Oriental Bank of Commerce

Oriental Bank of Commerce (OBC) came out with the financial results for the quarter ended September 2011 and conducted analyst meet on 02 November 2011 to discuss the financial performance and prospects of the bank. Nagesh Pydah - Chairman and Managing Director, V Kannan and S C Sinha - Executive Directors and RL Aggarwal - CFO and General Manager addressed the call

Highlights of the call are:

• Total business and advances have crossed the marks of Rs 2.5 lakh crore and 1.0 lakh crore. The business mix of the bank has increased by 19.6% y-o-y and 5.1% q-o-q to Rs 255163 crore at end September 2011.
• Total income during Q2 of FY 2011-12 increased by 27.21 % to Rs 4078 crore from Rs 3206 crore in Q2 of FY 2010-11, powered by healthy growth of 27.04% in Interest Income to Rs 3801 crore. Non-Interest Income increased 29.55% to Rs 277 crore during Q2FY12 from Rs 214 crore in Q2FY11 due to healthy growth in Income from Treasury at Rs 18 crore as against Rs. 0.81 crore in September 2010.
• Operating Profit of the Bank declined 5.9% to Rs 758.21 crore for Q2FY12 due to sharp increase in interest expenses. Net profit dipped 57.8% to Rs 167.74 crore during Q2FY12, due to 44.6% surge in provisions to Rs 590.47 crore.
• Break up of credit on broader classification was as follows: Advances to large corporate increased by 25.7% to Rs 55231.08 crore, Mid corporate by 15.3% to Rs 21404.04 crore, Retail Credit by 7.2% to Rs 11476.95 crore and others 22.7% to Rs 17499 crore. Infrastructure sector exposure of the bank was to the tune of Rs 23533 crore, accounting for 22% of the total advances, of which Rs 13543 crore was cornered by power sector.
• Retail loans (including Indirect Housing) at Rs. 11,477 crore constituted 10.87% of Total Advances and grew by 7.19% on YoY basis (Retail Loans excluding indirect Housing stood at Rs 8726 crore and constituted 8.26% of Total Advances). Education loan Portfolio grew by 9.82% (YoY) to reach Rs 1173 crore as on 30 September 2011 from Rs 1068 crore as on 30 September 2010. Vehicle Loan Portfolio grew by 25.72% (YoY) to reach Rs 981 crore as on 30 September 2011 from Rs 781 crore as on 30 September 2010. Direct Housing loan portfolio grew by 15.27% (YoY) to reach Rs 4760 crore as on 30 September 2011 from Rs 4130 crore as on 30 September, 2010.
• Priority sector advances grew by 24.53% (YoY) to Rs 36778 crore as on 30 September 2011, led by 23.62% increase in agricultural advances to Rs 12,893 crore.
• During Q2FY12, 5309 MSE (Micro & Small Enterprises) Accounts with an amount of Rs 451 crore & 5361 MSME (Micro, Small & Medium Enterprises) accounts with an amount of Rs 471 crore were opened.
• About 17 MSME Specialized Branches and 45 MSME focused Branches were functional as on 30th September, 2011.
• Total deposits have increased 18.9% on y-o-y basis and 3.5% on q-o-q basis to Rs 149552 crore, while total advances surged 20.7% on y-o-y and 7.5% on q-o-q basis to Rs 105611 crore at end September 2011. Market Share of deposits as well as advances eased slightly to 2.59% and 2.48% at end September 2011 from 2.61% and 2.52% at end September 2010.
• Bank expects the deposits to grow 18% and advances to increase 20% during FY2012.
• CASA Deposit increased by Rs 2261 crore to Rs. 34,182 crore from Rs. 31,921 crore registering a growth of 7.08 % (YoY). CASA Deposits to Total Deposits stood at 22.86% at end September 2011 compared to 25.4% a year ago.
• Credit to Deposit Ratio improved to 70.75% at end September 2011 compared to 67.9% a quarter ago and 69.6% a year ago.
• Bank marketed 7006 policies with first premium collection aggregating Rs 24.74 crore during Q2FY12 and 10485 policies with first premium collection amounting Rs 39.91 crore during H1FY12. Bank has earned a Gross Commission of Rs 3.11 crore in Q2 and Rs. 7.48 crore in H1 FY12.
• Cost of Deposit increased by 177 bps to 7.63% for Q2FY12 and 170 bps to 7.43% for H1FY12. Yield on Advances is at 11.65% for Q2FY12 and 11.54% for H1FY12, representing an increase of 137 bps and 139 bps, on y-o-y basis. Cost to income ratio stood at 40.15% for Q2FY12.
• Net Interest Margin (NIM) declined to 2.64% during Q2FY12 and 2.79% for H1FY12 compared to 3.3% for Q2FY11 and 3.32% for H1FY11.
• Return on Assets (RoA) stood at 0.64% for Half Year ended 30 September 2011, compared to 1.07% for H1FY11.
• The investment book grew by 19.7% to Rs 44564.54 crore at end September 2011 against Rs 37235.65 crore at end September 2010. HTM book stood at Rs 28331.41 crore, AFS at Rs 15449.54 crore and HFT at Rs 783.59 crore. Duration of total portfolio has declined to 4.73% with AFS duration at 3.63 years. Yield on investment improved to 7.65% as on 30 September 2011 compared to 7.34% a year ago.
• CRAR of the Bank is at 12.59% under BASEL-II, comprising of Tier-I Capital of 9.92% and Tier -II Capital of 2.67%.
• Book Value Per Share stood at Rs 364.28 as on 30 September 2011 as against Rs 320.52 as on 30 September 2010.
• Gross NPA ratio jumped to 2.95%, while Net NPA ratio more than doubled 1.90% as on 30 September 2011 compared to 1.67% and 0.7% at end September 2010. Slippages during the H1FY12 were to the tune of Rs 188135 crore. Provision Coverage Ratio declined to 63.77% at end September 2011 compared to 81.36% at end September 2010.
• The bank has completed the system driven recognition of NPAs, so expect the NPAs to ease now onward. It has targeted to cut Gross NPA to 2% and Net NPA to 1% by end March 2012. Bank has targeted the cash recovery of Rs 100 crore per month.
• During the H1FY12, the bank has restructured 2551 accounts with value of Rs 643.66 crore. The total restructured assets at end of September 2011 were to the tune of Rs 5391.92 crore. However, the outstanding restructured amount was to the tune of Rs 4119.47 crore.
• Business per Branch increased to Rs 151 crore from Rs 138 crore registering a growth of 8.96% (YoY). Business per Employee increased to Rs 15 crore from Rs 13 crore registering a growth of 16.49% (YoY).
• Bank's branch network stood at 1692 Branches with 23 extension counters. It has opened up 48 Branches during Q2 of FY-2011-12, while about 72 Branches have been opened during Half Year ended 30 September 2011. Bank also installed 22 ATMs during Q2FY12 for 29.51 lakh card holders, taking the total number of ATMs as on 30 September 2011 to 1242 (including 7 Mobile ATMs, 325 offsite ATMs and 3 Biometric ATMs).
• During Half Year ended 30 September 2011, Bank recruited 738 personnel including 375 Probationary Officers & 225 Specialist Officers. About 1735 Clerks are likely to join by November 2011.