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DCB Bank - Q3FY21 First Cut - ICICI Direct

Posted On: 2021-01-24 20:22:42 (Time Zone: Arizona, USA)

(CMP - Rs. 116, MCap- Rs. 3595 crore)

Modest business growth, PAT impacted by provisions

Q3FY21 Earnings Summary

- DCB bank posted modest set of numbers for Q3FY21 with Net interest income rising by just 3.6% YoY to Rs. 335 crore mainly on account of flattish loan growth. Other income for the quarter jumped 67% sequentially and 93% YoY, this sharp rise was aided by one-off profit on sale of investment. Opex was kept under control as a result cost-to-income ratio declined ~397 bps QoQ to 43.3%. Provisions remained elevated (up 30.6% QoQ) to Rs. 147.7 crore, as a result Net profit for the quarter was flat on yearly basis at Rs. 96.2 crore but was up sequentially by 17%.

- Headline asset quality number was benefitted from standstill classification as GNPA and NNPA declined sequentially form 2.27% and 0.83% to 1.96% and 0.59%. However on proforma basis the GNPA ratio stood at 3.70% and NNPA at 1.92% up from 2.39% and 0.92% respectively. The bank has provisions worth Rs. 229 crore for covid related stress, and further provisions can be made depending on how development takes place. Credit cost for next few quarter can remain elevated

- Account that were not classified as NPA from August to December 2020 stood at Rs. 448 crore of which ~Rs. 30 crore have moved below 90 DPD, Rs. 56 crore are fully secured gold loans, Rs. 159 crore is eligible for MSME restructuring.

- Business growth for the bank has remained muted at loan book declined marginally by 0.5% YoY to Rs. 25300 crore. The company now focuses to expand LAP, Gold loans etc. Home loans during the quarter increased by 11% YoY and Gold loans saw jump of 105% YoY. Advances momentum is expected to reach precovid levels by Q1FY22 as per management.

- On deposit front also the growth was tepid as total deposit book reduced by 2.9% YoY to Rs. 28858 crore. CASA deposits also declined by 4.1% YoY as a result CASA ratio saw slight dip of 20 bps YoY to 23.1% but was up 64 bps sequentially.

We would be shortly coming out with a detailed report.

Shares of DCB Bank Limited was last trading in BSE at Rs.116 as compared to the previous close of Rs. 117.7. The total number of shares traded during the day was 43542 in over 620 trades.

The stock hit an intraday high of Rs. 118.25 and intraday low of 114.75. The net turnover during the day was Rs. 5081385.

Source: Equity Bulls

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