DBS Bank India swings into profit in fiscal 2016 but provisions surge

DBS Bank’s advances grew 11.5% to Rs17,653.1 crore, led by an increase in disbursals to large as well as small and medium enterprises


DBS Bank India on Monday declared a net profit of Rs8.6 crore for 2015-16 against a net loss of Rs274.6 crore a year ago. Photo: Rituparna Banerjee/Mint
DBS Bank India on Monday declared a net profit of Rs8.6 crore for 2015-16 against a net loss of Rs274.6 crore a year ago. Photo: Rituparna Banerjee/Mint

Mumbai: The Indian unit of Singapore’s DBS Bank Group on Monday declared a net profit of Rs.8.6 crore for 2015-16 against a net loss of Rs.274.6 crore a year ago, thanks to provisions that fell by 40% and a deferred tax credit of Rs.32.7 crore.

Total provisions fell to Rs.421.6 crore as of 31 March from Rs.703.9 crore in the previous fiscal year, a release from the lender said. DBS Bank India did not have write-offs or sale of bad loans in fiscal 2016. However, its provisions towards non-performing assets (NPA) trebled to Rs.239.7 crore as of 31 March from Rs.54.7 crore in the previous year. The increase in provisions improved the provision coverage ratio (PCR) to 62.28% from 59.35% a year ago. Net NPA ratio rose to 4.34% from 4.15% a year ago, indicating asset quality pressures still remain.

The bank said it made a provision of Rs.35.8 crore towards loans under strategic debt restructuring.

“The bank had starting recognizing in FY 2013-14 and FY 2014-15, the weakness in the various sectors which have been hit by the slowdown in growth and drop in commodity prices,” the lender said in its release.

The lender’s advances grew 11.5% to Rs.17,653.1 crore, led by an increase in disbursals to large as well as small and medium enterprises. Deposits grew 34.7% to Rs.23,427 crore, led by a 64.3% surge in savings deposits, the bank said. DBS Bank recently launched a mobile-only platform to acquire retail customers called digibank, and aims to bring at least 5 million customers on board over the next five years. The DBS mobile application will allow individuals to access a wallet at first and then open a savings deposit account with the bank. The balance in the account will earn 7% interest per annum.

The bank’s CASA (current account savings account) ratio improved to 8.1% compared to 7.8% last year.

The lender’s capital adequacy ratio improved to 18.64% as on 31 March 2016, as compared to 17.01% last fiscal after the parent infused Rs.667.5 crore equity capital into the Indian operations. “The capital infusion by DBS Group underlines the bank’s commitment to India and its plan to convert into a wholly-owned subsidiary (WOS), which is awaiting regulatory approval,” the bank said in its release.

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