By Jindal Haria

India Ratings and Research (Ind-Ra) has placed Oriental Bank of Commerce Ltd’s (OBC) ‘IND AA’ Long-Term Issuer Rating on Rating Watch Evolving (RWE). 

KEY RATING DRIVERS

Ind-Ra has placed the rating on RWE following the finance ministry’s announcement dated 31 August 2019 on the proposed amalgamation of Punjab National Bank (PNB; ‘IND AA+’/RWE) with OBC and United Bank of India (UBI; ‘IND AA-’/RWE) with PNB being the absorbing bank post amalgamation.

 

As the announcement will be followed by multiple approvals at various levels, including the boards of these banks, the agency has placed OBC’s ratings on RWE. The key reasons for placing the ratings on RWE are the scale of the mergers and the potential integration-related challenges that may be encountered in the process; the banks may not be ready within the stipulated time (as may be determined later). The RWE indicates that the rating may be affirmed, downgraded or upgraded. Ind-Ra expects to resolve the RWE on the outcome of the merger and the availability of the first set of consolidated quarterly financial results.

 

For Ind-Ra’s views on latest announcement on amalgamation or public sector banks, click here.
 


COMPANY PROFILE

OBC is a public sector bank with operations across India. At end-June 2019, the bank had 2,390 domestic branches and 2,620 ATMs.

 

FINANCIAL SUMMARY

 

Particulars

FY19

FY18

Total assets (INR billion)

2,719.10

2,333.44

Total equity (INR billion)

189.01

117.69

Net profit (INR billion)

0.55

-58.72

Return on assets (%)

0.02

-2.31

Common equity tier 1 (%)

9.86

7.46

Capital adequacy ratio (%)

12.73

10.50

Source: OBC, Ind-Ra



RATING HISTORY

Instrument Type

Current Rating/Rating Watch

Historical Rating/Outlook

Rating Type

Rated Limits (billion)

Rating

22 January 2019

17 October 2017

26 August 2016

Issuer rating

Long-term

-

IND AA/RWE

IND AA/Negative

IND AA/Stable

IND AA/Stable



COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity level of the instrument, please visit https://www.indiaratings.co.in/complexity-indicators.

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

About India Ratings and Research: India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies and project finance companies. 

Headquartered in Mumbai, Ind-Ra has seven branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Pune. Ind-Ra is recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank. 

India Ratings is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

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Analyst Names

  • Primary Analyst

    Jindal Haria

    Director
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th floor, West Wing Plot C-2, G Block. Bandra Kurla Complex Bandra (East), Mumbai 400051
    +91 22 40001750

    Media Relation

    Namita Sharma

    Manager – Corporate Communication
    +91 22 40356121