DCB bank Q2 net profit down 10%

Bank plans to double branches by December 2016

Private sector lender DCB (formerly Development Credit Bank)'s net profit fell 10 per cent in the July-September quarter on account of high provisioning and a steeper tax outgo.

Net profit for the second quarter of this financial year was Rs 37 crore against Rs 41 crore in the same period last year.

Murali Natrajan, managing director and chief executive officer, said in the provisions increased by 58 per cent to Rs 22 crore on account of some stress in the corporate loan book. Tax expenses also increased to Rs 19.5 crore in the September quarter of FY16 from Rs 5.01 crore in the corresponding quarter of the last financial year.

Net interest income, the difference between interest earned and interest expended, grew 27.44 per cent to Rs 150 crore from Rs 117.7 crore year-on-year. In the same period, other income also grew by 31.8 per cent to Rs 48.70 crore.

Net interest margin, a key indicator of bank’s profitability, improved to 3.79 per cent during the quarter from 3.72 per cent in the year-ago period.

Asset quality remained stable with gross non-performing assets (NPAs) rising by only nine basis points year-on-year to 1.99 per cent. Net NPA also increased to 1.16 per cent in the second quarter of FY16 from 1.07 per cent in the same quarter in the last financial year.

In the quarter ended September, advances increased 27 per cent to Rs 11,180.87 crore and deposits grew 24.4 per cent to Rs 13,557.28 crore compared to the same quarter in FY15.

Going ahead, the bank plans to double its branches by December 2016. At present, DCB has 160 branches. “Competition is going to increase dramatically in the next one year on account of new payments banks, small finance banks being set up and also on account of existing banks increasing their expansion. So we need to be prepared for it,” Natrajan said.