Karvy Stock Broking has come out with a research report on Oriental Bank of Commerce (OBC). The research firm has maintained market performer rating with a target price of Rs 278, in its report dated November 11, 2009.

"In Q2FY10, Oriental Bank of Commerce (OBC) reported 7.6% (Y/Y) growth in net interest income to Rs 5.6 billion compared to our estimates of Rs 5.52 billion.; marginally better than our estimates. In the quarter, margin improved sequentially but remained lesser than corresponding quarter previous year level; cost of deposits reduced to 7.08% from 7.41% in Q1FY10 and 7.33% in Q2FY09and yield on advances decreased sequentially only by 5 bps to 10.33%. OBC's credit-deposit ratio remained at 69% but incremental C-D ratio came down to 68% from 77% in Q1FY10 and 75% in Q2FY09. On non-interest income front, the bank reported robust growth of 66% (Y/Y) in core fee income to Rs 1.44 billion, treasury income went up from Rs 780 million to Rs 1.09 billion; total non-interest income grew by 46% (Y/Y) to Rs 3.05 billion", says Karvy Stock Broking.

"During the quarter, the bank provided Rs 240 million for wage revision compared to Rs 300 million in Q2FY09. Moderate growth in NII, strong jump in other income and contained operating overheads led to 24% increase in operating profit to Rs5.0 bn against our expectations of Rs 4.8 billion. The bank's net profit increased by 14.3% (Y/Y) to Rs 2.7 billion in-line with our estimates. OBC's asset quality remained stable with gross NPAs of Rs 11.8 billion and restructured standard assets of Rs 52 billion. Overall the quarterly result was in-line; we maintain our market performer rating with a target price of Rs 278 at 0.83x adjusted book value FY2011", according to the report.

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To read the full report click on the attachment.........