We want to double our balance sheet in about 40 months: Murali Natarajan

Interview with MD & CEO, DCB Bank

Private sector lender DCB Bank has seen a 61 per cent rise in net profit for the March quarter, on higher net interest income. Murali Natarajan, Managing Director and Chief Executive Officer, talks to M Saraswathy about the performance and way forward. Edited excerpts:

The bank's balance sheet has grown by 25 per cent in the last financial year. Do you think this would be sustainable? What is the medium term growth plan, and which are the sectors you will focus?
We aim to double the balance sheet in 36-42 months. As on March 31, 2015, the balance sheet was at Rs16,132 crore as against Rs12,923 crore as on March 31, 2014, a growth rate of 25 per cent. We also want to increase its SME/MSME portfolio to 15-16 per cent. However, we would stay away from any large-ticket exposure in this segment.

There is a slight increase in non-performing assets (NPAs). Any concerns on credit quality?

Our gross NPAs were 1.76 per cent (of the total) as on March 31, 2015, compared to 1.69 per cent a year before. This was because there was a large corporate NPA of Rs65 crore in the quarter, which impacted the books. This was a company in the ship building segment, a restructured account.

In FY15, gross NPAs opened at Rs138 crore but we had fresh slippages of Rs174 crore, whereas Rs79 crore was upgrade and recovery. Further, Rs47 crore was a write-off. However, barring this one large NPA, credit quality is not much of a challenge.

The bank was to absorb all its accumulated losses by March. Has that been achieved?
We have been able to wipe off almost all accumulated losses, except Rs4 crore. This will be wiped off in the first quarter of FY16.

Cost-to-income ratio of DCB Bank is at 62 per cent. Is that a cause of worry?
We have ideally wanted the cost-to-income ratio be at 60 per cent. We had increased our branch network to 154 in FY15. In the next two years, we aim to bring the cost-to-income ratio to 55 per cent in two years.

Your Casa (current & savings account) ratio also saw a decrease. Will the new branch additions aid in better CASA?

Our Casa ratio as on end-March was 23.4 per cent, as against 25 per cent on end-March 2014. This was because the savings account grew (only) 17 per cent. With new branches being added, savings accounts will grow by 25 per cent when these branches mature. Every year, we plan to open 25-30 branches across the country.

With the Reserve Bank of India's view that rates will be cut only when there is transmission by banks, do you see a reduction in your base rate?
We are confident that term deposit rates would come down in three to six months. Accordingly, the base rate will come down.