Oriental Bank of Commerce (OBC) has reported commendable financial performance for the fourth quarter ended March 2002. The bank's interest income grew at a strong rate of 14% and operating profits jumped by 81% with improvement in interest margins and cost control measures.
Income from operations
Net interest income
Operating Profit Margin (%)
Provisions and contingencies
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (m)
Diluted Earnings per share*
During the year, the bank brought down its cost of funds, resulting in higher margins, which is reflected from a 23% rise in net interest income. Its cost to income ratio too declined to 37% in FY02 from 50% in FY01 due to savings on account of employee cost. In FY02, the bank wrote off VRS cost amounting to Rs 159 m which is included in other expenses.
Contrary to the trend witnessed in the public sector banks, OBC's interest income from advances flared up by 20% in the fourth quarter. The bank managed to post a sharp rise in this revenue stream despite a slowdown in the industrial activity.
Interest on advances
Income from investments
Interest on balance with RBI
Taking advantage of the higher other income, the bank increased the amount for provisions on non-performing assets. OBC's net NPA to advances ratio which stood at 3.6% as on March 2001 is likely to come down with this higher provisioning.
At the current market price of Rs 41, OBC is trading at a P/E of 3x and adjusted price to book value ratio of 0.6x. The bank's valuations are one the lowest compared to frontline public sector banks. OBC's slow absorption to technology and low visibility about future growth prospects is impacting its valuations.
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