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DCB Bank conducted a concall on 25 January 2020 to discuss financial performance for the quarter ended December 2019. Murali Natrajan - MD and CEO of the bank addressed the call:
Highlights:
- The fresh slippages of loans for the bank increased to Rs 202 crore in Q3FY2020. This includes a corporate loan of Rs 41.8 crore of a 9 year long customer in packaging industry. Bank is the sole banker with tangible collateral in the form of land, building and factory. The bank has made provisions of 25%.
- Excluding Corporate Loans the gross slippage ratio was 2.60% for Q3FY2020.
- The bank always mentions that 2-3 accounts always show some stress.
- The commercial vehicle portfolio is about Rs 1600 crore and the bank is steadily reducing the exposure to the troubling segment.
- The processing fee income is starting to pick up and bank is hopeful that it should do better. ATM fees have started to pick up a little bit better. Trade finance, unfortunately is static. Bank is confident of 12% to 14% growth in fee income.
- The bank has never in entire history used floating provisions.
- The security receipts book has fallen from Rs 70 crore end March 2017 to Rs 34 crore end September 2019, as a reflection of a granular mortgage SME type of portfolios given to ARCs.
- The bank has expects cost of funds to reduce in due course, while its first target is to achieve best-in-class share of top 20 depositors in another 2 years.
- The acquired Abu Dhabi Commercial Bank deposits base is Rs 800 crore with 95% retail deposits. Advances acquired are Rs 300 crore relating to 10-12 corporates, while none of the account is under stress.
- Bank continues to target NIM at 3.7 to 3.75%.
- Bank would add at least 14 to 15 branches in Q4FY2020. Bank also proposes to add 15 to 20 branches every year ahead.
- The home loan portfolio share has moved up to 15% of total book and now it is contributing almost 40% of mortgages, while the bank would focus more on home loans.
- The bank expects credit growth to improve from the current level.
- Credit provision stood at Rs 52 crore, floating and standard asset is Rs 6 crore and investment is Rs 1 crore in Q3FY2020.
- Headcount at the bank has moved up by about 100 odd to 6500 in Q3FY2020.
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