DCB: Sustaining Growth In A Challenging Environment
Suparna / 16 Jan 2014
Despite the challenging macro-economic environment that created a tremendous pressure on the banking sector, DCB has put up a fairly decent show for the December quarter of 2013. What makes it more interesting, is the fact that its asset quality hasn’t really deteriorated over the quarter.
The banking sector has been blowing hot and cold throughout the December quarter. From speculations on interest rates to discussions on asset qualities, it’s all been there for us to face. Amidst all such volatility that the sector came face to face with, companies have been declaring results which to some extent are in line with expectations and in some cases outright surprising . After some fairly encouraging results from Yes Bank, here is what DCB Bank did in the December quarter. It has posted a decent set of numbers for the third quarter of FY14. Its net profit for the quarter under review came in at Rs 36.37 crore, up 35% from the Rs 26.19 crore it had earned in the corresponding quarter of the previous year.
Net Interest Income (NII) of the bank grew by 30.49% on a yearly basis (up 2.96% on a QoQ basis) to Rs 93.95 crore, which beat the street estimates by a good margin. Other Income of the bank grew by 13.52% to Rs 32.48 crore as against the Rs 28.92 crore it had earned in the corresponding quarter of the previous year. The operating profit stood at Rs 647.36 crore as against Rs 472.16 crore in Q3FY13, marking a growth of 37%.
The provisions and contingencies were up 42.11% on a QoQ basis (up 105.56% on a YoY) to Rs 9.99 crore. The bank's Capital Adequacy Ratio (CAR), as per the Basel III norms, stood at 12.86% as on December 30, 2013, compared with 13.81% as at the end of the September quarter of 2013.
On the asset quality front, despite the growth in advances, the bank has managed to sustain its asset quality at the current levels. For the December 2013 quarter, it’s Gross and Net NPAs stood at 2.77% and 0.77% respectively, as against 3.43% and 0.86% seen in the previous quarter. The Gross NPAs stood at Rs 207.92 crore in the elapsed quarter as against Rs 235.08 crore as on September 30, 2013.
We believe DCB Bank has reported satisfactory numbers, despite the current challenges that have engulfed the economy in general and the banking sector in particular and tightened liquidity throughout the quarter. The business growth is expected to remain modest due to tough macro-economic conditions. Today (January 16, 2014), its shares gained 3% to touch Rs 60.55.
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