Oriental Bank of Commerce rallied on high volumes after it reported a surge in its Q4 net profit on account a substantial decline in provisions.

The scrip of the public sector bank lunged up 16.4% to Rs 136.40 on BSE in late afternoon trades . Heavy volumes of 29 lakh shares were witnessed on the counter by then.

In fact, so positive was the spurt in Oriental Bank of Commerce (OBC), that it  boosted a host of other banking PSUs as well --  Punjab National Bank (up 6% to Rs 146.50), Corporation Bank (up 5.7% to Rs 161), Bank of Baroda (up 4.4% to Rs 112.60) and Canara Bank (up 4% to Rs 103.85).

Of late, there have been two key triggers for banking PSU stocks -- falling interest rates and improvement in asset quality of banks with most of them having written off non-performing assets (NPAs) against treasury income.

Funds have been active in OBC of late. Prominet among them is Templeton Mutual Fund, which added OBC to its portfolio (across some of its schemes) in April 2003.

On Monday, OBC reported a surge in its Q4 net profit. On a 30% growth in net interest income to Rs 347.27 crore, net profit rose 87% to Rs 119.49 crore. The bank undertook lower provisioning of Rs 102.49 crore, a fall of 59% whereas taxation provision (including deferred tax) increased 51% to Rs 108.71 crore.

For FY 2002-03, the bank reported a 43% growth in net profit to Rs 456.95 crore on a 24% growth in net interest income to Rs  1,204.75 crore. The rise in FY 2002-03 profit was mainly due to treasury operations.

OBC has a strong presence in the northern and western regions of the country. The bank has been a pioneer as far as NPA recoveries are concerned.

The bank has been focussing on lower cost funds.

It has aggressively entered the retail segment. In this segment, housing finance occupies the most prominent place. The bank had earlier proposed to complete 91% computerisation by September 2003.