The Oriental Bank of Commerce (OBC) on Thursday reported a 91.28 per cent decline in net profit for the quarter ended December 31, 2014 at ₹19.58 crore (against ₹224.30 crore in the year-ago quarter).
Total income for the quarter rose 7.8 per cent to ₹5,458.79 crore (₹5,063.98 crore)
Briefing the media on the third quarter financial performance of the bank, Animesh Chauhan, Managing Director and Chief Executive Officer, said a sharp increase in provisions due to worsening asset quality weighed heavily on the bank’s bottomline.
Restructured assets went up by ₹2,050 crore and non-performing assets or bad loans slippage was ₹1,340 crore.
The restructured assets included three major ones involving an aggregate amount of ₹1,200 crore related to sugar, iron and steel and infrastructure industries, Chauhan said.
Provision (other than taxes) rose 57.8 per cent to ₹885.14 crore (₹561.10 crore).
There was also an exceptional item of ₹137 crore — a charge on the profit and loss account — resulting from the Reserve Bank of India’s observation that only the cash component of sale consideration to asset reconstruction companies is eligible to be booked as profit.
Chauhan, who assumed charge on December 31, said his immediate priority would be to restructure the balance sheet to improve profitability. Efforts would also be taken to ensure better utilisation of the capital, he said.
Given the weakness in asset quality, OBC’s bottomline for the entire fiscal may come in lower than the previous year’s net profit level of ₹1,139.41 crore, Chauhan said.
Till end-December this fiscal, OBC had recorded a net profit of ₹675.52 crore (₹829.09 crore in April-December 2014).
Chauhan expressed confidence that the economy would bounce back in the coming quarters.
Asked about the fraud related to term deposits of Jawaharlal Nehru Port Trust (JNPT), Chauhan told BusinessLine that the bank has made a provision of ₹47.46 crore (₹23.73 crore a quarter) for the period ended December 31, 2014.