GTB losses nearly erased, profit from FY06 Q1: Oriental chief

Global Trust Bank's current operating losses have been virtually wiped out, said Oriental Bank of Commerce chairman and managing director, B D Narang Monday.

He expects bank to start making operating profit by April-June of 2005-06. Global Trust will contribute minimum Rs 350 crore operating profit next financial, he added.

"For January-March, the operating losses of Global Trust are not likely to exceed Rs 80-100 crore," Narang said.

"Global Trust will be history by April-May," Narang told CRISIL MarketWire.

The bank has handled Rs 900 crre worth of GTB's non-performing assets, he said, adding that the sum amounts to 75 per cent of the total NPAs from the acquired bank.

Oriental Bank has also made cash recoveries for nearly Rs 96 crore, and another Rs 49 crore have been upgraded to standard assets. "Nearly Rs 356 crore worth of assets have been restructured and rescheduled," Narang said.

"The board has approved Rs 126 crore worth of settlements and another Rs 250 crore are in hand," he said.

The bank has also initiated criminal action in certain cases to recover assets worth Rs 295 crore. Oriental Bank has also sorted out most of its deposit and liability side issues from the Global Trust merger. The bank is now resolving property issues.

"We expect to add Rs 1 crore per month (from the GTB properties)," Narang said.

The bank is not constrained to make a public offer for issue of shares due to capital adequacy requirements. The bank's capital adequacy ratio is 9.4 per cent as of the first nine months of this fiscal.

The bank has, however, sought government approval for a 50-million-share issue, which will reduce the government's stake to 53 per cent from 68 per cent.

"We will go for the public issue at the right time," he said.

Oriental Bank has yet again not made a transfer of its government securities to the held-to-maturity category portfolio to hedge against the rising bond yields.

"There is money still to be made in the market," said Narang with regard to its government securities investment portfolio, adding that he does not expect the 10-year benchmark bonds to rise significantly from current levels.

"I derive comfort from the fact that the government has borrowed much less than its original estimates," he added.

The bank nevertheless, has made a notional provision of one billion rupees on the portfolio.

Monday, shares of Oriental Bank of Commerce closed at Rs 318.80 on the National Stock Exchange, down 1.27 per cent over Friday.