DCB Bank Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from DCB Bank Limited (DCBBANK) Q4 FY22 Earnings Concall

Management Update:

• DCBBANK said it is continuing to build frontline capacity to put the growth in a higher trajectory. The intention is to double the balance sheet in 3-4 years.

Q&A Highlights:

• Darpin Shah from Haitong Securities asked about the breakup of provisions and yield and cost of funds for 4Q. Murali Natrajan MD replied that net NPA provision is INR59 crores. As in every quarter, DCBBANK made INR3 crores floating provision, INR8 crores is RBI-mandated standard assets provision, and from restructuring provision, there is INR3 crores reversal on accounts which got closed.

• Darpin Shah from Haitong Securities queried about the yield and cost for 4Q. Murali Natrajan MD answered that yields on advances for the quarter was 11% and cost of funds was 6.04%.

• Renish Bhuva from ICICI Securities asked about the ROA journey over the next 2-3 years. Murali Natrajan MD replied that how DCBBANK is seeing it is that the company is making investments and will make investments. The intention would be to consistently deliver 1% ROA and at least between 12-14% ROE.

• Uttam Purohit from Perfect Research asked about advances growing 13% YoY and if the same can be expected going forward. Murali Natrajan MD answered that the bank is trying to put itself in a 20% growth rate trajectory. DCBBANK added that it will be a mix of digital, branch expansion, front-line expansion and so on.

• Yatin Kumar from Alpha Capital asked about the NIM going forward, given rates are going up. Murali Natrajan MD answered that DCBBANK believes its business model operates on a NIM range of about 365-375 bp. The bank wants to reach that steady state.

• Yatin Kumar from Alpha Capital also asked about any credit cost guidance for the coming year. Murali Natrajan MD replied that DCBBANK can’t give credit cost guidance for a particular year, but in a steady state basis, hopefully, in about 2-4 quarters, the bank will be on a 50 basis, 55 basis cost to average assets. And at the moment, PCR is at 68% and backing off the gold loan NPA, it’s actually at 72%.