ICRA revises ratings of 5 bonds of Oriental Bank of Commerce

Rating agency ICRA has revised downwards ratings of 5 bonds of Oriental Bank of Commerce (OBC) taking into consideration higher than anticipated bad loans.
The revision in rating is on account of higher than anticipated stress, slower than expected pace of recovery and weak outlook for several credit intensive sectors which led to sharp deterioration in asset quality indicators of the bank and has impacted the earnings profile of the bank, ICRA said in a statement.
"Further, earnings profile of the bank over the medium term is likely to remain weak given relatively high share of stressed assets (7.4 per cent restructured advances, excluding SEBs and Air India as a percentage of standard assets and other weak assets), relatively high un-provided NPAs (Net NPA per cent of 4.99 per cent as on December 31, 2015)," it said.

Limited visibility on capital availability to fully support credit growth while meeting the regulatory minimum requirement also constrains the rating, it added.
However, the ratings continue to draw comfort from OBCs majority sovereign ownership (59.13 per cent equity shares are held by Government of India), bank's strong franchise imparting healthy and stable deposits base, comfortable liquidity profile, the statement said.