DCB Bank breaches lower circuits as profitability shrinks in Q2FY16

DCB Bank posted very disappointing Q2 results on yesterday. The share price of the bank tanked by 19.97 per cent in early trades and touched lower circuits on BSE. Now the scrip is trading at Rs 106.8 on intraday basis.

On a sequential basis, DCB Bank's total interest earned increased by 2.93 per cent to Rs 416 crore in Q2FY16. The bank's total expenditure rose by 5.9 per cent to Rs 120.56 crore inQ2FY16 on quarterly basis.

DCB Bank's EBIT increased by 1.77 per cent to Rs 296 crore in Q2FY16 as compared to previous quarter. The bank's EBIT margin contracted 81 basis points to 71.03 per cent in Q2FY16 on quarterly basis. It's PAT decreased by 21.21 per cent to Rs 36.93 crore in Q2FY16 on quarterly basis as other income reduced by 22.85 per cent to Rs 48.7 crore during the quarter. The net interest margin of bank stood at 3.79 per cent during Q2FY16 against 3.81 per cent in the previous quarter.

The asset quality of DCB Bank declined and gross NPA (Non performing Assets) stood at 1.99 per cent to Rs 224 crore in Q2FY16 against 1.96 per cent to Rs 206 crore in Q1FY16. However, Its net NPA contracted by 6 basis points to 1.16 per cent amounting to Rs 130 crore in Q2FY16 on quarterly basis.

Considering the segment results, DCB Bank's Treasury segment revenue reduced by 12.55 per cent to reach Rs 162.15 crore in Q2FY16 on quarter on quarter basis. The bank's revenue from Wholesale/Corporate Banking segment declined by 6.65 per cent to Rs 90.85 crore in Q2FY16 on quarterly basis. However, Its revenue from Retail banking segment increased by 5.79 per cent to Rs 379 crore in Q2FY16 on quarterly basis.

On yearly basis, DCB Bank revenue grew by 24.28 per cent to Rs 416 crore in Q2FY16. Total expenses of the bank rose by 27.2 per cent from Rs 94.78 crore in Q2FY15 to Rs 120.56 crore in Q2FY16. Its provisions and contingencies increased by 57.6 per cent to Rs 21.67 crore in Q2FY16 on yearly basis. DCB Bank's PAT decreased by 10.12 per cent to Rs 36.93 crore in Q2FY16 on yearly basis. The Net interest margin, a key indicator of bank’s profitability, improved to 3.79 per cent during Q2FY16 from 3.72 per cent in the year-ago.

DCB Bank's shareholding pattern indicates that FII holdings expanded by 390 basis points to 18.69 per cent while DII holdings contracted by 195 basis points to 22.42 per cent during September 2015 quarter.

DCB bank also declared that it wishes to expand its branch base by double from the existing 160 branches within one year. Apart from rapidly expanding branch network, the Bank also palns to invest heavily in customer and frontline facing technologies to enhance customer experience.

DCB Bank is a modern emerging new generation private sector bank with 160 branches across 16 states and 2 union territories. It is a scheduled commercial bank regulated by the Reserve Bank of India. DCB Bank’s business segments include Retail, Micro-SME, SME, Mid-Corporate, Agriculture, Commodities, Government, Public Sector, Indian Banks, Co-operative Banks and Non Banking Finance Companies (NBFC). The bank has approximately 5 lakh customers.