DCB Bank

The market was not too enthused with the Q4FY14 performance of DCB Bank. On face value, the numbers look good- after all the bank has managed to bring down its Gross NPA from 2.77% to 1.69% (QoQ) but this was mainly on account of write-offs and some recoveries. It restructured loans to the tune of Rs.70 crore for FY14 of which Rs.35 crore was in Q4 alone. But the market is more perturbed with its corporate sector, which accounts for 25% of its loan book, where another 17% is suspect – slippages are expected in the coming months. Yet, it looks like the Bank is treading with extreme caution as its fresh addition to bad loans during the quarter was less than 1.5%. Its total stressed assets account for around 2.5% of total advances.

Its net profit for the quarter rose 15% (YoY) at Rs.391 crore and NIM rose to 3.59% v/s 3.52% (YoY). Its cost-to-income ratio has also come down from 63.44% to 62.43% (QoQ). Provisions have gone up from Rs.10 crore to Rs.11 crore (QoQ). CASA ratio for the quarter is at 25% v/s 27.26% (YoY) and provision coverage ratio has come down – 80.54% from 85.71% (YoY). Deposits grew 8% while loans rose 11%. The Bank plans to increase its asset book by 23-25% and double the balance sheet over next three years.