OBC puts up sterling show in face of incredible odds
30 Jan 2015 1:08 AM GMT
Profit of Oriental Bank of Commerce (OBC) on Thursday plummeted by a staggering 91.2 per cent to Rs 19.56 crore for the third quarter ended December 2014 on account of higher provisioning for bad loans and restructuring of assets. The public sector bank had a net profit of Rs 224.30 crore in the October-December quarter of 2013-14. The gross non-performing assets of the bank rose sharply to 5.43 per cent from 3.87 per cent in the December quarter of last fiscal.
Its net NPAs also increased to 3.68 per cent from 2.91 per cent in the same quarter of 2013-14. Explaining the huge swing in profit, OBC Managing Director and CEO Animesh Chauhan said, “There are two-three reasons for a sharp drop in profit this quarter...it is because of provisioning. “One is we did some technically written off asset of sale in June where sale was taken as profit. After
discussing with regulator (RBI) we found out the error and reversed (cash profit) by about Rs 137 crore.”
Secondly the restructuring and NPA slippage has been quite high during the quarter, he said.
“Restructuring has been around Rs 2,050 crore and NPA slippage has been Rs 1,340 crore. So the provisions made for these two and the reversal of Rs 137 crore from June profit has resulted in profit being low,” he said. It is to be noted that new MD and CEO took charge of the bank on December 31, 2014. It is noticed that in some cases the first result announcement by a new head has provided very subdued numbers.
He however said that all the numbers were frozen on December 31, 2014, and he had no operational role during the 3rd quarter. He, however, finalised and presented the numbers for the quarter under review. Provisioning for bad loans and contingencies stood at Rs 885.14 crore in third quarter of 2014-15 as compared to Rs 561 crore in the same period of the last fiscal.
Asked about the fourth quarter, he said, it is also expected to be subdued. The gross NPA is expected not to come below 5 per cent and fresh slippages would be in the range of Rs 1,100 crore. Restructuring is also expected in the range of Rs 1,200 crore, he said. However, total income of the bank increased to Rs 5458.79 crore during the quarter from Rs 5,063.98 crore in the corresponding period a year ago.
Its net NPAs also increased to 3.68 per cent from 2.91 per cent in the same quarter of 2013-14. Explaining the huge swing in profit, OBC Managing Director and CEO Animesh Chauhan said, “There are two-three reasons for a sharp drop in profit this quarter...it is because of provisioning. “One is we did some technically written off asset of sale in June where sale was taken as profit. After
discussing with regulator (RBI) we found out the error and reversed (cash profit) by about Rs 137 crore.”
Secondly the restructuring and NPA slippage has been quite high during the quarter, he said.
“Restructuring has been around Rs 2,050 crore and NPA slippage has been Rs 1,340 crore. So the provisions made for these two and the reversal of Rs 137 crore from June profit has resulted in profit being low,” he said. It is to be noted that new MD and CEO took charge of the bank on December 31, 2014. It is noticed that in some cases the first result announcement by a new head has provided very subdued numbers.
He however said that all the numbers were frozen on December 31, 2014, and he had no operational role during the 3rd quarter. He, however, finalised and presented the numbers for the quarter under review. Provisioning for bad loans and contingencies stood at Rs 885.14 crore in third quarter of 2014-15 as compared to Rs 561 crore in the same period of the last fiscal.
Asked about the fourth quarter, he said, it is also expected to be subdued. The gross NPA is expected not to come below 5 per cent and fresh slippages would be in the range of Rs 1,100 crore. Restructuring is also expected in the range of Rs 1,200 crore, he said. However, total income of the bank increased to Rs 5458.79 crore during the quarter from Rs 5,063.98 crore in the corresponding period a year ago.
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