OBC Shares Sink as Q3 Net Falls 91%

Shares of Oriental Bank of Commerce (OBC) fell nearly 15 per cent to a day low of Rs 267.05 on Thursday after the lender's net profit in the third quarter came in much below analysts' expectations.

The public sector lender's net profit slumped 91 per cent year-on-year to Rs 19.5 crore for the quarter ended December 14, 2014. Analysts polled by NDTV had estimated its net profit at Rs 289 crore.

Its Q3 net profit was impacted by higher provisions for bad loans and exceptional items.

The bank's provision for bad loans in the third quarter increased 58 per cent year-on-year to Rs 885 crore, against Rs 561 crore in the same quarter of the previous fiscal.

Provisions for exceptional items on account of book adjustment on asset sale to asset reconstruction companies were at Rs 137.38 crore during the quarter.

During the third quarter, the bank's net interest income, or interest earned over interest expended, stood at Rs 1,297 crore against analyst estimates of Rs 1,325 crore.

However, its net profit was positively impacted by tax adjustments of Rs 100 crore relating to earlier years.

Other income or non-interest income of the bank increased 50 per cent year-on-year to Rs 512 crore against Rs 341 crore last fiscal.

OBC has also witnessed significant deterioration in its asset quality. Its gross non-performing assets (GNPA) increased to 5.43 per cent of total advances against 4.74 per cent sequentially and its net non-performing assets stood at 3.68 against 3.29 per cent last quarter.

Shares in OBC ended 10.79 per cent lower at Rs 279.50 apiece on the National Stock Exchange, underperforming the broader Nifty, which closed 0.43 per cent higher.