DCB Bank net profit up 33% to Rs 36 crore

Private sector DCB Bank today reported a 33 per cent rise in net profit to Rs 36 crore in the three months ended December 31 from Rs 27 crore a year ago.
The mid-size lender's deposits grew 27 per cent to Rs 9,592 crore, while advances jumped 23 per cent to Rs 7,361 crore on a good show by corporate and mortgage books.
DCB Bank Managing Director and CEO Murali M Natrajan attributed the good set of numbers to prudent business wherein the bank lowered its exposure to stressed sectors such as agriculture and small industrial units, among others.
On equity dilution by the promoters, Natrajan said the bank is unlikely to meet the RBI deadline of March 2014 due to market conditions and will approach the regulator for a deadline extension.

The DCB promoters Aga Khan Fund hold 18 per cent in the bank and have to bring it down to under 10 per cent as per RBI directive. Over the past four years, the promoters have trimmed their holding to 18 from 26 per cent.
Good asset quality helped the lender to improve its net interest margin (NIM) to more than the expected level of 3.5 per cent, up from 3.38 per cent a year ago.

Natrajan said he expects the NIM to come down a bit in Q4 as priority sector lending will increase in the quarter. The bank expects to close FY14 with a 3.34 per cent NIM, though the target is 3.25 per cent.

The capital adequacy ratio of the bank stood at 12.86 per cent under Basel III as of end December.
During the quarter, the bank's balance sheet rose 24 per cent to Rs 11,989 crore from Rs 9,644 crore, Natrajan said.
Deposit growth was driven by retail deposits, which stood at 77 per cent of the total, with CASA (current and savings accounts) forming 25 per cent as against 29 per cent a year ago.
On the asset book, he said retail constituted 45 per cent, corporates 24 per cent, SMSE 19 per cent and agri 12 per cent.
Natrajan said the bank opened 12 branches in the quarter, taking the overall number to 115, and is hopeful of adding 15 more by March-end.

The new branches will come up in Chhattisgrah, Andhra Pradesh, Gujarat, Madhya Pradesh, Punjab and Rajasthan, he said, adding that about 40 branches will be added in the next fiscal.