DCB Bank Q2 Results Review - NIMs Declined; Strong Fee Income Supported Profitability: IDBI Capital

IDBI Capital Report

DCB Bank Ltd.’s net interest margin declined by 12 basis points QoQ to 3.27% led by decline in yield on assets. Management believes that margins have bottomed out thus will show an upward trajectory going ahead. Asset quality remains stable with gross non-performing asset at 3.29% versus 3.33% QoQ led by higher recoveries.

Banks deposits growth remained strong at 20% YoY; credit growth too witnessed strong growth at 19% YoY. We expect 18% CAGR (FY24-26) credit growth. Net interest income grew by 2.5% QoQ led by decline in margins.

Core fee income grew by 22% QoQ; also management guided for sustainability which will drive return ratios higher. Pre-provision operating profit grew by 24% QoQ led by higher non-interest income. Profit after tax grew by 18% QoQ led by higher provisions (up 61% QoQ).

We largely maintained the estimates for FY25/26E adjusted book value and maintain ‘Buy’ with a new target price of Rs170 (Rs 167) valuing it at 0.9 times price/adjusted book value FY26E.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.