Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
DCB Bank Limited (NSE: DCBBANK) Q4 2026 Earnings Call dated Apr. 24, 2026
Corporate Participants:
Praveen Kutty — Managing Director and Chief Executive Officer
Analysts:
Akshat Agarwal — Analyst
Aditya Khandelwal — Analyst
M B Mahesh — Analyst
Rohan Mandora — Analyst
Jai Mundhra — Analyst
Akshay Badlani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the DCB Bank Q4FY26 earnings conference call hosted by AD Factors PR. Joining on the call is the senior leadership team of DCB Bank. Mr. Praveen Kutty, Managing Director and CEO Mr. Sridhar Shishadri, Whole Time Director Mr. Ravi Kumar, Chief Financial Officer. Mr. Ajit Kumar Singh, Chief Investor Relations Officer. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing Star then zero on a Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Kurti, managing director and CEO from DCB Bank. Thank you. And over to you sir.
Praveen Kutty — Managing Director and Chief Executive Officer
Thank you, Yusuf. Good evening ladies and gentlemen. Welcome to DCB Bank’s quarter four earnings call. In line with what we said before, consistency, predictability, repeatability are very critical to us. This is the eighth successive quarter. I’ve been presenting the results and I’m happy to say that the bank continues to grow in line with the stated milestones and the objectives that we have articulated in the last two years. Bottom line first, the profit after tax for Q4 is at 206 crores and the full year is at 732 crores.
Both of which are the highest ever in the history of the bank. This is the third successive quarter of registering highest quarterly profit. Underlying the inherent consistency of our output, the bottom line is keeping pace with the top line and the operating jaws are widening. 16% income growth, 11% expense growth, full year operating profit 25% which is the highest in the last eight years. You’ll be hearing the sentence quite a lot in the next 10 minutes of my opening speech. In Q4, advances have grown by 18% on a year on year basis and 6% in the sequential quarter.
Deposits have grown by 21% on a yoy basis and 7% in sequential quarter. We continue to ensure that the deposit growth outpaces the advances growth. The good part of the deposit growth is that the granularity of the portfolio continues to improve. Top 20 ratios well under 7%. 655 against 661 in the previous year. Further, this growth is coming at lower costs. Cost of deposit in Q4 is 44 basis points lower this year as compared to Q4 of last year. The advantage growth is coming from Chosen products which is secured small ticket and granular mortgage corporate Gold loan, agree tractors, kcc, construction, finance, educational, institutional loans have contributed healthily to this particular growth.
I want to take you through some of the commitments made in the beginning of the year, one of which was that we said that the co lending book at the end of the year would be less than 15%. It is at 13.9% actually the collating book has decreased in absolute terms between Q3N and Q4N. On net interest margin the uptick continues 3.39% which we record in Q4 is 12 basis points higher than the sequential quarter and 10 basis points higher than the previous period. In the same period last year, remember we also had a 25 basis point rate cuts full cap impact happening in Q4.
Treasury had a very muted quarter as far as fees was concerned, as expected. But our third party distribution and other fee avenues demonstrated our fairly healthy growth resulting in our core fee income growth of 198crores which is the highest ever in the history of the bank. Gross NPA coming to the portfolio quality is at 2.45. Net NPA is at 0.89, both of which are at 7 year lows. Our full year credit cost is 40 basis points. I want to hark back to the Q1 guidance in which I said we had a 59 basis points credit cost in Q1 and had assured that there’s no way we’re going to be higher than 45 basis points credit cost for a year.
We clogged in 40. Our upgrades in recoveries during this quarter was 109% of fresh slippage. Our absolute gross NPA of 1496 crores at the end of the year is lower than what it was in the beginning of the year. This is all about the output. What gives us confidence going forward is that the slippage ratio is 2.28% down from 3.09% and that can only augur well for the future. As far as the portfolio quality is concerned, we continue to improve our cost to average assets. Our cost to average asset for the full year is 2.5% despite taking what we took last in Q3, 27 crores because of the new wage code and for Q4 the cost to average assets is 2.47.
Our cost to income ratio has decreased by 300 basis points last year compared to this year. In November during our Investor Day, many of you were kind enough to attend. We had reiterated quite a lot of things. We reiterated our stance of changing our mortgage mix of home loan and business loan, improving our average ticket size Increasing direct sourcing vis a vis dsa. We see the benefits of these flowing in. Our employee productivity is historically the highest. Our OPEX cost increases. Our Marginal Remember 16% growth in incomes, 11% growth in expenses.
Widening jaws. We were able to drop moderately on the yield and advances due to the rate cuts to a certain extent by the gains on yield on account of the mix change over the year. Q4 of last year was Q4 of this year the yield in advances has decreased by 56 basis points despite we having a 100 basis point rate cut applicable for this financial year. In Q4 our ROE is 0.97 and our ROE is 13.53% the full year ROE is 12.77 the highest in the last 11 years. In fact the highest ever since the became a full taxpaying entity.
That’s all of the past on a go forward basis. The fundamentals of business are that we have sold and harvested for several years are continuing to bring in consistent, predictable, repeatable outcomes. We’re confident that it should continue in the future as well. There are clouds in the horizon on account of West Asia crisis. We have been cautious, we have overstocked on our liquidity. We have done detailed assessment and we don’t see an immediate impact on the portfolio performance but again depends upon how long this imbroglio lasts.
That’s it. Now I leave the floor open for questions or clarifications. Operator, could you come in please?
Operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assemble. First question is from the line of Akshat Agarwal from Smith Institutional Research. Please go ahead.
Questions and Answers:
Akshat Agarwal
Good evening sir. Thanks for the opportunity and congrats on a good set of numbers. My first question, my first question is on margins. Nims have continued their robust support trajectory and previously I’d guided for benefits from the deposit repricing to continue until Q2. So if you can get some color on the repricing benefit which is still pending and how is the bank progressing on HL to BL incremental sourcing? Is it still 60 40?
Praveen Kutty
Well see, we expect the deposit repricing benefit to come till late Q2, perhaps early Q3. That’s it, not beyond that. Okay, so that’s the answer to your first question, HL to BL is much more than that. It’s like we are almost 70, 30 and that’s really helping us. It’s helping us in terms of, you know, yield. It is helping us in terms of credit cost and the fact that we have also gone slightly higher ticket size has helped the cost consistently and that possibly is reflecting in the new slippages coming down from 3.09 to 2.28.
It’s certainly a part contributor to that.
Akshat Agarwal
Right sir. In terms of asset quality which continues to be very strong, do you expect this trend to sustain or should we anticipate normalization towards your through the cycle guidance of 45 to 4055 bucks. The business model guidance barring this West Asia conflict
Praveen Kutty
As of now we’re sticking to the below 45 bits. Okay. We don’t see, see currently we’re at 30, 32, 33 bips. See I don’t see us in the short term getting increasing anywhere around the 45 basis points mark and our model continues to be 45 to 55. So fairly strong on that and I would expect similar trend to continue. There’s no reason to believe that in the short term we would have any reversal coming through.
Akshat Agarwal
Very well, sir. In terms of fee growth which has been very strong for many quarters now and the latest quarter at 9% poq, what are the key drivers for this quarter and how should we see sustainability going forward? Still third party distribution or is there some other drivers? So if you can help with some color sir. Thank you.
Praveen Kutty
It’s the same. The leopard never changes spots. We don’t, we are like that. We don’t. Nothing happens all of a sudden we continue to be, well you know, high, high on third party distribution. Forex income is decent. Trade is our area of, of consultations. The repeatability of income is something which we are, which we are focusing on. Treasury gave us nothing in Q4, nothing. And we expect that trend possibly to continue. So core fee income is a key driver for fee going forward.
Akshat Agarwal
Right sir. And my last question is on branch expansion headcount. So what’s your outlook going forward? I understand you added 11 branches in 4Q and employs around 400 on net basis. So how should we think about investing investments on this front going forward?
Praveen Kutty
If you see the number of employees, you see a U shape coming through. So if you were to see the number of employees that we have in. Let me get the year right, 24 end, you know, you see that or rather September of 2024 we had 11,900 people. We still are lower than that, but I expect us to hit a 13,000 kind of number by the end of this particular year. We’re still a people driven business. A lot of our sales are assisted sales. So there will be more people coming in. Branches are optional. We don’t necessarily need to have more branches to grow.
People are required. But having said that, there is a very high probability that we cross a 500 branch barrier or rather mark during this year.
Akshat Agarwal
Very well sir, thank you very much for answering all my questions. All the best.
Praveen Kutty
Thank you.
Operator
Thank you. Next question is from the line of part m gutka from 361 Capital. Please proceed.
Aditya Khandelwal
Yeah, hi sir, thanks a lot for the opportunity. My first question is on the day, you know, if I’ll.
Operator
Sorry to interrupt. Mr. Path, your voice is breaking.
Praveen Kutty
I’m so sorry, I don’t know you can hear me, but we just can’t hear you.
Operator
Mr. Path.
Aditya Khandelwal
Yeah, yeah, yeah. Can you hear me now? Yes,
Operator
Yes, we can hear you now. Please proceed.
Aditya Khandelwal
Yeah, yeah. Okay. So, so my question was in Maya, if I look at your yield on advances, it’s flat, quarter on quarter. You know, cost of funds have declined slightly. You know, the liquidity on the balance sheet has, you know, gone up quarter on quarter. So, so, you know, so, so ideally margins should have been, you know, not improved by 12bps or should have improved marginally is what the calculation suggests. So are there any one off in the margins?
Praveen Kutty
There are no one offs in the oil. We don’t, we’re not a one off business. You can’t be in a retail environment and have one offs. What you could have is SKUs at the month end. The liquidity buildup could be towards the end rather than the other way around. One of the key factors in NIM is a quality of portfolio. If you recover 109% of your fresh slippage, it is bound to have an impact not only on the NPA and the gnpa, but also on your nim.
Aditya Khandelwal
Okay, fair enough. Okay. And my second question was the cost to assets, you know, considering for the full year we are at around 2.45. What is the.
Praveen Kutty
For the full year we are 2.5. For the quarter we are 2.4.
Aditya Khandelwal
Okay, so, so what is the further, you know, further juice left here? Or, or you know, or what will lead to the further improvement of cost to assets from here on? Or, or it will be stable at around these levels.
Praveen Kutty
See this is a bit like the earlier question which was asked on, on credit cost model suggest 45 bits to 55 bits of credit cost. Model suggest 2.5 of cost to average assets. Reality, we are slightly better than that. We are very happy at 2.5. And remember, there is going to be an increase in the number of people which will also result in more productivity. Already been one. So there will be a linear increase through the year of number of people. So those investments are critical. And despite that, we are reasonably confident of our 2.5% cost average going through.
Aditya Khandelwal
Okay, Perfect. Okay. And just one last question. If I can squeeze in, you know, so because you know, the war was persisting, you know, large part of the March month, have you tweaked any of your risk filters while sanctioning and disbursements to, you know, customers?
Praveen Kutty
I think we were lucky more than we never predicted this. But going up the ladder of ticket size, it is meant to be an operation productivity excise that has resulted in lower bounces. We sacrificed a bit of a yield, but we’re getting better quality customers and that’s reflecting in fresh slippages being better. And all these things happened much before the war actually manifested. So now see, if this continues, it’ll affect everybody. But people at the lower end of the economic pyramid will get impacted more.
So there’s not a specific problem we’ll have if hydrocarbon prices go up, everyone is going to get affected and the effect will be largely felt by people who do not have the security of a cushion to take care of this extra expense. We will hit their monthly bills. So I would tend to think that reprofiling and going up the ticket size about a year and a half back is helping us compared to where we would have been had we not moved the needle. But there’s not a reaction to the war at all. It just so happened that it helps us that we’ve done these things much beforehand.
Aditya Khandelwal
Sure, sir. Thanks a lot, sir.
Praveen Kutty
Are you welcome?
Operator
Thank you. Next question is from the line of MB Mahesh from Kotak Securities. Please go ahead.
M B Mahesh
Just two questions from my side. When you speak to your collection teams and when they’re reporting such strong numbers, would you, would you ascribe this on the ground that their leverage levels for the borrowers have come down, their access to credit has improved, what is the general feedback as to what constitutes a better recovery? Number one. Second one is that if, assuming that we are into this slowdown and there is a slowdown in the next six to nine months, would you say that the book today is better than where it was in 2023 when we had the slowdown led by unsecured loans and mfi.
Or would you say that the book is broadly the same?
Praveen Kutty
I think. Let me ask you a first question first. So what has really happened is if you were there in the investor day presentation, I made the statement saying that we moved from managing NPA to managing one DPD as in one days past due. And when we made the statement we already implemented that. So we did put in more people. We significantly improved our early bucket collection. The intensities increased significantly and what you see in March is the result of those activities which we did in somewhere around June, July and then persisted with it.
That’s where some. So it’s more of intensity, it is more of, you know, more of focus in the earlier buckets which we were not really focused upon. Otherwise your slippage ratio would never come down. I mean you could have any kind of recovery, 109% recovery, which will help NNPA most certainly, but that will not help the slippage. One particular metric you can look at is for the first time we’ve given slippages of gold loans separately in the investor presentation. Now that clearly is an indicator of the pressure in the market because we don’t do early bucket collection in gold loan.
It’s not worth our while because the gold is there. Why call on the 30th day? And that’s an operational cost. So there’s a natural delinquency which we see on the gold loan. And I would tend to imagine that as a reasonably good barometer for the pain at the lower end of the pyramid. And if you were to look at that page number, I think it is 26 at the bottom left hand corner. You can see there’s marginal improvement. I’ll just read out the number for those people who haven’t seen this. It used to be 6.29 a year back, now it is 5.3.
And this is natural repayment or natural slippage which really happens. The real action happens near NPA rather than, rather than in the beginning.
M B Mahesh
Perfect, thank you. And to the question that you’re seeing with respect to the portfolio that you’re carrying today versus where you were probably about two years back.
Praveen Kutty
Two years back our credit cost was in the region of 0.3, somewhere about point, somewhere between 0.38 and 0.5. Currently we are at 0.4. So what we have done is we have ridden the wave. So if history were to repeat, we will also repeat the particular performance. So you see marginal increase in our Credit cost still will be below 45bps but there is a very strange statement to make because if freight prices were to shoot up post you could see a situation whereby inflation really really is impacted Second order issues of petrochemical oriented products not coming to the market could keep the supply chain inefficient so it is not just about inflation alone it’s about everybody’s impacted and unlike Covid you can’t throw, you can’t do quantitative easing and get out of this.
You will have to. It’s not going to be that easy but at the moment it’s good to be in a position where your slippage ratios are lower, where your NNPs are lower, your recoveries are higher It’s a good place to be in
M B Mahesh
Just to clarify in your assessment when you are looking at those borrowers are you saying are you seeing a situation where those borrowers leverage level is similar to where they were two years back or they are better or worse off what’s your assessment of the customers that are coming to the pull?
Praveen Kutty
So the reason I’m not able to give you a straight answer is the customer’s stock which we had two years back is very different from the customer stock that we’re having today because over the last two years the kind of ticket size of customers that we have onboarded the kind of profile of customers that we onboarded are different Our MFI book has dramatically come down at one point in time it was 1400 crore book now it is some 600700 yeah 600700 crore book so so it’s not the same I mean while the balance sheet has grown by 20 the customer advances have grown by about 18% the fact remains that they’re not that comparable
M B Mahesh
Okay, thank you sir thank you
Praveen Kutty
Youu’re welcome
Operator
Thank you Next question is from the line of Rohan M from Iquira Securities Please proceed
Rohan Mandora
Good evening sir thanks for the opportunity on good set of numbers thank you very much this is on the yields yield flattish Q on Q and what we had explained earlier in the conference is we are book on the mortgage especially fixed to floating when we see gradual repricing over some period so with repo cuts happening what has helped us such an yield at this level especially with corporate dispositions also picking up so have we taken any increase in spreads on incremental lending or what has helped that?
If you can explain that
Praveen Kutty
Yeah so frankly if you see our core lending book has come down Core lending book is a low yield book it comes at low Cost but low yield. So this is a product mix game. So if you see we have grown 6% quarter on quarter sequentially and our co lending book has degrown so the low yielding book has degrown and higher yielding book have grown which resulted in the in incremental yield being higher and it has absorbed the 25% 25 bips sorry 25 bps repo rate cut the full impact of which we had in Q4.
Rohan Mandora
So secondly if you look at slippages x gold it has fallen to 1.5%
Praveen Kutty
1.47.
Rohan Mandora
So just trying to get a sense like given how the macro is evolving right now and this uncertainty on how things will shape up given your interaction with the clients, like is this sustainable going into FY27 especially with negative net slippages and this Trend Continue in FY27.
Praveen Kutty
Because you know so many unpredictable unpunterables there. But you know what you see day one is very different from what you see on day two. There is so much of change happening which is, you know, which makes prediction really, really very difficult. But what I’m confident of is that I don’t see our net NPA going back about 1%. We said that as not you remember in the Q4, in Q3 call I said we will be below 1%. We are there and we intend to stay there. Like I said in the opening remark, the benefit is coming through.
Lower slippage, higher focus on the early buckets. But if an SME customer does not get the component that he wants to complete his product, he will suffer and along with him we also will suffer. We are aware of that. So far we are not seeing that happening. But that is not a guarantee for the future.
Rohan Mandora
Sure. And so lastly, what will drive your NIMS towards your business model? NIMS target of 352, 365. And what is your time frame expectations around that?
Praveen Kutty
See if there is one thing I’m not happy in a very decent quarter or a decent year for the matter is there are so many things which are good. One thing which I’m not very happy about is the current account pickup. So we are focused on it. We want to. Our SA growth is 10%. Our car growth is flat and that’s not a good thing to happen. We’re putting resources behind it, we’re putting effort behind it, we’re putting focus behind it. That has to improve and practically everything that we put focus on, you see an improvement happening.
It’s time it happens in the current account portfolio as well. So that’s one big driver. We have really moved the needle on engagement with our savings customers. You know there is a whole host of cross sell activities happening on our asset customer base. Is it still a snowball? It hasn’t reached avalanche but sustained efforts over a period of time. Retail was that way. The good work that we had done about a year and a half back, you’ve seen the result of it now. So we are at it. We just keep progressing on the right path.
Trust the process and the results will happen.
Rohan Mandora
Sure, sir. So thanks. Thanks for the opportunity.
Praveen Kutty
You’re welcome.
Operator
Thank you. Next question is from the line of Jay Mundra from ICICI Securities. Please go ahead.
Jai Mundhra
Yeah. Hi, good evening Praveen. Thanks for the opportunity. Yeah. I have few questions. One is if I look at your slippages number, right. So just a broad calculation. Slippages Overall slippages are 2.28 excluding growth. Gold is 1.47 and gold is 5% roughly
Akshat Agarwal
The number
Jai Mundhra
Somehow does not tally in the sense that gold is supposedly less than. I mean if I do the reverse calculation it looks like gold is 20% of the portfolio to drive that change from 2.28 to 1.47. These are gross slippages number only. Right. So that is why I’m assuming these are gross slippages 1.47 and 5% of gold.
Praveen Kutty
That’s right. These are, these are actual numbers. If, if you, I can, I can put you onto my finance folks or a collection folks and can have a discussion on that can take you through the numbers. These are 2.28 is our, is our slippage. It’s come down from 3.09. Okay,
Jai Mundhra
So that is anyway, so I’ll take them offline. Second is on the growth front. Right. So we have done 18% growth which is much faster than the industry. But somehow as you also mentioned in the opening remarks, the co lending has declined. Qoq and rightly you had highlighted at the beginning of the year also that at some point of time it will moderate. But the growth of the core businesses like mortgage 10, 11% MSME flat or negative. How and as you said, cool ending. I believe this cool ending is a function of CLM transition.
So how should we look at the next year going ahead when you know, mortgage is 10 11% and MSME is still yet to pick up and so far the growth has been coming from.
Praveen Kutty
Let’s look at that. Let’s look at that. It’s a good question and I’m sure my answer will Help a lot of people in this call. Kindly look at Q quarter. Okay. Look at the quarter and look at the mortgage growth in the quarter. You want me to tell you the page number?
Jai Mundhra
Yes. 3.8%. Yeah.
Praveen Kutty
Okay. For, for sake of argument, let’s say 4%. Okay.
Jai Mundhra
And,
Praveen Kutty
And if you were to multiply by four, you’re talking about 16. So what, what you have seen is while the bank has grown 18% in this year, 24% the last year, we have been busy re engineering the mortgage business. We have really turned it around because that has contributed to delinquencies. It is a lower ticket issue which is vulnerable. So we have really, really turned chained the wheels of the train while the train is still moving. And you haven’t felt it because other products contributed to that particular growth.
Now what’s happening is a better blhsq, a better self sourced versus DSA sourced mortgage is up and running and every quarter that growth is better than the previous Q on Q growth. So what you have seen, the 10% of growth that you saw in the year. I would look at it slightly differently and say 6.5% was a growth in the first nine months and 3.5% is a growth in one single quarter. And the 3.5% of the mortgage book that we are growing in the quarter is of a supremely better quality than the kind of book that we had a year back.
Are you with me? Hello.
Jai Mundhra
Yes. Yes sir. This part is understood. Yes.
Praveen Kutty
So clearly there is a, there is a takeoff happening on that count. My finance folks have just come in with some broad math. Can I go to the earlier question?
Jai Mundhra
Sure, sir.
Praveen Kutty
Right, so one. Sorry, Vishal, you want to explain this?
Aditya Khandelwal
Yeah. Gold have a weightage of 21% and a slippage of 5.3% and other than gold have a weightage of 79 and a slippage of 1.4%. So overall it’s coming 4.28%. No,
Jai Mundhra
Sir, you’re right. If the gold weightage is 20% then it, the math is absolutely right. But then 21.21.
Praveen Kutty
So that, that covers the discussion. Okay, so, so that’s the second question. Now can I ask you a question, Jay?
Jai Mundhra
Yeah. Pizza.
Praveen Kutty
Do you remember in the investor day we were standing outside and then you told me our, at that time our NNPA was 1.22% and you told me you for a business of R type, you remove the 22 basis points from the, from the ROA. Do you remember the conversation?
Jai Mundhra
Yes, yes I do, sir.
Praveen Kutty
So I want to tell you you don’t have to do that anymore. You are at the 89 bits. Congratulations. No no no. Once again I want you to know that and thank you for it because this kind of conversation I want to let you know helps us also. So now we’re at 89 bits. So I just want to tell you that there are not promises the intentions that we say we take it extremely seriously and we demonstrate it by. By the performance. And you’ll see that coming through in the next few quarters as well.
Jai Mundhra
Right sir, appreciate well appreciated sir. Yes okay. No sir sorry just to come back. So gold loan proportion is 2021 percent but in this table the advances makes the gold loan proportion looks like you know 78%. So I believe the coal lending plus gold plus it is also somewhere sitting somewhere.
Praveen Kutty
Absolutely, absolutely.
M B Mahesh
See
Praveen Kutty
Coal ending we have about 8300 crores. 8366 crores of coal ending bulk of which is gold. And then you have normal gold, our own gold of about 4,000 odd crores.
Jai Mundhra
Right. Okay. And sir then going ahead so mortgage. I take your point sir that mortgage has accelerated and maybe it will sustain but if the other piece, I mean so far this quarter the growth has also been contributed by corporates and MFI institutions which may or may not be desirable or you know you can still sustain. But I’m saying that in case of co lending not being a meaningful contributor to the growth which which portion will do the heavy lifting apart from.
Praveen Kutty
So I just want to, I want to repeat what I said earlier consistently been saying broad we had and I would tell you this our corending growth in 2425 it is not in this book but if you have to look at the previous book was 108% 108% this year it is 24.9% that is 2526 in the current year 2627 I am not telling you the percentage but it will be exactly the same as the overall asset growth of the bank. Are you with me? 108 has been brought down to 24.9 and in the, in the current year 2728 sorry 2627 we will be exact co lending growth will be exactly similar to the overall asset growth of the bank.
So that’s one part of it. It will not be zero and it’s not even advisable. So that will be the. It will be the steady normal growth happening there. You will have growth coming in from the mortgages and there are some impact players like SME MSME and construction finance where a lot of effort has gone into it. The output is yet to come but it will not remain like that forever. So we see contribution coming in from these core segments, the agri segment. I don’t know how fertilizer prices will be affected by this West Asia crisis but assume that life is normal.
I would tend to think that tractors KCC growth will happen. I’m not a big fan of mfi. We do MFI only to meet the small farmer marginal farmer requirement. It’s not meant for balance sheet growth or you have to do with your do it. The history has not proved very very good either for us for industry. But yeah, so it will be, it will be the MFI growth, sorry the BC MFI growth will be sufficient to meet our small farmer marginal farmer appetite. So that’s the way we see this. So I take, I mean do the math.
Six percent is a quarter on quarter growth you remove co lending it comes to 8.6% non co lending growth. 8 points. I’m not saying 8.6 into 4. I wish I could say that my senior leadership team also sitting here. I mean just imagine 8.6 into 4 then I could be leaving home at 4 o’ clock every day.
Jai Mundhra
And sir, any guidance or I mean you would I think in the endless day you had said that you know this 18, 20% kind of a growth we should be delivering over the next. I mean that still remains the broad guidance, right? I mean
Praveen Kutty
In these times when there are clouds etc on the horizon 18 we are cautious. Very, very. We also we only know the pains of getting 1.22% NPA NNPA to 0.8 million. Our team is fully aware of the pain of getting a 3.32% gross NPA 8/4 back to 2.45. So these are hard not to talk about slippage. We are hard learned lessons so very confident about growth what kind of growth that we want and we think we are fairly on a good track as far as the portfolio concerned.
Jai Mundhra
Right. And last question sir on co lending CLM change, you know correct me my understanding is that it has now changed from non discretionary sorry discretionary to non discretionary and which is why you may have some disruption in the current in the March quarter has been. Has that been sorted already or you believe there could be some more teething issues when you, when you align towards the new guidelines. And
Praveen Kutty
Jay, one good thing on the bank is the quality of tech. Okay. I mean that that is one, one really good thing that we have so but that doesn’t guarantee everything because partners tech also should be up to, up to gear. We added pretty much early around September, October on this and we got it absolutely right. Some of the big gold loan players are our partners and it’s working very well, very very well with them. And probably you, since we are all in the financial industry, you’ll be covering them also.
I invite you to even speak to them and figure out how this particular thing is progressing. We’re very comfortable with them, they are very comfortable with us. And I’m sure some of these guys are part of your coverage.
Jai Mundhra
Just to coming to the question is the disruption, the transition is over and even incrementally. I mean you said that co lending will be growing as much as the overall growth. So I would believe that the entire transition is over. Right. And there is no more.
Praveen Kutty
Why I’m not giving you a straight answer on that is it is over for gold. It is not over for we do educational financing. We do that is school financing. We do lab. We do see we keep doing various things. So in areas of little volume consequences we are a bit slow. So at a bank level is it done fully? No. But as far as our gold loan is concerned it is a lion’s share of a co lending. We are very comfortable. And the reason why Gold loan is a lion’s share of co lending is because you can, you can accurately predict the loss.
Jai Mundhra
And does this change anything? Sir, structurally I’m in the transition. One one is I believe you, you may not have a discretion in terms of how you, how you partner with the partner. Is there anything also changes or not material? We
Praveen Kutty
Had this partnership J. Okay. With one of our partners from 2022. Okay. He became, he was that partner was our single largest partner until February of 2024.
Jai Mundhra
Right.
Praveen Kutty
Then we had a second big partner coming through. So we are talking about four year history. We are talking about two year history and there is a, you know, we, it’s like a full fledged. I mean I can do a PhD on co lending, Gold co lending at least. Right. So that these are kind of relationships that we have for the, for the co lending part. So I don’t see any disruption coming in. Sorry.
Jai Mundhra
And lastly sir, if I may ask, why is there a seasonality in the fourth quarter? I mean is this a normal seasonality in terms of lower slippages, higher recovery or there is something more fundamental in the product that we have? I mean all banks have seasonality which is favorable seasonality in 4Q but for our case looks Slightly more pronounced. So any reason or it’s like business is useful. Thank you.
Praveen Kutty
Our appraisal is in April. I can’t think of any reason. Jay. Sorry.
Jai Mundhra
Okay, no issue sir. Thank you and all the. Very good. Thank you.
Operator
Thank you. Next question is from the line of Aditya from Securities Investment Management. Please proceed.
Jai Mundhra
Yeah. Hi sir. Thanks for the opportunity and congratulations on a good set of results. Hi sir. Thank you very much. First question was on nims. How should we see the NIM trajectory now from year on? So do you see them still improving? Because while your deposits are still getting repriced but your CASA share has been reducing rates industry wide have been hardening and also your reliance on bulk deposits have been increasing. It is now 20% of your deposits. So how do you see the limits for the bank going forward?
Praveen Kutty
I wanted to focus on cost and deposit because the ultimate truth, which is a mixture of cars or institutional deposits, you know, excess liquidity that we keep for a rainy day. All that is reflected in cost deposit. Right. So have a look at the trend line of the cost of deposit. Our belief is that if you were to renew as much as we renew normally, we should be having some advantage going all the way into Q2. After that the advantage will stop. But that’s only part of the story. In the investor day I had mentioned this and this is public information.
Just do this. Look at the peak retail term deposit rate of three of the biggest private sector bank and three of the biggest public sector banks and come with a composite peak retail term deposit rate. Compare that with DC banks and see how convergence is happening. This number, the difference between the composite rate rate of this the six largest banks in India and US at one point in time was about 1.27. It was 0.89. If I remember right in March it’s there in my investor day presentation the 0.89 we brought it down to something like 0.60 or 6.1 and it’s publicly available.
Why am I not doing this? Bulk deposit is. I’m not aware because many banks don’t publish that. We do. Right. So that way it’s slightly unequal but this is an indication. One is of longer tenure deposit maturity and you’re having a benefit of renewal repricing. The second is even fresh deposit. This bank used to be a bank which was in the top three of highest interest rate trade. Please look at the website of similar sized banks. We are no longer there. The bank has learned to sell liability products on items other than price.
Also price still A big, big component. I mean we are not anywhere where we need to be. But the reason why people bank with you earlier used to be the rate. Today it is changing and it’s been hard work for the last one and a half years. Our branch bank team has done a fantastic job of switching it. And the proof of the pudding is. Look at the website. Look at the website and find out. I don’t want to name banks now we’ve grown 20.91%. Look at our rates, look at similar size, even bigger sized banks if you’re not lower than them.
The distance between the two has dropped. So that’s how we are seeing it. And like I told another gentleman earlier, we’re really working hard on getting our story on current account right. Effort has gone into it. Results have not come in yet. But we have people who give up easily.
Jai Mundhra
But now sir, I do understand that we have been more aggressive in cutting rates as compared to other banks. But now when I look at the deposit growth so that is majorly being coming from bulk deposits. Our retail deposits have not been keeping up pace with the overall deposit growth. So how do you see that going forward?
Praveen Kutty
For us there are two things which really really matter in the order of priority. We should be liquid. Being liquid is not a choice. So that pure play liquidity is important. Cost and deposit is important. Long tenure is important. Now if you meet these conditions, frankly is it a SAR coming in really doesn’t matter. There was a time when the bank used to give 8% rate on savings account. Today I think it gives 6.7% okay, that’s a rate that the bank gives. That’s why I said you can. It’s easy to grow bulk saw and show a better CASA ratio.
We prefer to grow deposits and keep the cost at deposit it down.
Jai Mundhra
Whereas
Praveen Kutty
CAA is an equal story. Even compare CAR across banks SA comparing doesn’t really make sense because some of the SA actually more expensive. Like one day you can put money into savings account and get in our bank itself 6.7%. So it is really expensive. But it helps in terms of saying publicly CASA ratio is good. I would tell you should look car and saw separately. Look at the While we don’t publish it, our saw average weighted average pricing on a saw has come down significantly. I mean if 25 basis point rate cut happened and we have reduced our cost of deposit in Q4 which is a traditionally very liability hungry market it comes comes because we are getting the right kind of deposit.
Jai Mundhra
Last bit on this deposit part now BCV is generally known for being focused on granularity, either being on advances or on deposits. Now bulk deposits is currently 20%. So is there any percentage beyond which you won’t be comfortable growing bulk deposits?
Praveen Kutty
Like I told you, we have to ensure that getting if you get a bulk deposit which is or which is of a lower rate of interest. Earlier we were giving it up but now we are managing three things. We’re managing granularity, we are managing ROI and we are also managing the, the. The tenor. So it is an uneven battle we have. We triangulate these three things. Earlier we used to take a stance saying that even if the rates are lower we will not take bulk because the, because it doesn’t meet our small ticket criteria.
But in a time like now when there is chaos, liquidity is important for us. So it is good to have extra liquidity even if means there is a higher carrying cost. So we do have bulk deposit. Do we have a number on retail term deposit? Yes, of course we have to grow that, we want to grow that. But there is a good growth buffer to keep for keeping your cost of deposit down.
Jai Mundhra
And sir, on your roa. So for the ROA to improve from here, I believe NIMS would be the major lever for us to grow because your credit cost and OPEX costs are pretty much under control. And for the NIMS to improve from here, would cost of deposits be the only trigger for us to improve our NIMs?
Praveen Kutty
Yes, we don’t want to go into a higher yield segment because this is not really the time to go to a high yield segment. It comes the sting in the tail. So improvements will come because we’re keeping a tighter reign on the cost deposit.
Jai Mundhra
Got it. And now sir, on this SME book, this 2000 book. So how big is the trades part? Because we were looking to degrow that part of the book. And how is the book apart from trades growing for us the CCOD part
Praveen Kutty
It’s not growing. So that’s why I said we are putting some effort into it. It’s not growing, it is stuck where it is. If I see it’s about. It’s a flat kind of thing. Quarter on quarter it has decreased by about 13% year on year. So we cannot revamping that. We got a new vertical to look at the greater than 3 crore. There are a lot of good customers who are above a particular threshold. 3 crores where leaving the bank because it’s meant to be a small ticket program. We said look, that doesn’t make any sense.
So you’re just filling up the bank. So we have got a new. No longer. From July onwards we’ve been having this channel. It is just getting set and ready. So that’s, that’s where the momentum we see happening. The SME comeback will happen. Treads is about 300 crore book. So hardly anybody used to be 300, it continues to be 300 so there’s no change.
Jai Mundhra
Understood. As a last question, any you know what is the bank’s now position on fundraising? We have got an enabling provision for fundraising. So how’s the bank looking?
Praveen Kutty
We should be in the next 2, 3/4 or next 2/4 maybe. Right. Maybe either late Q2 or early Q3. We should be going in for our fundraise because we see that as a bank we’ll be continuing to grow at this kind of pace and if we do come, continue to grow at this kind of pace with a similar kind of portfolio mix probably we’ll reach our internal red flag by Q1 of 2728. We don’t want to wait that long. So maybe Q2 and Q3 beginning.
Jai Mundhra
So thanks sir for answering your question.
Operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to address the question from all the participants in the conference please restrict yourself to two questions per participants. Should you have a follow up questions please rejoin the queue. Next question is from the line of Param Subramanyu from Investech. Please proceed.
Jai Mundhra
Yeah, hi. Thanks for taking my question and congratulations. Yeah, yeah. So firstly on the, you know the board enabling resolution for the capital is. So is that an enabling. Is it just procedural or are we looking at something and 1500 crore seems the largest number thing.
Praveen Kutty
Yeah, maybe I’d be happy with something like 1100, 1200 crore. So it’s good to keep some 1500 core enabling done. $100 million, not slightly more maybe in that particular region. See the thought process behind it is simple. Take what you need right now at the price prevailing at this particular point in time. Our belief is that if we continue performing like this the next race will be at a. At a different level. So don’t over dilute at this point in time. Just do what is required to continue this particular growth moment.
And then when the next level of expansion happens, hopefully soon we will be raising again at slightly different level with the fundamental numbers looking even better than what is looking today. That’s what is driving the management thought process.
Jai Mundhra
Perfect. Perfect. Praveen makes a lot of sense. Secondly on your provision coverage ratio, I mean this quarter it’s gone up sharply. What level are we broadly comfortable with?
Praveen Kutty
78 plus is good and as a company we like to keep those provisions. But any, anything above 75 is okay. But if you remember we have some, some MFI loans had gone bad in the last year, Q1, Q2, etc. So we want to ensure that, you know, the aging provision of that should not stutter us. So we have kind of sufficiently ensured provisioning in these unsecured small ticket microfinance kind of loans off of Q1 so that, so that there is some evenness in the way things will happen going forward.
Jai Mundhra
Got it. And lastly this is just so on the quarter. So your NIM is up 12 basis point right now. Is there some day count or something, you know, impacting that? Because you know your NII is broadly in line with your loan growth and your asset growth. Right. So, so 12 basis point uptick. I’m just trying to reconcile with the quarter on quarter, 5% NII group.
Praveen Kutty
See what I look at is instead of worrying about you know, day count, I just Compare ours with Q4 of last year. Last year Q4 we had 3.29. Neither was last year a leap year nor is this year a leap year. I think so. So you’re talking about similar candidates. So you’re if you’re having 10bps improvement on NIM despite having a hundred basis point repo rate cut impact, not doing too badly.
Jai Mundhra
I was looking at the quarter on quarter sort of movement. Right. The name is fine but. Yeah, yeah,
Praveen Kutty
Yeah. So, so I, I would anything I always look at, you know, Jan 5, March and April, May, June, so that in case there are any, any, any, any abnormalities of, of number of days coming into play comparison with similar kind of time frame the previous year is a good indicator. Are we making progress or not?
Jai Mundhra
Perfect. That’s all I had. Congratulations on the quarter once again. Thank you. Thank
Praveen Kutty
You very much.
Operator
Thank you. Next question is from the line of Akshay Badlani from HDFC Securities. Please proceed.
Akshay Badlani
Hi, thank you for taking my time. Hi Akshay,
Praveen Kutty
How are you?
Akshay Badlani
Hi. I’m good, I’m good, thank you. So Praveen, just wanted to ask you, you mentioned of increasing employees headcount to 13,000 from current. So it could be around 13,000 from
Aditya Khandelwal
Current.
Akshay Badlani
Yeah. So 1500 addition for the next year. So just wanted to understand in which areas are you looking to add on and how would we ensure that our you know, cost to income, you know, the train that has been there and we have maintained reducing a cost to income. How would we ensure that, you know, in spite of adding employees that we will maintain that run rate?
Praveen Kutty
Yeah, because
Akshay Badlani
We haven’t added employees in you know, last year or so apart from this
Praveen Kutty
We haven’t. We kept on adding and we kept on getting rid. So it is not as if we never added. Our exit process was really sharp and good but where I see this coming in is it’s not for this year. We see practically all these folks going into the, going into the liability and deposit acquisition. So we’ll put more people in the branches, we’ll put more people on the distribution front. I realize the basic math tells us that between a self sourcing sales network on mortgages and their DSA dependent sourcing initially you may feel that 2% or 2.5% to the DSA is cheaper.
But if you seen that the loan sticks with you for two years, two and a half years whereas self sourcing loans stick with you for 6, 7 higher than 6 years you’re getting the benefit coming through the BT’s. The balance takeouts are considerably less. You own the customer, not somebody else. And the credit quality if you know of these loans are really better than what the DSA source loans are. They are a necessary. I’m trying to find another word for evil. They are a necessity. We can’t live without them.
But our dependence has to necessarily come down. So I don’t mind putting in the people there because I will. I’m very confident that the team has shown it to me that from a longevity perspective, from a balanced BT out perspective, from a coupon perspective and a credit perspective these customers over the currency loan in our bank are far far better quality than BSA. There is a basic math of 2 and a half percent per preferred ticket size with a 5 lakh salary of a sales executive may initially look like it’s a bad call.
It is not. I mean if you know how to run the non DSA channel.
Akshay Badlani
Sure, sure. My second question was on the line of cross sell so you know at the analyst day we had indicated of you know the DCB NEO cards where you know we would, we would like to cross sell and even in terms of liabilities like OD facility we were wanting to offer. So what progress, what kind of progress have we made there?
Praveen Kutty
I’m very happy to say that not a significant, a sizable chunk of the 3.8% Q on Q mortgage growth has come from the branch banking channel. Look, this is bread and butter for most companies. For us it is not so for us there’s a low hanging fruit. It just kind of is kicking in. There should not be news at all. Honestly. This should have been the way things should happen. But anyway, let’s not complain. So clearly that is coming through from the branch banking channel, less so for the digital channel.
So that’s one our credit bureau linked interventions on our liability base is where these lap loans and home loans are coming through. We’re reasonably happy with that. I’m not particularly happy with the level of cross sell that we have achieved so far but again that is not stopping us from trying. There is a treasure within. It is difficult, it’s not, it’s not an easy thing but we are, we are at it, it is giving us result. So. But it’s a, it’s. I knew it would be a painfully slow process but this, it is certainly a painfully slow process but yeah, it is.
Directionally. Is it, is it going okay? Yes. From a. From a volume sense it is a bit frustrating at times but. But there’s no choice either. Keep at it and we’ll see the benefit of it coming through.
Akshay Badlani
Sure. So thanks, thanks for answering the question.
Praveen Kutty
Not at all.
Operator
Thank you. Next question is from the line of Puneet Balani from Dalit Capital. Please proceed.
Jai Mundhra
Oh, hello sir. Am I audible?
Praveen Kutty
Oh you’re very much audible. Yes.
Jai Mundhra
Yeah. So firstly on the margin front like this quarter, the firstly if you could explain where the 12bps QoQ is coming from and secondly, if you are looking at, you know, from a next year, from a next year perspective, is it fair to assume that, you know, given that we have a lot of bulk deposits and yes, we are doing a mortgage book pretty well despite that we will get some decline from funding costs. We can expect margins to be range around these levels because you know, because of these two factors.
Any comments on that?
Praveen Kutty
It can happen. I mean can it be range bound in this particular level? Possible. But like I told the gentleman earlier, also compare us quarter on quarter with the same quarter the previous year. If it happens, it primarily will be a execution issue because our ability to get the liabilities at the cost that we want is a journey that we are taking and we are very happy with the first nine months of that progress. People have learned that you don’t need to be the highest rate or one of the highest rate provider to get liabilities into the bank.
So that I would see as an execution risk rather than a strategic risk. So it’s worked very well so far in Q4. If you can get that kind of volume and still Keep the rates not over the cost, the rates, the offered rates on the website lower than who we used to have a margin, a difference with other banks who had a margin with it’s a good thing going. So there is an institutional resilience building on ability to get lower cost deposit. Nowhere are we near the big six or big seven. But we are not the bank that we were a year and a half back.
Jai Mundhra
And on the growth front, like I know you have mentioned in your presentation that you know in three to four years you aim to double the balance sheet. But given the fact that now you have the way you have highlighted that with the gold loan book it is already at a decent base. The co lending book. Is it fair to assume that growth will be around these levels for the next couple of years or so or you are Targeting still the 20% level plus
Praveen Kutty
I think 18, 20% is a given. I mean you just look at our March 22nd liability numbers and multiply by two. You just multiply our March 22nd asset numbers and see where we are.
Aditya Khandelwal
Right, right. 59,
Praveen Kutty
800
Aditya Khandelwal
Was
Praveen Kutty
Our asset number in March 22nd. Today you are 60,000.
Aditya Khandelwal
Right.
Praveen Kutty
You have your, your liability number was 35,000 or slightly 36,000.
Aditya Khandelwal
Yeah, 35,000
Praveen Kutty
In March 22nd. Today you Are at 72,000. So that’s four years. And. And that four year where one year they were recovering from our bank was recovering from COVID
Aditya Khandelwal
So
Praveen Kutty
Getting up to speed. So in that tough times and we can do that, we had a microfinance kind of problem hitting us. Da secured. Da problem hitting us. Despite all this, we are managing both the credit quality and the growth. These things will happen. And that’s why we are paid in the first place. Right. To manage these imponderables. You know something is going to hit you. You don’t know what it is and how well you manage. That is the resilience of an institution.
Aditya Khandelwal
Right? Right. Okay. That’s it. From my sense of.
Praveen Kutty
Thank you very much.
Operator
Thank you ladies and gentlemen. We will take this as the last question for the day. I now hand the conference over to Mr. Praveen Kutti for the closing comments. Over to you sir.
Praveen Kutty
Thank you very much for your attention and watch the space 90 days from now.
Operator
Thank you sir. On behalf of DCB Bank. That concludes this conference. Thank you all for joining us. And you may now disconnect your lines.