Oriental Bank of Commerce (OBC) is hopeful of doubling its bottomline this fiscal riding on improved focus on retail and SME customers, its Managing Director and Chief Executive Officer Animesh Chauhan has said.
For the fiscal 2014-15, the public sector lender reported a net profit of ₹497 crore, a 56.3 per cent decline over the net profit of ₹1,139 crore in the previous fiscal.
“ The exceptional item charge of ₹280 crore that we faced in 2014-15 will not be there. Add this to last year bottomline and an overall expected 20 per cent growth in profits, we should be able to double the profits from 2014-15 level of ₹497 crore,” Chauhan said at a press conference to announce the financial results of 2014-15 and the fourth quarter of 2014-15.
At the board meeting on Thursday, the Board of Directors declared a dividend of ₹3.30 a share of ₹10 each.
For the quarter ended March 2015, Oriental Bank reported a net loss of ₹178 crore compared to a net profit of ₹310 crore in the same quarter last fiscal.
The fourth quarter bottomline was adversely impacted by an ‘exceptional item’ charge of ₹280 crore — being the complete reversal of the amount taken to the profit and loss account in the fourth quarter last fiscal.
This amount represents the value of security receipts received from the sale of assets to an asset reconstruction company. Chauhan explained that the total sale proceeds was ₹291 crore, of which only ₹11 crore was received in cash and the remaining as security receipts.
As the asset sale related to a technically written-off account with value of ₹1, the entire sale proceeds value including ₹280 crore was booked as profits is last year’s fourth quarter financial statements.
Now, with the RBI directing that such Security Receipt value cannot be treated as ‘income’, the earlier accounting entry was reversed. Now, it is an ‘exceptional item’ charge in the profit and loss account in the fourth quarter of 2014-15
Meanwhile, the fourth quarter bottomline performance was also impacted by a ₹201-crore provision towards wage revision.
The provision for non-performing assets (NPAs) for the quarter stood at ₹565 crore (₹728 crore). On the other hand, provision for standard assets stood at ₹159 crore (₹68 crore).