Oriental Bank: Getting ambitious - 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?  

Oriental Bank: Getting ambitious

Dec 14, 2000

After the NYSE listing of ICICI Bank last year, Oriental Bank of Commerce is looking at an overseas listing. It is the ninth largest public sector bank in India with a network of 900 branches having a strong presence in the North Indian states.During the past three years, Oriental Bank (OBC) has reported excellent growth in revenues (a CAGR of 30%). However, its profit grew at a slower rate (a CAGR of 15%) due to pressure on operating margins and increase in provisions and contingencies. The bank with an asset base of over Rs 300 bn and deposits of Rs 270 bn is considered as one of the most profitable public sector bank in India.

During the first half of the current year the bank reported a disappointing growth in the profits. The lower growth in the profits was mainly on account of more than proportionate increase in interest expenditure. OBC expects to achieve an earnings growth of a marginal 8% during the year.

Financial Snapshot
(Rs m)1HFY001HFY01Change
Interest Income 11,789 13,808 17.1%
Total Income 12,887 14,895 15.6%
Operating Profit 4,681 4,959 5.9%
Other Expenses 2,055 2,278 10.8%
Profits before tax 2,626 2,681 2.1%
Provisions & Contingencies 1,086 1,127 3.8%
Profits after tax 1,540 1,554 0.9%
Equity shares (m) 193 193  
Operating profit margins30.4%28.0% 
NPM11.9%10.4% 
EPS (Rs)16.016.1 

The bank has a high exposure (70% to 80%) to relatively smaller sized companies. Loans to this segment are more susceptible to becoming non-performing loans if the economic recovery is delayed. The percentage of large corporate clients accounts for 35% of OBC’s clients. However, it is much less than what other state owned banks have. The bank’s focus to increase business exposure with large corporates will enable it to increase its fee-based income in future.

Comparative Analysis
ParticularsOBCSBIBOICorporation
Bank
CAR12.7%11.5%10.6%12.8%
NPAs as a % of net advances3.8%6.4%8.6%1.9%
Interest spread as a % of total assets2.9%2.7%2.3%2.7%
ROA1.1%0.8%0.3%1.5%
Business/employee (Rs m) 21.8 11.1 13.6 20.8
Profits/employee (Rs m) 0.2 0.1 0.0 0.2

At the current market price of Rs 37 OBC is trading at a P/E multiple of 2.4 times its FY01 projected earnings and a Price/Book value ratio of 0.4 times. The current valuations of the bank are relatively lower than other public sector banks (PSBs). Nevertheless, the bank compares well in terms of productivity ratios and other parameters with the other PSBs. It has one of the highest capital adequacy ratios (CAR) and interest spread among its peers. The reasons for lower valuations of the bank could be attributed to slower earnings growth and increasing non-performing assets. OBC is also lagging behind in terms of adoption of latest technology.


Equitymaster requests your view! Post a comment on "Oriental Bank: Getting ambitious ". Click here!

  

More Views on News

ORIENTAL BANK Announces Quarterly Results (3QFY20); Net Profit Up 39.1% (Quarterly Result Update)

Jan 24, 2020 | Updated on Jan 24, 2020

For the quarter ended December 2019, ORIENTAL BANK has posted a net profit of Rs 2 bn (up 39.1% YoY). Sales on the other hand came in at Rs 47 bn (up 2.1% YoY). Read on for a complete analysis of ORIENTAL BANK's quarterly results.

ORIENTAL BANK Announces Quarterly Results (2QFY20); Net Profit Up 23.7% (Quarterly Result Update)

Oct 25, 2019 | Updated on Oct 25, 2019

For the quarter ended September 2019, ORIENTAL BANK has posted a net profit of Rs 1 bn (up 23.7% YoY). Sales on the other hand came in at Rs 49 bn (up 13.7% YoY). Read on for a complete analysis of ORIENTAL BANK's quarterly results.

How the YES Bank Collapse Unfolded - 10 Points (Sector Info)

Mar 9, 2020

A timeline of how YES Bank went from a stock market darling to a pariah.

Today's Stock Market Crash: 10 Points (Sector Info)

Mar 6, 2020

Top factors that dragged the markets lower today.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts 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

ORIENTAL BANK - CANARA BANK COMPARISON

COMPARE ORIENTAL BANK WITH

MARKET STATS