Net interest income grew 7 percent to Rs 334 crore, while the non-interest income fell by 9 percent to Rs 92 crore. DCB Bank intends to make conservative provisions given the current environment, it said.
DCB Bank on October 31 reported a nearly 10 percent decline in net profit at Rs 82 crore for the quarter ended September 30, 2020 as provisions rose.
The bank logged a net profit of Rs 91 crore in the same quarter of the previous fiscal year.
"Profit before tax for the quarter was impacted by Rs 48 crore COVID-19 regulatory package provision. In order to further strengthen the balance sheet, the bank intends to make conservative provisions given the current environment," DCB Bank said in a release.Total income also fell marginally to Rs 970.98 crore in July-September 2020-21 as against Rs 980.59 crore in the year-ago same period.
Net interest income grew 7 percent to Rs 334 crore, while the non-interest income fell by 9 percent to Rs 92 crore.
Operating expenses were up by 22 percent at Rs 225 crore as against Rs 185 crore.
Gross bad loans or non-performing assets (NPAs) of the bank rose to 2.27 percent of gross advances by the end of September 2020 against 2.09 percent by the year-ago same period. In value terms, it stood at Rs 573.70 crore as against Rs 523.24 crore.
However, net NPAs improved at 0.83 percent (Rs 205.77 crore) from 0.96 percent (Rs 237.86 crore).
Provisions for bad loans and contingencies more than doubled to Rs 113.10 crore for the quarter from Rs 43.27 crore in the year-ago period.
Capital adequacy continues to be strong and as on September 30, the CAR ratio was at 18.28 percent (with Tier I at 14.22 percent and Tier II at 4.06 percent as per Basel III norms).
The private sector lender said it has been steadily growing retail term deposits (of less than Rs 2 crore) since the last two years and reducing the bulk deposits. The retail term deposits grew 33 percent from a year ago. While the top 20 deposits stood at 7.89 percent.
"For the past many months, the bank has been intentionally reducing bulk and interbank deposits. During Q2 FY2021, inter bank term deposit at Rs 2,857 crore reduced by 29 percent as compared to Rs 4,052 crore as at March 31, 2020. The Certificate of Deposits as on September 30, 2020 was zero," DCB Bank said.
The lender said in the coming months it intends to focus on business loans (loan against property), home loans, gold loans, Kisan Credit Card, tractor loans and short-term corporate loans.
Advances by the end of the quarter were slightly up from a year ago period at Rs 24,879 crore.
Based on the current outlook, the advances for the full year may remain flat at 2019-20 level or may de-grow slightly, it added.
"We expect step by step improvement in collections efficiency in the coming months. We believe ECLGS (Emergency Credit Line Guarantee Scheme) is an excellent scheme that is likely to help bridge the gap in working capital and immediate financial obligations especially for smaller self-employed entities," Murali M Natrajan, managing director and chief executive officer, DCB Bank said."New loan momentum is picking up and our aim is to achieve monthly volumes similar to pre-COVID-19 between March 2021 to May 2021", he added