Public sector Oriental Bank of Commere (OBC) Monday posted a net profit of Rs 201.50 crore for the January-March quarter of the last fiscal, helped by fall in bad loans, arrest of fresh slippages and a healthy growth in retail loan portfolio.
The bank had clocked a loss to the tune of Rs 1,650.22 crore in the corresponding period of the fiscal ended March 2018.
Total income grew to Rs 5,711.92 crore in the March 2019 quarter from Rs 4,689.12 crore in the same period of the preceding fiscal.
On a yearly basis, the bank managed to return to profit after two fiscals by registering a net profit of Rs 55 crore for FY 2018-19.
The lender had posted a loss of Rs 5,872 crore in 2017-18 and of Rs 1,094.07 crore in 2016-17.
For FY 2018-19, total income stood at Rs 20,536.77 crore as against Rs 20,181.25 crore in the previous fiscal.
On the asset quality front, gross non-performing assets (NPAs) came down to 12.66 per cent of gross advances at the end of March 2019 from 17.63 per cent in March 2018. Net NPAs or bad loans were also trimmed to 5.93 per cent from 10.48 per cent.
"We have been making profits for the last three quarters. We are very confident that we will sustain the profit in the times to come year after year, quarter after quarter...," the bank's MD and chief executive, Mukesh Kumar Jain, told a news conference at its headquarters.
"Earlier we were having more than Rs 12,000 crore slippages (for) the full year, now this is contained to around Rs 7,000 crore. Recovery and upgradation (of loan accounts) ... has increased from Rs 3,161 crore to Rs 6,597 crore now," he said.
So these things are basically contributing to the turnaround, Jain said.
Further, he said that the bank is confident of bringing down the bad loans to below 5 per cent on a net basis by the next fiscal and the gross NPAs less than 10 per cent on account of focussed strategy on arresting slippages, speedier recovery process and constant monitoring.
"Our main focus is on recovery and upgradation only. We have even posted six general managers in the field for only with the responsibility of recovery and upgradation (of loan accounts). And we have been seeing good results also," he said.
On asked about bank consolidation and prospects of merger into some bigger, Jain said being a mid-sized bank Oriental Bank can equally acquire some other lender/s as well because of strong fundamentals.
"We can think of acquiring some other banks also. Yes, if some opportunity is there as we are in profits, good credit growth is there, net interest margin of about 2.73 per cent. All these parameters are quite healthy and we are open to acquire other bank as well," he added.
Giving a guidance on growth, the lender is targeting loan growth of around 10-12 per cent going forward, while the net interest margin is expected to be rising to around to 2.75-3 per cent.
Speaking on bank's exposure to crisis-ridden IL&FS exposure in which it has an exposure of Rs 1,134 crore, Jain said the stress level in the overall non-banking financial companies (NBFC) sector is not the same as it was some months back.
The bank's overall exposure to NBFC sector of Rs 20,000 crore.
Identifying it to be a national bank for retail and MSME sectors, Jain said the focus will be on retail, agri and MSME advances.
"As we are a mid-sized bank so we want to target mid-size loan portfolio in the corporate sector. We will not go for very large accounts such as Rs 500 crore to Rs 5,000 crore," Jain said.
On the accounts referred to the National Company Law Tribunal (NCLT) for recovery of bad loans, Oriental Bank said resolution on three key accounts -- Ruchi Soya, Alok Industries and Bhushan Power & Steel -- is likely to be reached by September.
Jain said the bank has referred as many as 180 cases to the NCLT amounting to around to around Rs 15,475 crore for which it is expecting recovery shortly.
"We are expecting nearly 50 per cent or so recovery from at least three NCLT cases. Before IBC, it used to take 6-7 years for recovery, if you discount that way, we are in much better position now," he said.
The board of directors at the meeting held today also approved the plan for raising capital of Rs 3,000 crore by way of issue of equity shares via Qualified Institutional Placement (QIP)/ Employee Share Purchase Scheme (ESPS)/ follow on public offer or rights issue.
Stock of Oriental Bank of Commerce closed 3.30 per cent down at Rs 92.30 apiece on the BSE on Monday.
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