Oriental Bank of Commerce (OBC) is betting on a better second half to maintain last year’s bottomline performance of Rs 1,328 crore in the current fiscal.
For the half year ended September 30, the bank has recorded a net profit of Rs 605 crore, which is 13 per cent lower than the net profit of Rs 695 crore recorded in the first half of last fiscal.
“We will be more than happy to maintain last year’s bottomline performance,” S.L. Bansal, Chairman and Managing Director, said at a press conference.
Oriental Bank on Wednesday reported a 17 per cent decline in net profit for the second quarter ended September 30 at Rs 251 crore (Rs 302 crore).
The performance was weighed down by a negative contribution from treasury operations and reduction in recoveries of non-performing assets on a year-on-year basis, said V. Kannan, Executive Director.
OBC incurred a trading loss of about Rs 17 crore against a trading profit of Rs 52 crore in the same quarter last year.
Bansal said the Reserve Bank of India’s mid-July move (when Marginal Standing Facility rate was hiked by 200 basis points) had taken the sheen out of bank’s balance sheet.
Not only did the bank give up on the Rs 200 crore trading profit (in G-secs and bonds) it booked in the first quarter this fiscal, in the second quarter it had to provide Rs 109 crore toward shifting of securities from availability for sale (AFS) to held-to-maturity (HTM) category.
In September, in view of abnormal market conditions, OBC shifted Statutory Liquidity Ratio (SLR) securities amounting Rs 13,521 crore from AFS to HTM. This had led to provision of Rs 109 crore.
Also, in end September, there was a mark-to-market loss of Rs 240 crore, of which Rs 80 crore has been provided in the September quarter, Kannan said.
The movement in G-sec rates in the coming days will have an impact on the bank’s bottomline performance, it was pointed out.
Bansal said the bank would in the first week of December complete the formalities for issuing shares to Government on a preferential basis to get the approved capital infusion of Rs 150 crore.
This would take Government stake in the bank to 59.1 per cent from 58 per cent earlier.