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Nirmal Bang Report
DCB Bank Ltd.’s net profit in Q1 FY23 grew by 188% YoY, led by strong loan growth, margin expansion and drop in provisioning even as opex intensity remained elevated on the back of growth investments.
Sequential loan growth stood at 2.5%, which implies that subsequent QoQ growth rate will need to be higher as the bank looks to double its balance sheet every three-four years.
The YoY increase in headcount and branches implies growth investments being undertaken by the bank. Opex ratio for FY23 is likely to remain elevated.
DCB Bank is guiding for 55-60 basis points credit cost on the back of asset quality improvement. Slippages were elevated in Q1 FY23 due to gold loans, but are expected to decline going forward, as collections have been improving. The bank is targeting 1%/14% return on asset/return on equity in the next four-five quarters.
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