We are living in a dynamic and unpredictable world. There are complex set of variables that are constantly changing making it very difficult to visualize stability or predict the future with any level of accuracy. At the same time there are new opportunities for growth and success. Achieving linear growth may not be easy or possible — we are witnessing jagged movements in some respects and exponential change in others.
Uncertainty and Flux
Almost all firms today are under existential threat. Looking out five years is difficult at best. The automobile industry, civil aviation, financial services, communications, mobility, renewable energy, robotics, are all undergoing transformation. Many industries such as Banking (1600), the gasoline automobile (1870) the Aeroplane (1905), that facilitate our everyday lives find their origins to more than 100 years ago. The 21st century is likely to challenge all of our assumptions about the future of everyday life and transform the experience to something very different which has never been known before. This is both scary as well as hopeful. We are marching to a better world which we can scarcely imagine today.
The firms that are succeeding spectacularly today are those that are creating this new world through innovation and vision. Apple, Google, Tesla, SpaceX, Amazon, Airbnb, Uber are some examples who were barely known fifteen years ago or didn’t even exist. The ubiquitous firms of yesterday have either disappeared or are a fraction of their size today. The most valuable firms of today emerged as ideas whose time had come using technology to their advantage and redefining the manner in which business was done. This process is likely to continue.
What does this all mean for DCB Bank? The challenge for the Bank is to grow steadily from year to year defined by our own strategy of retail banking pan India. We do this by doing what we do well. We are constantly learning and internalising this learning to serve our customers better every year using technologies that are appropriate for us and that serve our purpose. We find ourselves as a small private sector bank operating side by side with giants but finding a place of our own in this vast market in India.
Being small, nevertheless, does not preclude us from being technologically creative. In innovative payment solutions, mobile convenience and a modern infrastructure to support our core banking operations with speed and safety, the bank has been on the forefront of recent developments. We have built an extremely capable and innovative team for IT solutions for our banking needs within the Bank. The teams are constantly engaged with Fintech companies by conducting structured Hackathons to understand where opportunity for product development may exist. Some ideas are then adopted as innovative product developments for the future.
Managing risks for profitable growth
Given the period of flux that I have described, managing risk in a constantly changing environment is of utmost importance. It constitutes the theme of this annual report. Our growth and success depends firmly on the manner in which we assess the risks of doing business in an uncertain world. Our own perception of these risks is internalised with regard to the profile of our lending, the nature of our deposits as well as cybersecurity risks we may be subjected to. Given the size of our balance sheet we are very mindful of constantly defining our risk appetite and the possible impact it may have if these risks were to materialise.
We have built a very capable team within the Bank for conducting Data Analytics and applying these techniques to the possible risks we face within the Bank over a wide variety of areas. This constitutes an intelligent way of observing risks embedded in the data we possess, which would not be otherwise visible, and then developing measures to mitigate these risks. Data Analytics has been used to examine a variety of operational areas within the Bank to great effect and has alerted us to factors constituting risk which we would not otherwise have perceived.
DCB Bank has charted a path of steady profitable growth through very difficult times. I am happy to report that this growth path has remained intact despite shocks to the system in the past many years.
This year our Balance Sheet has grown 18.4% to Rs. 35,791.83 crores and Total Operating Profit by 23.2% to Rs. 646.60 crores. Profitability (PBT) has grown by 31.2% to touch Rs. 506.54 crores. Our Net NPAs continue to be kept in control at 0.65%. Our expanded Branch Network of 333 branches are performing satisfactorily ensuring our continued growth of CASA deposits with have now grown by 16.6% to Rs. 6,809.90 crores. The Book Value of our equity share is now Rs. 92.72.
While the Bank has made steady progress and will continue to do so, I felt it necessary to indicate that we are very mindful of the environment that we face as we sail into the future. Stormy seas will buffet the ship but we must always point our sails in the direction of our ultimate destination. Failure to do so will quickly divert our course in a direction that is unknown and treacherous.
In order to do that we need to use all the techniques we can muster that will give us a pointer to the risks we face and how we could manage them more effectively. Every year these techniques will become more sophisticated and hopefully more useful for management. We are building the intellectual capabilities with which to tackle these challenges.
In the end it is the human resources that drive these processes. DCB Bank is blessed with an excellent team and I am sure that we can rise to the challenges that face us in the future.
Chairman Mumbai, April 18, 2019