DCB Bank Limited held its Q4 & FY25 Earnings Conference Call on April 25, 2025, discussing the audited financial results for the quarter and year ended March 31, 2025.

Key highlights from the call:

• Balance sheet growth of 22% for the year.
• Deposit growth stood at a healthy 22%, with loan growth at 25%.
• Savings account growth was 19%.
• Net Interest Margin (NIM) stabilized at 3.28% for Q4 FY25, compared to 3.29% in Q3 FY25.
• Total fee income for the year was ₹751 crore. Core fee income in Q4 reached a high of ₹161 crore.
• Cost to average assets for Q4 came in at 2.54%. Operating income growth was higher than operating expense growth.
• Provision cost was lower for the year at approximately 31 basis points. Q4 provision cost was 0.33% on average assets.
• Slippage ratios in Q4 were the lowest in the last five quarters. Recovery to fresh slippage ratio was 83% for Q4.
• Gross NPA closed just under 3% at 2.99% (lower than 3.28% at the start of the year).
• Net NPA was 1.12% (one basis point higher than the start of the year).
• Provision Coverage Ratio (PCR) was healthy at 74.48%. No write-offs during Q4.

Management Commentary (Mr. Praveen Kutty, MD & CEO):

• Expressed satisfaction with the growth momentum, improvement in portfolio quality, and the path set for cost and operating leverage, which provides a platform for upcoming quarters.
• Strategy of secured assets, granular deposits, and granular loans remains sacrosanct.
• Efforts are underway to immunize rate cut impact through savings account rate reductions (already done) and retail term deposit rate reductions (ongoing). Bulk rates have already seen substantial cuts.
• Focus is on tweaking fresh sourcing towards higher-yielding products like LAP within the existing framework.
• Co-lending growth pace is expected to be in line with balance sheet growth going forward, with incremental growth driven more by organic products.
• Sees core fee income growth, lower provision costs, and cost management as levers to potentially offset NIM pressure and work towards a 1% ROA target.
• Capital adequacy (Tier 1 at 14.30%, Total at 16.77%) is well above required levels, indicating sufficient capital for growth. Capital raising is being considered, potentially in Q2 FY26, aiming for a valuation reflective of the bank's intrinsic strength.
• Highlighted the competitive advantage in business loans, especially against NBFCs, through the offering of overdraft products which enhance customer engagement and fee income opportunities.