Private sector lender DCB Bank on Friday reported a net profit of Rs 48.49 crore for the quarter ended September 2016, up 31.3% year-on-year.
The growth was driven by a near 27% rise in net interest income (NII), or the difference between interest earned and interest expended. Non-interest income stood at Rs 61.62 crore. On a sequential basis, DCB Bank’s net profit rose a little over 3%. The net interest margin (NIM) improved 17 bps y-o-y to 3.96%.
The bank saw a 22.2% year-on-year increase in provisioning at Rs 26.48 crore, even as the overall asset quality improved, with the gross NPA ratio falling to 1.75% from 1.99% a year ago, and the net NPA ratio dropping to 0.84% from 1.16%.
The CASA deposit ratio fell by 200 basis points y-o-y to 22% by the end of September. Retail deposits accounted for 77% of all deposits and stood at Rs 9,906.6 crore.
In a conference call, MD and CEO Murali M Natrajan addressed concerns over rising delinquencies in the bank’s mortgage portfolio, which accounted for more than 29%, or Rs 74.3 crore, of its gross NPA figure of Rs 255.4 crore. This marks a nearly 60% increase year-on-year.
“There are two major problems emerging in mortgage in the LAP (loan against property) market. One is that there is a huge price competition. Because there is not enough asset base, everyone is chasing loan against property. The second thing is that in order to take over a loan from another financier, you end up overvaluing the property or giving more money than what the customer deserves…How we are trying to protect ourselves from this is that we are going strictly by our credit policy. If we over by competition.” Natrajan said.