DCB Bank net profit up 188% in Q1
Private sector lender DCB Bank on Saturday reported a net profit of Rs 97 crore for the three months ended June 30, up 188% year on year (year-on-year) due to a significant reduction in its provisions . The bank posted a 77% year-on-year decline in its provisions to Rs 35 crore in Q1FY23.
At the operational level however, the lender saw an 18% year-on-year decline in its pre-provisioning operating profit to Rs 166 crore due to lower non-interest income. The bank’s other income fell 24% to Rs 92 crore in Q1FY23.
The bank’s net interest income improved 21% year-on-year to Rs 374 crore, driven by strong loan growth. The net interest margin (NIM) as of June 30 stood at 3.61% as of June 30 against 3.31% the previous year. The lender is aiming for a NIM of 3.65-3.75% by improving current accounts, savings accounts (CASA), a diversified loan portfolio and improving asset quality.
The bank’s gross non-performing asset (NPA) ratio as of June 30 was 4.21%, down 71 basis points year-on-year and 11 basis points sequentially. Net NPA was 1.82% as of June 30, 2022, down 102 bps year-on-year and 15 bps sequentially. The provision coverage ratio (PCR) was 69.48% as of June 30.
“NPA monthly slippages, excluding gold lending, are trending steadily towards pre-Covid-19 levels. Recoveries and upgrades continue to be strong. Frontline and branch investments are expected to increase the growth trajectory in the coming months,” said Murali Natrajan, Managing Director and CEO of the bank.
Advances increased by 18% year-on-year to reach Rs 29,814 crore in Q1FY23. The bank aims to double the size of its balance sheet in three to four years, thanks to mortgages and gold loans. Deposits increased by 15% year-on-year to Rs 35,081 crore. The CASA ratio improved to 28.57% as of June 30 from 21.69% a year ago. The capital adequacy ratio was 18.47% as of June 30, with level I at 15.44% and level II at 3.03%.