Concall Summary: DCB Bank Q4FY20

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Participants:

  • ICICI Securities
  • HDFC Securities
  • B&K Securities
  • HDFC Mutual Fund
  • Motilal Oswal PMS
  • ICICI Prudential Mutual Fund
  • TVS Capital
  • Kotak Securities
  • Ambit Asset Management
  • Corporate Research
  • Anived PMS
  • IDBI
  • Banyan Capital
  • Alpha Line Wealth Advisors
  • Naredi Investments

ConCall highlights:

  • Retail term deposit (below Rs 2 crore) grew 51% YoY; contribution of top 20 depositors drops to around 8% in December 2019
  • Overall moratorium is around 60% (as on April end); Home loan- 52% (value) and business loan- 56% (LAP)
  • Moratorium for CV portfolio is little bit on the higher side
  • Bank took moratorium asset classification benefit on Rs 89 crores and on that provides 10%. Over and above that bank has provided about Rs 53 crores for the COVID provision
  • Bank has generated close to Rs 800 crores of retail term deposits during April and May
  • Feedback from 60-70% customer suggests that once the lockdown gets over their business will revive
  • CASA was volatile as lot of businessman and SMEs are using their CASA to meet expenses and wages
  • NIM is stable but fee incomes get impacted as there is hardly any income from ATM fees, processing charges, CASA-related AQB charges, penal charges etc.
  • NIM may drop in coming quarters if NPA incrases over a period of time
  • Bank has missed out Rs 12-15 crores of recovery, upgrade which was very much in the pipeline, because of the restriction
  • Reliance on Certificate of Deposits is very minimal; total book is around Rs 100 crore
  • Mortgage portfolio: Home loan -38% and LAP- 62%. Salaried in home Loan is 21% and self-employed is 79%; in business loan 90% is self-employed 
  • EMI collection in April: 56.9% in home loan and 52% in business loan
  • Average LTV: 49% in home loans and 37% in business loans  
  • Self-occupied residential/commercial is 87% (ticket size Rs 17-20 lakh). 35% of home loan borrowers and 30 business loan borrowers have no outside debt
  • Bank will continue to offer higher deposit rate to retail to attract them as administrative cost is less as compared to bulk deposit
  • Floating provision currently stands at is Rs 100 crores; during this quarter made about Rs 2 – 3 crores of floating provision
  • DCB doesn’t book any loans below 700 score; only a very handful customers are below 700 score. But for smaller areas customer, those who have no track record, bank provides loan and they perform well
  • Bank has no plans for doing raising any funds at the moment. Tier 1 capital at 13.9%. Loan growth likely to be muted for next two quarters
  • Full year PSLC income is Rs  40 crores vs Rs 28 crores YoY
  • Employee strength increased to 6,845 from 6,140 in last year
  • Average ticket size for gold loan business is around Rs 1.5 lakh
  • Bank has already scaled down new CV portfolio and focusing on used CV portfolio
  • Bank had decided not to disburse any loans after 12th of March and for that reason close to Rs 400 – 500 crores of loans were remain undisbursed 
  • Cost of servicing a CASA is far higher as compared to a retail term deposit. Cross-sell opportunities are better in retail term deposits as their capability to buy products is higher
Also Read on FinMedium:  Concall Summary: Godrej Agrovet Q4FY20

Read more concall summaries here.

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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