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RESULTS REVIEW 1QFY17

16 AUG 2016

Oriental Bank of Commerce


NEUTRAL
INDUSTRY
CMP (as on 12 Aug 2016)
Target Price

BANKS
Rs 114
Rs 108

Nifty

8,672

Sensex

28,152

KEY STOCK DATA


Bloomberg

OBC IN

No. of Shares (mn)

346

MCap (Rsbn) / ($ mn)

39/589

6m avg traded value (Rsmn)

449

STOCK PERFORMANCE (%)


52 Week high / low

Rs 184/75

3M

6M

12M

Absolute (%)

34.9

38.9

(29.6)

Relative (%)

25.8

16.4

(31.9)

SHAREHOLDING PATTERN (%)


Promoters

58.38

FIs & Local MFs

21.92

FIIs
Public & Others
Source : BSE

Parul Gulati
parul.gulati@hdfcsec.com
+91-22-6171-7322
Darpin Shah
darpin.shah@hdfcsec.com
+91-22-6171-7328
Siji Philip
siji.philip@hdfcsec.com
+91-22-6171-7324

7.63
12.07

No respite from stress


OBC yet again disappointed with elevated slippages
as high as 9.3%. The saving grace was that relapse
from the restructured book contributed 44% to
overall slippages. The operating performance
remained dismal with elusive loan growth and NIMs
dented by high interest reversals negating the impact
of lower CoF. One-offs from provisions write back on
restructured assets and high trading gains aided
profitability.
With the restructured book is at 5.7%, we expect
slippages to remain elevated in FY17/FY18. Further
profitability will remain suppressed led by elevated
LLP on NPA ageing. This, coupled with constrained
Tier I at 9.2% (though better than peers), will keep
the loan growth muted at 8.5/12% in FY17/FY18E.
We estimate ROAs at 0.17/0.29% in FY17/FY18E.
Given the low return ratios, overhang of a book
dilutive fund raise, unstable asset quality and weak
traction in growth, we maintain NEUTRAL. Revise TP
to Rs 108 (0.7x FY18E ABV of Rs 154)
Financial Summary
(Rs mn)
Net Interest Income
PPOP
PAT
EPS (Rs)
ROAE (%)
ROAA (%)
Adj. BVPS (Rs)
P/ABV (x)
P/E (x)

1QFY17
12,046
9,171
1,007
3.1

1QFY16
13,285
10,445
2,578
8.6

YoY (%)
-9.3%
-12.2%
-60.9%
-63.6%

Highlights of the quarter

Slippages were elevated and higher than


estimated at Rs 34.6 bn (9.3% ann.) vs. Rs 40.1bn
(10.7%) QoQ. Given the high restructured book we
estimate slippages to remain elevated at 5.2/3.2%
in FY17/F18E. Overall loan growth remained
dismal at 3/-2% YoY/QoQ with only a marginally
better growth in retail at 11/-2% YoY/QoQ.

Constrained capital and NPA provisioning shall


keep the growth modest at 8.5/12% in
FY17/FY18E. Reported NIMs were down 29bps
QoQ to 2.36% impacted by interest reversal (Rs
1.6bn) consequent to high slippages negating the
benefits from lower CoF (-18bps QoQ to 6%). High
slippages will weigh on NIMs in FY17 with some
recovery in FY18E.

Near term outlook: the weak 1Q show will keep


the OBC stock range bound.
4QFY16
13,537
8,787
216
0.7

QoQ (%)
-11.0%
4.4%
365.7%
365.7%

FY15
50,842
42,271
4,971
16.6
3.8
0.34
278.2
0.31
5.1

FY16P
53,746
36,821
1,561
4.5
1.2
0.07
138.1
0.82
25.2

FY17E
53,538
37,462
4,161
12.0
3.0
0.17
109.4
1.04
9.5

FY18E
59,614
41,145
7,510
21.7
5.2
0.29
154.0
0.74
5.2

Source: Bank, HDFC sec Inst Research

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Sky high slippages, though materially from

restructured book: The bank disappointed with


quite elevated and higher than estimated
slippages at Rs 34.6 bn (9.3% ann.) as against Rs
40.1bn (10.7 %) in Q4FY16. However, solace
being that 44% of the slippages were relapse. Of
the total slippages, Corporate is at Rs 26.6 bn,
Retail Rs 0.8 bn, SME Rs 4.9 bn, and Agriculture
Rs 2.3 bn. Iron & Steel contributed Rs 10.7 bn
and Textiles Rs 9.6 bn.With the standard
restructured book (ex SEB) at 5.7% and Std. 5/25
and SDR at~1.2% of the loan book, we estimate
slippages to remain elevated at 5.2/3.2% in
FY17/FY18.

Loan growth remain elusive: The overall loan

growth remained dismal at 3/-2% YoY/QoQ with


only a marginally better growth in the retail at
11/-2% YoY/QoQ. The growth is weak across the

segments: Corporate (1/-1% YoY/QoQ), SME (9/6% YoY/QoQ), and Agriculture (-8/-5% YoY/QoQ).
Constrained capital Tier I 9.2% (though relatively
better) and NPA provisioning would conatin loan
growth at a modest 8.5/12% in FY16/FY17.

High slippages dents margins: The reported

NIMs were down 29bps QoQ to 2.36% impacted


by interest reversal (Rs 1.6bn) consequent to
high slippages negating the 1) benefits from
lower costs of funds (down 18bps QoQ to 6.0%),
2) 223bps QoQ improvement in the C/D ratio to
73.5% and 3) 70bps QoQ improvement in CASA
ratio to 25.9% (though largely aided by low
balance sheet growth). In FY17/18E we estimate
NIMs at 2.19%/2.27% as against 2.30% in FY16.
High stress formation in FY17 shall continue to
negate benefits from lower reprising of deposits,
while FY18 is estimated to see recovery.

Page | 2

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Five Quarters At A Glance


(Rsmn)
Net Interest Income
Non-interest Income
Treasury Income
Operating Income
Operating Expenses
Pre provision Profits
Provisions and Contingencies
NPA Provisions
PBT
Provision for Tax
PAT
Balance Sheet items/ratios
Deposits (Rsbn)
CASA Deposits (Rsbn)
Advances (Rsbn)
CD Ratio (%)
CAR (%)
Tier I (%)
Profitability
Yield on Advances (%)
Cost of Deposits (%)
NIM (%)
Cost-Income Ratio (%)
Tax Rate (%)
Asset quality
Gross NPA (Rsbn)
Net NPA (Rsbn)
Gross NPAs (%)
Net NPAs (%)
Delinquency Ratio (%)
Coverage Ratio (%) reported

1QFY16
13,285
4,539
1,013
17,824
7,380
10,445
5,777
5,958
4,668
2,090

2QFY16
13,831
4,246
1,283
18,076
8,151
9,925
5,694
4,761
4,231
1,218

3QFY16
13,093
3,945
1,182
17,038
9,375
7,664
11,831
14,504
(4,167)
80

4QFY16
13,537
4,933
1,372
18,469
9,682
8,787
10,261
10,865
(1,474)
(1,690)

1QFY17
12,046
6,138
1,626
18,184
9,013
9,171
7,504
9,609
1,667
660

YoY Growth
-9.3%
35.2%
60.6%
2.0%
22.1%
-12.2%
29.9%
61.3%
-64.3%
-68.4%

QoQ Growth
-11.0%
24.4%
18.5%
-1.5%
-6.9%
4.4%
-26.9%
-11.6%
-213.1%
-139.1%

2,578

3,013

(4,247)

216

1,007

-60.9%

365.7%

1,960
475
1,465
74.8
11.1
8.6

1,992
497
1,501
75.3
10.8
8.4

2,065
510
1,525
73.9
11.1
8.2

2,089
527
1,489
71.3
11.8
9.1

2,045
530
1,503
73.5
12.4
9.2

4.4%
11.7%
2.6%
-129 bps
133 bps
57 bps

-2.1%
0.6%
1.0%
223 bps
64 bps
6 bps

11.6
7.5
2.7
41.4
44.8

11.4
7.3
2.8
45.1
28.8

11.0
7.1
2.6
55.0
(1.9)

10.8
6.9
2.7
52.4
114.7

10.6
6.7
2.4
49.6
39.6

-100 bps
-79 bps
-29 bps
816 bps
-517 bps

-17 bps
-16 bps
-29 bps
-286 bps
-7508 bps

85.8
53.6
5.85
3.76
4.3
37.5

85.6
51.9
5.70
3.55
2.1
39.4

118.2
73.6
7.75
4.99
10.5
37.8

147.0
99.3
9.57
6.70
10.7
32.4

172.1
117.3
11.45
8.11
9.3
31.8

100.6%
119.0%
560 bps
435 bps
491 bps
-572 bps

17.1%
18.1%
188 bps
141 bps
-141 bps
-63 bps

Weak loan growth and interest


reversal of Rs 1.6bn impact NII
High treasury gains support other
income; fees grew ~4%
LLP remains elevated at 257bps vs.
290bps QoQ; write back of Rs 2bn on
restructured book provided cushion

C/D ratio sees QoQ improvement;


tepid low growth aides de-bulking of
deposits
Overall loan book remained tepid,
though marginally better growth in
retail

Margins impacted by high slippages


despite fall in costs of funds

Slippages remain sky high, though


materially contributed from relapse

Change In Estimates
(Rsmn)

Old
NII
54,777
PPOP
38,201
PAT
4,524
Adj. BVPS (Rs)
125
Source: HDFC sec Inst Research

FY17E
New
53,538
37,462
4,161
109.4

FY18E
Change
-2.3%
-1.9%
-8.0%
-12.8%

Old
60,656
42,054
7,608
160

New
59,614
41,145
7,510
154

Change
-1.7%
-2.2%
-1.3%
-3.5%

Page | 3

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Loan Growth remain dismal


Chg (%) (RHS)
%

Advances (Rs bn)


Rs bn

12.0

1,400

10.0

1,300

8.0

1,200

6.0

1,100

4.0

1,000

2.0

Source: Company, HDFC sec Inst Research

CD Ratio shows sequential improvement


Deposits (Rs bn)
Rs bn

CASA Ratios Up 70bps QoQ to 25.9%

Chg (%) (RHS)


%

Other (incl. Bulk)


14

Retail TD

SA

CA

41

36

41

42

40

38

39

39

36

35

35

34

31

35

40

35

34

36

38

37

37

40

41

40

41

43

18

18

18

18

18

19

18

18

18

19

18

19

20

1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

12
10
8
6

Source: Bank, HDFC sec Inst Research

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200

1QFY14

CASA ratio inched up


~70bps,aided by weak
balance sheet growth

SME
19.3%

Corporate
53.9%

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

Source: Company, HDFC sec Inst Research

Retail
12.2%

Agri
13.7%

3QFY14

900

Others
1.0%

14.0

1,500

2QFY14

The growth is weak across the


segments: Corporate (1/-1%
YoY/QoQ), SME (9/-6%
YoY/QoQ), and Agriculture (8/-5% YoY/QoQ).

1,600

1QFY14

The overall loan growth


remained dismal at 3/-2%
YoY/QoQ with only a
marginally better growth in
the retail at 11/-2% YoY/QoQ.

Loan Mix: Retail Gains, Albeit On Lower Base

Source: Bank, HDFC sec Inst Research

Page | 4

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Yield on Advances
NIM (RHS)

20.0
13.0

14.0

15.0

13.0

10.0

11.0

12.0

5.0

10.0

2.8
2.6
2.4

8.0
7.0

2.2

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

2.0

1QFY14

1QFY17

4QFY16

3QFY16

5.0

2QFY16

(15.0)

1QFY16

8.0

4QFY15

6.0

3QFY15

(10.0)

2QFY15

9.0

1QFY15

(5.0)

4QFY14

10.0

3QFY14

3.0

9.0

2QFY14

12.0

11.0

Source: Bank, HDFC sec Inst Research

Cost of Deposits

4QFY14

Rs bn

1QFY14

NIMs were down 29 bps QoQ to


2.36% impacted by interest
reversal (Rs 1.6bn) consequent
to high slippages negating the
1) benefits from lower costs of
funds (down 18bps QoQ to
6.0%), 2) 223 bps QoQ
improvement in the C/D ratio to
73.5% and 3) 70 bps QoQ
improvement in CASA ratio to
25.9%

Chg (%) (RHS)


%

3QFY14

NII (Rs bn)


15.0

NIM Down29bps QoQ

2QFY14

NII Impacted By High Slippages

Source: Bank, HDFC sec Inst Research

Non-interest Income: Yearly Trend On Core Fees Remains Weak


Non-interest income was tepid
Treasury gains supported high
other income

Rs bn
4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17
Fee
2.8
2.2
2.4
2.0
2.5
2.4
2.1
2.1
2.5
2.5
%Loan Ann.
0.82
0.63
0.68
0.57
0.70
0.65
0.56
0.54
0.67
0.66
Treasury
0.3
1.2
0.6
2.0
2.2
1.0
1.3
1.2
1.4
1.6
Others
0.6
0.7
0.3
0.4
0.3
0.5
0.4
0.7
0.3
0.6
Recovery
3.9
1.8
0.6
0.7
1.3
0.6
0.5
0.5
0.8
1.5
Total
8
6
4
5
6
5
4.2
3.9
4.9
6.1
YoY %
63%
9%
26%
50%
-17%
-23%
8%
-23%
-22%
35%
Source: Bank, HDFC sec Inst Research

YoY %
4%

QoQ %
-2%

61%
7%
142%
35%

19%
104%
91%
24%

Page | 5

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Source: Bank, HDFC sec Inst Research

NPA ageing and high slippages


kept credit costs high

44% of the slippages were


relapse.
Of the total slippages,
Corporate is at Rs 26.6 bn,
Retail Rs 0.8 bn, SME Rs 4.9 bn,
and Agriculture Rs 2.3 bn.
Iron & Steel contributed Rs
10.7 bn and Textiles Rs 9.6 bn.

4.0
2.0

1QFY17

4QFY16

3QFY16

2QFY16

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

30.0

3QFY14

0.5

2QFY14

35.0

1QFY14

1.0

6.0

1QFY16

40.0

4QFY15

1.5

8.0

3QFY15

45.0

10.0

2QFY15

2.0

Net NPA (Rs bn)


Net NPA (%) RHS
% 14.0
12.0

1QFY15

50.0

200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
-

4QFY14

55.0

2.5

Gross NPA (Rs bn)


Gross NPA (%) RHS
Rs bn

3QFY14

Opex / Non Interest Income


%
60.0

1QFY14

3.0

C/I Ratio (% RHS)


%

Asset Quality Deteriorates On Higher Slippages

2QFY14

Growth in Other Expenses is contained

Source: Bank, HDFC sec Inst Research

Provisions: LLP is High


Rs bn
4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17
NPA
7.3
4.8
4.5
5.0
5.6
6.0
4.8
14.5
10.9
9.6
% Loans Ann.
2.12
1.37
1.28
1.42
1.56
1.62
1.28
3.83
2.88
2.57
MTM
0.3
(1.4)
0.1
1.5
0.5
0.3
0.4
0.0
0.1
0.0
Others
1.7
2.0
1.9
3.7
4.9
(0.4)
0.5
(2.7)
(0.7)
(2.2)
Total
9.3
5.4
6.4
10.2
11.1
5.8
5.7
11.8
10.3
7.5
YoY %
23%
2%
16%
82%
19%
7%
-11%
34%
-7%
30%
Tax
1.4
2.4
(0.8)
(0.3)
0.1
2.1
1.2
0.1
(1.7)
0.7
% PBT
32%
39%
NA
NA
7%
45%
29%
-2%
115%
40%
Source: Bank, HDFC sec Inst Research

YoY %
61%

QoQ %
-12%

-82%
385%
30%

-47%
211%
-27%

-68%

-139%

YoY %

QoQ %

116%

-14%

-9%
53%
88%
100%

233%
-33%
-42%
17%

Asset Quality Movement


Rs bn
4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17
GNPA Opening
51.8
56.2
59.8
66.4
76.7
76.7
85.8
85.6
118.2
146.3
Slippages
12.1
14.3
9.8
13.4
7.6
16.0
7.7
39.8
40.2
34.6
% Loans Ann.
3.51
4.10
2.81
3.81
2.11
4.35
2.08
10.52
10.67
9.26
Upgrade
0.3
3.7
0.5
0.6
0.5
2.9
2.1
0.1
0.8
2.7
Recovery
3.7
2.6
1.9
2.2
3.4
1.7
2.7
3.3
3.8
2.6
Write-off
3.7
4.4
0.8
0.4
3.7
2.3
3.1
3.7
7.5
4.3
GNPA Closing
56.2
59.8
66.4
76.7
76.7
85.8
85.6
118.2
146.3
171.4
QoQ %
8%
6%
11%
15%
0%
12%
0%
38%
24%
17%
Source: Bank, HDFC sec Inst Research

Page | 6

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

P/ABV Band Chart


600

2.5

500

2.0

400

1.5

+1SD

300

Aug-16

Aug-15

Aug-14

Aug-13

Aug-12

0.0

Aug-11

Aug-16

Aug-15

Aug-14

Aug-13

Aug-12

Aug-11

Aug-10

Aug-09

Aug-08

-1SD

0.5

Aug-10

0.8x
0.4x

100

Avg.

Aug-09

1.2x

1.0

Aug-08

1.6x

200

Source: HDFC sec Inst Research

Peer Valuations
Banks

Mcap
(Rsbn)

CMP
(Rs)

Rating

AXSB
CUB
DCBB
FB
ICICIBC #
IIB
KMB#
BOB
OBC
SBIN #
UNBK
UJJIVAN

1,411
77
32
109
1,430
698
1,398
346
39
1,889
89
53

591
128
113
64
246
1,174
763
150
114
243
129
452

NEU
BUY
BUY
BUY
BUY
BUY
BUY
BUY
NEU
BUY
NEU
NEU

TP
(Rs)

FY16E
522
212
157
46
115
58
70
42
280
113
1,188
285
761
120
162
72
108
138
265
99
137
91
510
118

ABV (Rs)
P/E (x)
P/ABV (x)
ROAE (%)
ROAA (%)
FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E
225
261 17.2
17.6 14.7 2.79
2.63
2.26 16.8
14.2
15.0 1.67
1.39 1.40
52
60 17.2
15.4 13.1 2.80
2.44
2.12 15.5
15.2
15.7 1.50
1.47 1.47
63
71 16.6
18.7 14.8 1.96
1.80
1.59 11.9
9.5
10.6 1.10
0.81 0.82
44
50 23.0
16.4 12.5 1.53
1.44
1.27
6.0
8.0
9.8 0.55
0.68 0.77
119
136 11.7
10.7
8.7 1.72
1.60
1.35 11.1
10.7
11.6 1.42
1.36 1.41
328
381 30.5
23.7 18.6 4.11
3.58
3.08 16.6
15.9
17.5 1.82
1.88 1.93
136
155 56.6
35.1 27.8 5.40
4.62
3.91 11.0
12.9
14.4 1.41
1.58 1.64
77
116
-6.4
17.0
9.5 2.07
1.94
1.29 -14.4
5.5
9.2 -0.78
0.29 0.47
126
160 25.2
8.7
5.2 0.82
0.90 0.71
1.2
3.3
5.3 0.07
0.19 0.29
108
127 14.1
12.2
8.6 1.81
1.70
1.33
7.9
8.6
10.4 0.46
0.49 0.57
99
152
6.6
6.4
4.0 1.42
1.30
0.85
7.0
6.6
9.8 0.34
0.33 0.48
152
169 25.8
20.3 22.8 3.84
2.97
2.68 18.3
17.5
12.2 3.65
3.65 2.15

Source: Company, HDFC sec Inst Research, # Adjusted for subsidiaries value

Page | 7

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Income Statement
(Rs mn)

Balance Sheet
FY14

FY15

FY16E

FY17E

FY18E

(Rs mn)

FY14

FY15

FY16E

FY17E

FY18E

Interest Earned

190,175

199,614

200,587

201,437

214,637

SOURCES OF FUNDS

2,998

2,998

3,462

3,462

3,462

Interest Expended

Share Capital

131,308

134,795

148,950

152,390

158,599

6,513

6,219

15,073

15,073

15,073

134,307

137,793

152,411

155,852

162,061

138,904

148,772

146,841

147,899

155,022

Net Interest Income

51,271

50,842

53,746

53,538

59,614

Reserves

Other Income

19,453

21,214

17,663

20,057

20,691

Shareholders' Funds

Fee Income (CEB)

8,649

9,108

9,005

10,017

11,232

Savings

351,606

365,255

398,692

438,561

491,189

Treasury Income

2,478

6,135

4,849

5,750

4,750

Current

118,818

128,395

128,211

137,826

150,231

Total Income

70,724

72,056

71,409

73,595

80,305

Total Operating Exp

29,169

29,785

34,588

36,133

39,160

Total Deposits

Employee Expense

16,767

16,375

20,317

21,418

23,401

Borrowings

78,636

65,450

78,974

84,996

91,484

PPOP

41,555

42,271

36,821

37,462

41,145

Other Liabilities

55,193

61,795

54,882

59,868

65,441

Provisions & Contingencies

25,751

35,923

33,562

31,428

29,521

Total Liabilities

18,455

23,093

36,070

33,428

31,271

15,804

6,348

3,258

6,034

11,624

4,410

1,377

1,698

1,873

4,115

Cash & Bank Balance

142,689

107,758

99,624

85,167

58,439

PAT
11,394
Source: Bank, HDFC sec Inst Research

4,971

1,561

4,161

7,510

Investments

614,722

620,387

656,578

694,290

736,953

462,474

518,119

503,283

532,019

565,129

Prov. for NPAs (incl. std prov.)


PBT
Provision for Tax

Term Deposit

1,464,465 1,546,446 1,562,246 1,640,358 1,763,385


1,934,890 2,040,097 2,089,148 2,216,745 2,404,804

2,203,025 2,305,136 2,375,415 2,517,461 2,723,789

APPLICATION OF FUNDS

G-Secs
Advances

1,390,798 1,452,613 1,488,800 1,615,672 1,811,636

Fixed Assets

12,556

13,525

22,719

23,514

24,337

Other Assets

42,259

110,852

107,694

98,818

92,424

Total Assets

2,203,025 2,305,136 2,375,415 2,517,461 2,723,789

Source: Bank, HDFC sec Inst Research

Page | 8

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Key Ratios
FY14

FY15

FY16E

FY17E

FY18E

FY14

FY15

FY16E

FY17E

FY18E

ASSET QUALITY

VALUATION RATIOS
38.0

16.6

4.5

12.0

21.7

Gross NPLs (Rsm)

56,179

76,662

147,017

168,926

159,571

Earnings Growth (%)

(16.5)

(56.4)

(72.8)

166.6

80.5

Net NPLs (Rsm)

39,044

48,162

99,322

111,949

102,766

BVPS (Rs)

426.2

438.8

396.7

406.7

424.6

Gross NPLs (%)

4.0

5.3

9.9

10.5

8.8

Adj. BVPS(Rs)

296.0

278.2

138.1

109.4

154.0

Net NPLs (%)

2.8

3.3

6.7

6.9

5.7

ROAA (%)

0.54

0.34

0.07

0.17

0.29

30.5

37.2

32.4

33.7

35.6

ROAE (%)

9.2

3.8

1.2

3.0

5.2

Provision/Avg. Loans (%)

1.3

1.6

2.4

2.1

1.7

P/E (x)

3.0

6.9

25.2

9.5

5.2

ROAA TREE

P/ABV (x)

0.38

0.41

0.82

1.04

0.74

Net Interest Income

2.44%

2.26%

2.30%

2.19%

2.27%

P/PPOP (x)

0.8

0.8

1.1

1.1

1.0

Non Interest Income

0.92%

0.94%

0.75%

0.82%

0.79%

Dividend Yield (%)

6.7

2.9

0.6

1.6

3.0

Treasury Income

0.12%

0.27%

0.21%

0.24%

0.18%

Operating Cost

1.39%

1.32%

1.48%

1.48%

1.49%

Provisions

1.22%

1.59%

1.43%

1.28%

1.13%

0.88%

1.02%

1.54%

1.37%

1.19%

EPS(Rs)

PROFITABILITY
Yield on Advances (%)

Coverage Ratio (%)

10.9

10.7

10.1

9.7

9.5

Yield on Investment (%)

7.2

7.6

7.5

7.3

7.1

Cost of Deposits (%)

7.2

7.2

6.9

6.6

6.5

Tax

0.21%

0.06%

0.07%

0.08%

0.16%

Core Spread (%)

3.7

3.5

3.3

3.2

3.1

ROAA

0.54%

0.22%

0.07%

0.17%

0.29%

NIM (%)

2.6

2.5

2.5

2.4

2.4

Leverage (x)

16.9

17.4

17.4

17.6

18.2

OPERATING EFFICIENCY

ROAE

9.16%

3.83%

1.16%

2.99%

5.22%

Cost/Avg. Asset Ratio (%)

Source: Bank, HDFC sec Inst Research

1.4

1.3

1.5

1.5

1.5

42.7

45.2

52.0

53.3

51.8

7.9

4.4

2.5

8.5

12.1

Deposit Growth (%)

10.0

5.4

2.4

6.1

8.5

C/D Ratio (%)

71.9

71.2

71.3

72.9

75.3

Equity/Assets (%)

6.1

6.0

6.4

6.2

5.9

Equity/Advances (%)

9.7

9.5

10.2

9.6

8.9

CASA (%)

24.3

24.2

25.2

26.0

26.7

Capital Adequacy Ratio (CAR, %)

11.0

11.4

11.8

11.3

10.8

8.9

8.7

9.1

8.8

8.5

Core Cost-Income Ratio

Provisions for NPAs

BALANCE SHEET STRUCTURE


Loan Growth (%)

w/w Tier I CAR (%)

Page | 9

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

RECOMMENDATION HISTORY
OBC

Date
3-Nov-15
16-Feb-16
12-May-16
8-Jul-16
16-Aug-16

TP

300
250
200

CMP
146
87
85
121
114

Reco
BUY
BUY
BUY
NEU
NEU

Target
235
124
95
112
108

150
100

Aug-16

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

50

Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Page | 10

ORIENTAL BANK OF COMMERCE : RESULTS REVIEW 1QFY17

Disclosure:
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Page | 11