OBC: Growth oriented performance - Views on News from Equitymaster

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

  • MyStocks


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

OBC: Growth oriented performance

May 22, 2002

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.

(Rs m)4QFY014QFY02ChangeFY01FY02Change
Income from operations 7,104 8,067 13.5% 27,587 30,405 10.2%
Other Income 792 1,910 141.3% 2,677 4,739 77.0%
Interest expense 4,934 5,404 9.5% 19,681 20,684 5.1%
Net interest income 2,170 2,663 22.7% 7,906 9,721 22.9%
Other expenses 1,090 710 -34.8% 5,243 5,289 0.9%
Operating Profit 1,081 1,953 80.7% 2,664 4,432 66.4%
Operating Profit Margin (%)15.2%24.2%9.7%14.6%
Provisions and contingencies 1,705 2,50747.0% 2,526 3,47737.6%
Profit before Tax1671,356712.0% 2,815 5,694102.3%
Tax 111 718547.4% 786 2,489216.6%
Extraordinary items - - - -
Profit after Tax/(Loss)566381037.3% 2,029 3,20658.0%
Net profit margin (%)0.8%7.9%7.4%10.5%
No. of Shares (m) 192.5 192.5 192.5 192.5
Diluted Earnings per share*1.213.310.516.6
P/E Ratio3.12.5

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.

Income breakup
(Rs m)4QFY014QFY02ChangeFY01FY02Change
Interest on advances 3,278 3,931 19.9% 12,027 14,159 17.7%
Income from investments 3,447 3,928 14.0% 14,414 15,375 6.7%
Interest on balance with RBI 231 146 -36.6% 940 808 -14.0%
Others 148 61 -58.7% 207 63 -69.7%
Total 7,104 8,067 13.5% 27,587 30,405 10.2%

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.

Equitymaster requests your view! Post a comment on "OBC: Growth oriented performance". Click here!


More Views on News

Union Bank of India Swings to Profit as Asset Quality Improves (Views On News)

Jun 8, 2021

Union Bank's share price up 2% post March quarter earnings.

PNB Reports Profit in March Quarter After Three-Way Amalgamation (Views On News)

Jun 8, 2021

Shares of PNB fell over 2% yesterday despite healthy quarterly results.

Bank of Baroda Shares Plunge 5% After Reporting Huge Loss (Views On News)

May 31, 2021

The stock fell after the bank posted a loss due to higher tax expenses.

India's Largest Bank, SBI Posts Record Profit in Q4 (Views On News)

May 22, 2021

All you need to know about the bank's latest financial results.

How Did Canara Bank Perform in Q4FY21? (Views On News)

May 19, 2021

Key takeaways from Canara Bank Q4FY21 results.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Mar 20, 2020 (Close)


  • 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