2025-11-12 20:05:20
Latest Post
Jyoti CNC Automation Ltd Q2 FY2025-26 consolidated profit higher at Rs. 85.50 crores
Aarti Pharmalabs Ltd Q2FY26 consolidated net profit slides to Rs. 27.92 crores
Menon Pistons Ltd consolidated Q2FY26 PAT at Rs. 6.94 crores
Gujarat Alkalies and Chemicals Ltd announces Q2FY26 results
Havells India Ltd enters into settlement agreement with HPL Group
Research
Oriental Bank of Commerce - Gaining momentum - MF Global Quarterly Report
Posted On : 2012-02-02 06:34:18( TIMEZONE : IST )
OBC delivered profit of Rs 3.54 bn, above ours as well as street estimates due to a) stable NII growth of 10.7% YoY to Rs 11.4 bn, b) strong non-interest income growth of 27.6% YoY to Rs 2.95 bn and c) contained slippages leading to lower loan loss provisions, even as provisions and contingencies increased on the back of high amount of restructuring done during the quarter. The bank restructured assets worth Rs 22.1 bn (including GTL group ~ Rs 6 bn and Uttar Haryana SEB ~ Rs 9 bn) and provided Rs 1.4 bn as an NPV sacrifice on GTL. The management expects incremental restructuring of Rs 15 bn (Rs 30 bn, if loans to Air India are also restructured) by FY12E. Furthermore, going forward, the focus on recoveries (especially from agriculture segment) will help stabilize GNPAs at ~2.8% and contain credit costs at ~0.7%. Stability in NII growth coupled with decline in credit costs will enable the bank to improve RoA to 0.9% by FY13E from 0.7% currently.
We maintain our Buy rating on OBC, given improved outlook and attractive valuations (0.7x FY13E ABV at CMP) with a target price of Rs 350.
- Net Interest Margin (NIM) improved by 26 bps QoQ to 2.9% due to a sharp rise of ~ 60 bps in yield and a 40 bps improvement in CASA. Q2FY12 NIMs were significantly impacted by interest reversal on bad loans. On a YoY basis, NIMs declined by 20 bps due to a YoY decline in CASA.
- Advances grew by 21.9% YoY driven by growth in agri, corporate and SME segment; while deposits grew by 20.8% YoY owing to strong growth in term deposits. However, during the quarter, the bank has substantially reduced dependence on bulk deposits (halved from Rs 406 bn as on Sep'11 to 195 bn as on Dec'11).
- Non-interest income grew by 27.6% YoY to Rs 2.95 bn driven by strong forex income and higher recoveries from written off accounts.
- Slippages for Q3FY12 was Rs 7 bn (largely from agri, textile and iron and steel segments) leading to GNPAs of 2.92% (2.95% in Q2FY12). Outstanding restructured book stands at Rs 60.1 bn.
