OBC sees GTB role in bottomline

Oriental Bank of Commerce (OBC) expects the erstwhile Global Trust Bank (GTB) to begin contributing to its operating profit from this quarter. The combined entity's profits are expected to cross Rs 900 crore in 2005-06.

"We hope to touch a business of Rs 1,00,000 crore in March 2006, Rs 60,000 crore in deposits and Rs 40,000 crore in advances," B D Narang, chairman, OBC said adding that the bank had already sanctioned Rs 10,000 crore for infrastructure projects.

At a roadshow for its second public offer, which opens on April 25-29, Narang said, "We want the offer to be attractively priced for the retail investor."

After the issue of 5.8 crore equity shares (with net offer to public at 4.6 crore shares), the government shareholding in OBC would come down to 51.2 per cent from 66 per cent.

Narang said, " Only a few branches of GTB were lending branches. We are now repositioning over 100 of its branches for retail business. We are planning to expand organically in east and as we have a lot of employees from Bihar we will easily find 400-500 employees who would be willing to go there."

The bank has already opened regional offices in Pune and Bhubaneswar and is planning to open such offices in Bangalore, North Mumbai and Durgapur.

Narang declined to give profit figures for last fiscal as the accounts were under audit but the bank is expected to take a hit during 2004-05 mainly owing to huge provisions for the losses of GTB estimated at Rs 1,450 crore.

OBC clocked a net profit of Rs 524 crore during the nine-month ended December 2004 (the net profit in 2003-04 stood at Rs 686.34 crore).

The net deficit on account of GTB was of Rs 1,225 crore after excluding the share capital.

"OBC has already recovered Rs 200 crore of bad assets of GTB, approved compromised settlement of Rs 445 crore, restructured loans worth Rs 410 crore and filed 25 criminal cases with CBI to recover another Rs 984 crore.

"The filing of cases is having its effect and the borrowers are coming to talk to us," Narang said.

"The bank would get a tax benefit of over Rs 300 crore as finance minister P Chidambaram has proposed to amend Section 72AA of the Income Tax Act to enable a merged entity to claim tax benefit for accumulated and current losses, he added.

"We expect NPAs to be lower than 1.7 per cent during fiscal end 2005," Narang said, adding the bank will again strive to be zero NPA bank by the end of this fiscal.