A robust growth in net interest margin (NIM) on the back of decline in cost of deposits has helped Oriental Bank of Commerce (OBC) report a 15 per cent increase in net profit for the quarter ended December 2009 at Rs 289.43 crore (Rs 252.19 crore).
This bottom line growth has come mainly through strong growth in core operations and despite a subdued performance on the treasury front this quarter.
For the quarter under review, net interest income of the bank grew 54.35 per cent to Rs 872.87 crore (Rs 565.53 crore). However, treasury income had slumped to Rs 51 crore, from a level of Rs 184 crore in the same quarter last year. NIM increased to 3 per cent from 2.02 per cent and 1.8 per cent in the previous two quarters.
OBC's cost of deposits has come down from a level of 7.84 per cent a few quarters back, to 6.24 per cent for the quarter under review, thereby boosting margins. The average cost of deposits had come down on the back of new savings accounts that were opened by the bank and with current and savings accounts (CASA) deposits on the rise.
The 14.77 per cent increase in net profit had come despite a substantial increase in provisions and contingencies, which jumped to Rs 333.36 crore from Rs 134 crore.
The largest segment in the provisions and contingencies was accounted for by taxes at Rs 141 crore (Rs 82 crore), followed by a contingency of Rs 100 crore towards agriculture debt relief, for which settlement may not be received. The bank has also provided Rs 45 crore as provision for Non-performing Assets (NPAs), compared to Rs 68 crore in same period last year.
The outstanding restructured advances stood at about Rs 5,300 crore.
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