DCB Bank posts a poor Q1

DCB Bank posted a poor show for Q1FY17. Though its Net Interest Income rose by a smart 26% (YoY) to Rs.177 crore, net profit came in flat atRs.47 crore v/s Rs.46.9 crore in previous Q1. Higher cost-to-income and deteriorating asset quality kept the earnings in a tight bind. It added 5 new branches during the quarter and employee cost rose over 25%. Both these factors increased its cost-to-income ration from 57.8% to 60.9% (QoQ).

Asset quality fell. Gross NPA rose to 1.72% v/s 1.51%  (QoQ) and Net NPA rose from 0.75% to 0.87%. Fresh slippages were up 15% at Rs.58 crore. Provisions were actually down sequentially from Rs.27 crore to Rs.20 crore. During the quarter the ban made no sales to asset reconstruction companies and that could be one of the reasons for the rise in NPAs.

The market is disappointed and the stock price slipped intra day to a low point at Rs.98.05. It has recovered a bit but remains firmly in the red, down around 4%.