ended December 2013, OBC net profit declined to Rs 829 crore (Rs 1,020 crore).
Lending, deposit rates
Bansal said there was no immediate plan to revise the base rate or the deposit rates of the bank.
This is even as the RBI had recently hiked its repo rate by 25 basis points.
OBC is currently finding it difficult to pass on the increase in borrowing cost to the customers, given the sluggish economic environment. This has led to reduced net interest margins for the bank.
"In this current situation of economic slowdown, we don't want to put more pressure on the borrowers by increasing the lending rate", Bansal said.
Base rate is the interest rate below which a bank cannot lend. For OBC, base rate is currently pegged at 10.25 percent.