DCB Bank Q2 profit falls 10% at ₹82 crore

New Delhi: DCB Bank on Saturday reported nearly 10 per cent decline in net profit at ₹82 crore for the quarter ended September 30, 2020 as provisions rose.

The bank logged a net profit of ₹91 crore in the same quarter of the previous fiscal year.

"Profit before tax for the quarter was impacted by ₹48 crore COVID-19 regulatory package provision. In order to further strengthen the balance sheet, the bank intends to make conservative provisions given the current environment," DCB Bank said in a release.

Total income also fell marginally to ₹970.98 crore in July-September 2020-21 as against ₹980.59 crore in the year-ago same period.

Net interest income grew 7 per cent to ₹334 crore, while the non-interest income fell by 9 per cent to ₹92 crore.

DCB Bank said it aims to maintain net interest income at similar level of 2019-20. However, due to lower business volumes and COVID-19 disruptions, core fee income may decline in comparison to previous year.

Operating expenses were up by 22 per cent at ₹225 crore as against ₹185 crore.

Gross bad loans or non-performing assets (NPAs) of the bank rose to 2.27 per cent of gross advances by the end of September 2020 against 2.09 per cent by the year-ago same period. In value terms, it stood at ₹573.70 crore as against ₹523.24 crore.

However, net NPAs improved at 0.83 per cent ( ₹205.77 crore) from 0.96 per cent ( ₹237.86 crore).

Provisions for bad loans and contingencies more than doubled to ₹113.10 crore for the quarter from ₹43.27 crore in the year-ago period.

Capital adequacy continues to be strong and as on September 30, the CAR ratio was at 18.28 per cent (with Tier I at 14.22 per cent and Tier II at 4.06 per cent as per Basel III norms).

The private sector lender said it has been steadily growing retail term deposits (of less than ₹2 crore) since the last two years and reducing the bulk deposits. The retail term deposits grew 33 per cent from a year ago. While the top 20 deposits stood at 7.89 per cent.

"For the past many months, the bank has been intentionally reducing bulk and interbank deposits. During Q2 FY2021, inter bank term deposit at ₹2,857 crore reduced by 29 per cent as compared to ₹4,052 crore as at March 31, 2020. The Certificate of Deposits as on September 30, 2020 was zero," DCB Bank said.

The lender said in the coming months it intends to focus on business loans (loan against property), home loans, gold loans, Kisan Credit Card, tractor loans and short-term corporate loans.

Advances by the end of the quarter were slightly up from a year ago period at ₹24,879 crore.

Based on the current outlook, the advances for the full year may remain flat at 2019-20 level or may de-grow slightly, it added.

"We expect step by step improvement in collections efficiency in the coming months. We believe ECLGS (Emergency Credit Line Guarantee Scheme) is an excellent scheme that is likely to help bridge the gap in working capital and immediate financial obligations especially for smaller self-employed entities.

"New loan momentum is picking up and our aim is to achieve monthly volumes similar to pre-COVID-l9 between March 2021 to May 2021", Murali M Natrajan, Managing Director & CEO, DCB Bank said. PTI KPM KPM ANU ANU