DCB Bank expects to double balance sheet in next 4 yrs

Banking on high growth in small-ticket loans, retail and agriculture portfolios, private lender DCB Bank expects to double the size of its balance sheet in the next three-four years, a top official of the bank said.

"Our branch expansion has been completed, they have started to give us results. We are focussed on SME, agri, retail, commercial vehicles and small-ticket loans. While our loan growth is 16 per cent, our growth on loans in these segments, excluding corporate, is 21 per cent, DCB Bank Managing Director &CEO Murali M Natrajan told PTI in an interview.

"We want to double our balance sheet in three to four years. If we grow small & medium enterprises (SME), retail, agri, small ticket loans at 20 odd per cent per year, we should be doubling our balance sheet," Natrajan said.

Its balance sheet as on March 31, 2019, stood at Rs 35,791.83 crore, up by 18.4 per cent from Rs 30,222.09 crore in the fiscal ended March 2018.

The balance sheet of a bank includes deposits, liabilities, capital and reserves and surpluses, among others.

DCB Bank last month posted a 50 per cent jump in its March quarter net profit at Rs 96 crore on healthy growth in core income as well as low levels of bad assets. For 2018-19, net profit grew by 33 per cent to Rs 325.37 crore from Rs 245.34 crore in 2017-18.

However, there was a reduction in its net interest margin (NIM) during the fiscal, and Natrajan said the bank will continue to witness the compression for the next 1-2 quarters because of its credit profile.

Natrajan said the bank experienced NIM reduction primarily because it relied on refinance from NABARD and SIDBI, which comes at a higher rate, besides taking tier II capital at the end of the preceding fiscal, which had a full year impact (in 2018-19).

"But it should stabilise at about 370 basis points, what I think would be our approach," he said.

The bank which has more than 300 branches at present is going slow on expansion and would add 15-20 branches per year in the next 2-3 years, he said.

"We now have more than 300 branches that will help us bridge the distribution lag. We have the products, we have developed the expertise both in sales and credit to attract targeted segment of businesses. We also have our own dedicated collection teams to manage the NPAs," he said.

DCB Bank is managing the risk arising from the targeted segment on an active basis which has helped the lender restrict its gross bad loans below 2 per cent and net within 1 per cent, he added.

Bank's gross non-performing assets (NPAs) stood at 1.84 per cent of gross advances as on March 31, 2019, as compared to 1.79 per cent as on March 31, 2018. Net NPA ratio stood at 0.65 per cent against 0.72 per cent on March 31, 2018.

Natrajan also said that the bank will have limited exposure to corporate clients.

"We are not focussed on corporate, it is only 13 per cent of our portfolio," he added.