DCB Bank

Development Credit Bank as it was formerly known has posted an excellent set of numbers for Q3FY14. The best part about the numbers was the sharp drop in NPAs. Gross NPA was down to 2.77% v/s 3.43% in Q2 and 3.80% (YoY). Net NPA rose marginally to 0.77% v/s 0.73% (YoY). This sharp drop in the bad loans was mainly on account of a 605 drop in personal loans. The bank has made itself pretty risk averse as it has a strict lending policy, not lending to properties whose construction is less than 80% complete. The Bank has also lowered its exposure to stressed sectors such as agriculture and small industrial units, among others.This prudent lending policy also helped the Bank improve its NIM to 3.5%, up from 3.38% (YoY). Though in Q4, the bank has stated that it will increase lending to the priority sector, which could mean that NIM could come down. It expects to end FY14 with a NIM of 3.34%.

The Bank ended Q3 with a 33% (YoY) rise in net profit at Rs.36 crore. Deposits rose 27% at Rs.592 crore and advances were up 23% at Rs.7361 crore. CASA (current and savings accounts) came in at 25% as against 29% a year ago. Capital adequacy ratio of the bank stood at 12.86% under Basel III as of end December. During the quarter, the bank’s balance sheet rose 24% to Rs11,989 crore from Rs9,644 crore. During the quarter, the Bank opened 12 branches, taking the total tally to 115 branches. It hopes to add another 15 branches before end of this fiscal. The stock is expected to remain in the limelight as it is being tipped as one of the small banks, which could be a ripe acquisition target.