A recent press report said that Oriental Bank of Commerce reported a 2.37 per cent decline in net profit for the first quarter ended June 30, 2011 at Rs 354.70 crore.
Reports said that the decline in profit was due to the increase in the cost of deposits much sharper than the increase in yield on advances, leading to lower net interest margin of 2.94 per cent for the quarter under review as against 3.34 per cent in Q1 of 2010-11. Total income for the quarter under review grew 28.72 per cent to Rs 3,920.36 crore.
Reports also said that the NIM situation of the bank is expected to improve from the second quarter as the bank has planned to hike its base rates. This will in fact make loans such as home loan, vehicle loan, personal loan, educational loan, business loan etc. costlier to its borrowers.
Mr. V. Kannan, Executive Director, OBC, said that the RBI’s recent guidelines for provisioning of existing bad debts led to an incremental one-time provisioning of Rs 79.52 crore. For restructured assets, the incremental provisioning as mandated by RBI has led to increased provisioning of Rs 60.34 crore in first quarters.