Private sector DCB Bank’s Q2 net profit crashes 10% to Rs 36.93 cr

Private sector lender DCB Bank, which on Tuesday reported a 10 <g data-gr-id="32">per cent</g> decline in net profit at Rs 36.93 crore for the July-September quarter, said it will double its branches to over 310 over the next 12 months.

"We will be opening 150 more branches over the next 12 months, adding onto our 160 branches now. We want to be future ready as competition increases. We are in <g data-gr-id="42">growth</g> phase as we have cleaned up our balance sheet over the past few years," Murali M Natrajan, the Managing Director and Chief Executive of DCB, said.

He further said competition is intense so the bank needs to continuously fine tune its approach to <g data-gr-id="43">grow</g> the balance sheet at profitable margins. Natrajan further said this faster expansion will see the bank taking a hit of Rs 90-100 crore on its <g data-gr-id="39">bottomline</g> over the next two-three years, after which the new branches will start paying back.

"A branch takes 18-22 months to <g data-gr-id="33">breakeven</g> and <g data-gr-id="34">pay back</g> begins in 44-50 months. So I see a cumulative <g data-gr-id="35">bottomline</g> impact of Rs 90-100 crore by FY18 due to branch expansion."

He said these new branches will come up in tier-2 and -3 towns except in the northeast and Jammu & Kashmir. On the reason for the dip in net income, he said the bank has settled a big account (Rs 26 crore) this quarter, which saw the bank taking a Rs 6 crore hit from the account.

The bank has been recovering from this account since the past four years. Another reason for the dip in net income is the higher taxation, which is currently at 34.6 <g data-gr-id="36">per cent</g>, up from 13 <g data-gr-id="37">per cent</g> earlier, he added.

On NPAs, he said the pain is still not over yet and the bank needs to be watchful. He also said credit growth is yet to gather momentum. 

The bank's total income during the September rose to Rs 464.87 crore, compared to Rs 371.83 crore in the year-ago period.