GTB merger to drag down OBC profit

Oriental Bank of Commerce chairman and managing director B D Narang expects the bank's net profit for 2004-05 to be lower on account of the merger of the failed Global Trust Bank (GTB) with itself.

He, however, said the merger was proceeding smoothly and all issues on the liabilities side have been sorted out.

"We have now taken up issues on the asset side, and will then resolve property and staff issues," he said.

He sees the merger benefits to start showing over the next three years.

"I see GTB contributing Rs 1.5-3.0 billion by March 2006," he said.

He said GTB was currently a strategic business unit of the bank for technical reasons, but in due course would be integrated with the bank.

He said the bank is not looking at any acquisitions till all issues relating to the GTB merger are fully resolved.

The recent wage revision agreement signed with the bank's union will have an impact of Rs 600-700 million during the current year. But much of the increase has already been provided for, he said.

The bank is also looking at expanding its presence in the eastern part of the country and has got more licenses from the Reserve Bank of India, he said.

However, Narang said the bank was not looking at any acquisitions in the east and would be looking to grow organically.

OBC opened a bank in Bhubaneshwar in Orissa Thursday.