MOSL: DCB BANK (Neutral)-Healthy PAT growth backed by one-off other income and opex control
​DCB Bank: Healthy PAT growth backed by one-off other income and opex control
(DCBB IN, Mkt Cap USD0.91b, CMP INR198, TP INR192, 3% Downside, Neutral)
- DCB Bank (DCBB) reported healthy PAT growth of 39% YoY (23% QoQ) to INR652m, exceeding our estimate by 10%. PPoP performance surprised with a 14% beat (+18%/+47% QoQ/YoY), driven by one-off treasury gains of INR214m.
- NII rose 32% YoY to INR2.3b, led by 24% growth in interest-earning assets and 19bp YoY improvement in reported NIM. NIM improved 21bp QoQ after adjusting for one-off IT refund of ~INR9m received in 4Q. Opex was controlled with the CI ratio at 57.2% (-220bp/-370bp QoQ/YoY).
- Asset quality deteriorated, with gross/net slippages at 2.7%/1.7%, mainly due to stress in mortgages and AIB portfolios. Slippages increased 19% QoQ to INR887m. Recoveries & upgrades declined to INR331m from INR393m in 4QFY17. GNPA/NNPA stood at 1.74%/0.92%.
- Loan book grew 3% QoQ and 22% YoY to INR163b, driven by 22% YoY growth in each of mortgages, SME, agri and corporate banking. Total retail loans grew 1%/16% QoQ/YoY to 54% of loan book.
DCB Bank Limited is a scheduled commercial bank. The Bank's segments include Treasury Operations, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. The Treasury Operations segment includes all financial markets activities undertaken on behalf of the Bank's customers, trading, maintenance of reserve requirements and resource mobilization from other banks and financial institutions. The Corporate/Wholesale Banking segment includes lending, deposit taking and other services offered to corporate customers. The Retail Banking segment includes lending, deposit taking and other services offered to retail customers. The Other Banking Operations segment includes para banking activities like third party product distribution, merchant banking. The Bank has approximately 200 branches and approximately 410 automated teller machine (ATM) centers.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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