Oriental Bank of Commerce - March 2013 Results Preview - Motilal Oswal

- Management's strategy to de-bulk the balance sheet is expected to result in loan and deposit growth of 14% and 12% YoY respectively.

- Lag impact of reduction in high cost bulk deposits (19% as at end-3QFY13 v/s 30%+ in 3QFY12) would provide benefit to margins. Hence, it is likely to improve by ~10bp QoQ to 2.9%+.

- Net slippages are expected to be contained and we factor net slippage ratio of ~1.4%, compared to average of 1.6% in 9MFY13.

- Restructured loan portfolio is expected to increase. At end-3QFY13, management had guided for restructuring of ~INR32b, of which Punjab SEB was INR12b.

- Core fee income is expected to be flat YoY. However, higher share of non-core income and recoveries is expected to drive overall non-interest income growth of 29%+ YoY.

- The stock trades at 0.5x FY14E and 0.5x FY15E BV, and 4.3x FY14E and 3.4x FY15E EPS. Maintain Buy.

Source : Equity Bulls

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