VRS expenses hit OBC's profits - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

VRS expenses hit OBC's profits

Feb 7, 2001

Oriental Bank of Commerce (OBC) has reported a drop of 97% in net profit to Rs 22 m for the quarter ended December 2000. However, operating profits of the bank grew by 7% on the back of higher operating margins and cost efficiencies.

(Rs m)3QFY003QFY01Change9m FY009m FY01Change
Interest Income 6,308 6,676 5.8% 18,098 20,483 13.2%
Other Income 601 798 32.9% 1,698 1,886 11.1%
Interest Expenditure 4,559 4,811 5.5% 12,764 14,747 15.5%
Operating Profit (EBDIT) 1,750 1,865 6.6% 5,334 5,736 7.5%
Operating Profit Margin (%)27.7%27.9%29.5%28.0%
Other Expenditure 1,006 1,876 86.5% 3,061 4,153 35.7%
Profit before Tax1,345787-41.4%3,9703,469-12.6%
Provisions & Contingencies68476511.8%1,7701,8937.0%
Profit after Tax/(Loss) 660 22 -96.6% 2,200 1,576 -28.4%
Net profit margin (%)10.5%0.3%12.2%7.7%
No. of Shares (eoy) 193 193 193 193
Diluted Earnings per share*13.70.515.210.9
P/E (at current price)3.7
*(annualised)

Earnings for the third quarter declined due to more than 85% jump in other expenditure. During the quarter OBC has made full provision towards compensation payable to employees under voluntary retirement scheme (VRS) announced in December 2000. These expenses are included in other expenditure. OBC is the first bank to charge VRS expenses at one stroke in the third quarter results. The bank is expected to save wage cost of Rs 120 m every year in view of VRS scheme. Its staff productivity is also expected to increase from the current Rs. 21.8 m to Rs. 27 m by March 2001.

OBC's deposits in the first nine months of FY01 grew by 10% and advances rose by 22%. Credit to deposit ratio of the bank also increased to 41% (from 46% ) during the same period.

At the current market price of Rs 41 OBC is trading at a P/E multiple of 4 times its 9 months FY01 annualised earnings and Price/Book value ratio of 0.8 times. Its current valuations are lowest among its peers in the sector. With its focus on reducing the level of NPAs, technology adoption and dilution of the government's stake in the company re-rating in the stock is likely.

Equitymaster requests your view! Post a comment on "VRS expenses hit OBC's profits". Click here!

  

More Views on News

5 Indian Banks with the Lowest NPAs. Here's How they Did It... (Views On News)

Sep 27, 2021

These banks have managed to maintain their asset quality even in the middle of a pandemic.

PNB Reports an Over Three-Fold Jump in Net Profit as Provisions Fall (Views On News)

Aug 3, 2021

The reduction in provisions for bad loans and asset quality stability may have aided the lender's earnings.

Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter (Views On News)

Jul 28, 2021

All you need to know about the latest quarterly results of IndusInd Bank.

Axis Bank's Stock Falls as Results Disappoint on Asset Quality (Views On News)

Jul 27, 2021

Axis Bank's net profit more than doubles on a spike in other income and lower provisioning.

ICICI Bank's Quarterly Results Sends Stock to 52-Week High (Views On News)

Jul 26, 2021

ICICI Bank expects to maintain margins at the same level in coming quarter.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

ORIENTAL BANK SHARE PRICE


Mar 20, 2020 (Close)

TRACK ORIENTAL BANK

  • Track your investment in ORIENTAL BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARKET STATS