The overall signs of factory output slowdown and high cost of funding were reflected in the first quarter results of Oriental Bank of Commerce (OBC) which reported a marginal decline of 2.4 per cent in its net profit at Rs.354.70 crore during the quarter ended June 2011, against Rs.363.30 crore in the year-ago period.
The rise in provisions and contingencies had its impact on the net profit margins of the bank. The operating profit also declined by 2.55 per cent to Rs.801.30 crore from Rs.822.32 crore.
Net interest income declined by 3.69 per cent to Rs.1,018 crore from Rs.1,057 crore. However, provisions and contingencies increased to Rs.314.20 crore from Rs.227.90 crore in the same quarter last year. Total income rose by 28.7 per cent to Rs.3,920 crore from Rs.3,046 crore.
Chairman and Managing Director Nagesh Paydah said the net interest margin (NIM) of the bank declined to 2.94 per cent. “We will try and maintain NIM at 3 per cent during the fiscal. The cost of fund may soften when deposits go in for re-pricing later during the year,” he said.
He said interest rates were expected to soften after September as rates have almost peaked. The bank expects credit growth of 20 per cent while deposits are likely to grow at 19 per cent during the current fiscal.
