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Informist, Thursday, Jul. 31, 2025

By Sourabh Kumar

MUMBAI – DCB Bank Ltd.'s net profit for the June quarter rose year-on-year, but missed Street estimates by a slight margin as a sharp rise in provisions weighed on its profit. The bank's other income was sharply up on year in the June quarter, which lifted its profits higher compared to last year. Shares of DCB Bank, after releasing the quarterly results, were trading 4.3% lower at INR 135.59 on the National Stock Exchange.

The net profit of DCB Bank rose almost 20% on year in the June quarter to INR 1.57 billion. However, it was slightly lower than analysts' estimate of INR 1.59 billion. Provisions of the bank rose over four times from the year-ago quarter to INR 1.15 billion in the June quarter.

The bank's total income was up nearly 26% on year at INR 20.50 billion. However, it was up just 4.5% from the previous quarter. Sequentially, the bank's net profit was down a little over 11%, as the other income of the bank rose only slightly from the March quarter and could not offset the sharp quarter-on-quarter increase in provisions. While DCB Bank's other income rose over 65% on year to INR 2.36 billion in the June quarter, it rose a mere 8% from the March quarter. In contrast, provisions of the bank were up 71% on quarter.

Besides provisions for standard assets and specific non-performing assets, the bank held a floating provision of INR 1.83 billion on its advances as of Jun 30. It was slightly higher from INR 1.77 billion as of Mar. 31 and last year's INR 1.60 billion.

The bank's income on investments rose 19.2% on year to INR 3.68 billion. The sequential rise was relatively much slower, at 7.8%. On the expense side, the employees' cost of the bank was up 11.4% on year at INR 2.51 billion. The bank's other operating expenses were also up by almost 15% at INR 1.99 billion. 

The bank reported Basel-III capital adequacy ratio of 16.66% as of Jun. 30, which was up from 15.95% last year, but slightly down from 16.77% reported in the March quarter. The bank's gross non-performing assets ratio improved only slightly on quarter to 2.98% as of Jun. 30 from 2.99%. However, it improved much more from last year's 3.33%. The net non-performing assets ratio worsened both sequentially and on a yearly basis. It was 1.22% as on Jun. 30, from 1.12% in the previous quarter and 1.18% last year.

The bank's gross non-performing assets rose 8.3% on year to INR 15.54 billion in the June quarter. However, it was largely similar to the March quarter. The bank's net non-performing assets rose 25.3% on year to INR 6.25 billion, and were up 9.4% on quarter at INR 5.72 billion.

"Managing the NIM (net interest margin) in a challenging environment by optimizing the cost of funds has been a highlight of the quarter Q1 (Apr-Jun)," Praveen Kutty, managing director and chief executive officer said. "We are focused on reducing the slippage ratio and continue to ensure that cost to average assets ratio improves even further going forward."

The net interest income of the bank rose 17% on year and 4% on quarter to INR 5.81 billion in the June quarter. The bank's net interest margin was 3.20% in the June quarter, down from 3.29% in the previous quarter and 3.39% in the corresponding quarter of last year. The provision coverage ratio of the bank was 74.04% as on Jun. 30.

DCB Bank reported fresh slippages of INR 5.80 billion in the latest quarter, up from INR 3.65 billion in the March quarter and INR 3.72 billion last year. The fresh slippage ratio was 4.59% in the June quarter, up from 3.09% in the previous quarter and 3.67% last year. The bank upgraded INR 1.60 billion of non-performing assets accounts in the June quarter, against INR 1.22 billion in the previous quarter. 

The bank's advances were INR 512.15 billion, up 21.4% on year. The yield on advances was 11.24% in the June quarter, down from 11.54% in the previous quarter. Cost of funds of the bank was 7.18% in the latest quarter, down from 7.34% in the previous quarter. The deposits of the bank stood at INR 620.39 billion, up 20% on year. The cost of deposits was 7.12%, down from 7.28% from the previous quarter and 7.10% from last year.  End

Edited by Tanima Banerjee

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