DCB reported an in-line PAT of INR364mn (vs our estimate of
INR359mn), on account of higher-than-expected non-interest income
offset by lower NIMs. While NIMs fell 13bps q-q on account of priority
sector lending done during the quarter and 211bps q-q decline in CASA
ratio, asset quality improved with GNPLs improving 12% sequentially.
Loan growth came in higher at 23.4% y-y compared to our expectation
of 21% y-y. Cost-income ratio improved 271bps q-q to 63.4% resulting
into 90bps improvement in RoEs to 14.7%.
Key highlights
NIM contracted by 13bps q-q as cost of funds inched up 30bps q-q on
higher borrowing costs and 211bps q-q decline in CASA ratio at 24.8%.
While yields on loans also increased q-q, the quantum was lower in order
to offset cost of funds impact as the bank lent towards lower yielding
priority sector loans.
Loan growth of 23.4% y-y was driven by a 39.4% q/q increase in the
priority/agri portfolio and a 13% q/q increase in large and mid corporate
segment. SME loans dropped 7% y-y while retail loans continue to grow
strong at 35% y/y.
CASA deposits remained flat q-q (up 9% y-y), CASA per branch (on a
one-year lagged basis) has remained around INR270mn over the past few
quarters.
Core fee income improved to INR279mn (10.7% q-q), while investment
book gains came in at INR21mn.
GNPL fell 12% sequentially resulting to a 66bps q-q drop in GNPL ratio to
2.8%. Decline in GNPLs was on account of a sharp fall in GNPLs in
personal loan segment from INR590mn in 2Q to INR235mn. GNPLs in
CV/CE, corporate segment remains stable while SME and mortgage
segment saw a minor up-tick. LLPs came in at 40bps during the quarter
compared to 36bps in 2Q and provision cover remains at a healthy 72.6%.
The quarter also highlighted the impact of operating leverage playing out
with the cost-income ratio dropping to 63.4%, from 66.2% in Q2FY14.
The capital adequacy ratio is at a healthy 12.9% under Basel-3 with the
Tier-1 ratio at 12%.
We await more color after the earnings call scheduled on Friday.
Valuation: DCB currently trades at 1.1x our FY15F ABV and 7.8x our
FY15F EPS. At our TP of INR60, DCB would trade at 1.2x FY15F ABV of
INR51 and 8.2x FY15F EPS of INR7.3 for an ROA of 1.3% for FY15F.
��
INR359mn), on account of higher-than-expected non-interest income
offset by lower NIMs. While NIMs fell 13bps q-q on account of priority
sector lending done during the quarter and 211bps q-q decline in CASA
ratio, asset quality improved with GNPLs improving 12% sequentially.
Loan growth came in higher at 23.4% y-y compared to our expectation
of 21% y-y. Cost-income ratio improved 271bps q-q to 63.4% resulting
into 90bps improvement in RoEs to 14.7%.
Key highlights
NIM contracted by 13bps q-q as cost of funds inched up 30bps q-q on
higher borrowing costs and 211bps q-q decline in CASA ratio at 24.8%.
While yields on loans also increased q-q, the quantum was lower in order
to offset cost of funds impact as the bank lent towards lower yielding
priority sector loans.
Loan growth of 23.4% y-y was driven by a 39.4% q/q increase in the
priority/agri portfolio and a 13% q/q increase in large and mid corporate
segment. SME loans dropped 7% y-y while retail loans continue to grow
strong at 35% y/y.
CASA deposits remained flat q-q (up 9% y-y), CASA per branch (on a
one-year lagged basis) has remained around INR270mn over the past few
quarters.
Core fee income improved to INR279mn (10.7% q-q), while investment
book gains came in at INR21mn.
GNPL fell 12% sequentially resulting to a 66bps q-q drop in GNPL ratio to
2.8%. Decline in GNPLs was on account of a sharp fall in GNPLs in
personal loan segment from INR590mn in 2Q to INR235mn. GNPLs in
CV/CE, corporate segment remains stable while SME and mortgage
segment saw a minor up-tick. LLPs came in at 40bps during the quarter
compared to 36bps in 2Q and provision cover remains at a healthy 72.6%.
The quarter also highlighted the impact of operating leverage playing out
with the cost-income ratio dropping to 63.4%, from 66.2% in Q2FY14.
The capital adequacy ratio is at a healthy 12.9% under Basel-3 with the
Tier-1 ratio at 12%.
We await more color after the earnings call scheduled on Friday.
Valuation: DCB currently trades at 1.1x our FY15F ABV and 7.8x our
FY15F EPS. At our TP of INR60, DCB would trade at 1.2x FY15F ABV of
INR51 and 8.2x FY15F EPS of INR7.3 for an ROA of 1.3% for FY15F.
No comments:
Post a Comment