DCB Bank falls 11% post June quarter results

The stock dipped 11% to Rs 160 on the BSE in intra-day trade after net interest margin of the private sector lender declined 33 bps year on year (yoy) at 3.9% in June quarter.

DCB Bank dipped 11% to Rs 160 on the BSE in intra-day trade after net interest margin (NIM) of the private sector lender declined 33 bps year on year (yoy) at 3.9% in June quarter. NIMs were stood at 4.23% for Q1FY18 and 4.09% for Q4FY18.

“Margins are under pressure especially in mortgage and corporate loan book. We continue to be watchful of NPAs,” said Murali M. Natrajan, Managing Director & CEO, DCB Bank.

Gross non-performing assets (NPA) ratio for Q1FY19 came at 1.86% against 1.74% in the same quarter last fiscal. Net NPA for the quarter were flat quarter on quarter (qoq) and down 20 bps yoy at 0.72%.

The bank’s net profit grew 7.7% at Rs 700 million in Q1FY19 as against Rs 650 million in Q1FY2018. NII has improved 17.1% yoy to Rs 2.73 billion as compared to Rs 2.33 billion reported in the same period of the previous fiscal.

“Slippages inched up to Rs 1.07 billion (2.6% v/s 2.2% in 4Q), led by elevated slippages in Agri and Inclusive Banking (AIB). Healthy recoveries and upgrades at Rs 680 million led to an 8.6% qoq increase in GNPA to Rs 4 billion. However, the bank shored up its calculated PCR to 61.6% (60.2% in 4Q), leading to a 5% qoq rise in NNPA to Rs 1.54 billion. GNPA/NNPA (%) increased 7bp/0bp to 1.86%/0.72%,” Motilal Oswal Securities said in result update.

While we expect loan growth to stay ahead of system loan growth, operating leverage is likely to take time to play out, weighing down on the return ratios in the near term, the brokerage firm said with ‘neutral’ rating on the stock.

At 12:32 PM; DCB Bank was trading 8% lower at Rs 166 on the BSE, as compared to 0.09% decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 7.43 million shares changed hands on the BSE and NSE so far.