Oriental Bank of Commerce – Q4 Analysis

Do not take these results of Oriental Bank of Commerce only at face value – Rs1b quarterly loss is on account of accelerated write-off of acquisition costs. Operationally, pre-provisioning profits are flat yoy and up 10% qoq – ahead of expectations, and suggest some signs of a bounce-back, albeit off a pretty modest base.

OBC has pushed up margins about 10bp qoq; should better peer government banks. But this comes off a fairly low base; while this offers upside, the low 225bps margin level remains a fundamental drag on profitability.

OBC continues to maintain industry level growth – about 21% for the year, balanced, with some acceleration over the quarter. Its asset book, however, does see some increased pressure – not significant, but along with a provision write-back to support the bottom line, has eroded loan loss coverage.

Going forward, company should report an EPS Of Rs 29.88 for FY09.