DCB BANK 2022-23 Annual Report Analysis

Thu, 1 Jun

DCB BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

DCB BANK Income Statement Analysis

• Interest income during the year rose 19.6% on a year-on-year (YoY) basis.
• Interest expenses were up by 15.2% YoY during the same period.
• Operating expenses increased by 32.3% YoY during the year.
• The bank's net interest income (NII) increased by 26.5% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.7% in FY23 as against 3.6% in FY22.
• Other income declined by 9.4% YoY during the year.
• Net profit for the year increased by 61.9% YoY.
• Net profit margins during the year increased to 11.1% in FY23 from 8.2% in FY22.

DCB BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	35,128	42,003	19.6%
Other Income	Rs m	4,520	4,094	-9.4%
Interest Expense	Rs m	21,553	24,833	15.2%
Net Interest Income	Rs m	13,575	17,170	26.5%
Operating Expense	Rs m	10,126	13,397	32.3%
Pre-provision Operating Profit	Rs m	7,970	7,867	-1.3%
Provisions & Contingencies	Rs m	5,095	3,212	-37.0%
Profit before tax	Rs m	3,896	6,276	61.1%
Tax	Rs m	1,020	1,620	58.8%
Profit after tax	Rs m	2,875	4,656	61.9%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.6	3.7
Net profit margin	%	8.2	11.1

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DCB BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 412.4 bn as compared to Rs 346.9 bn in FY22, thereby witnessing an increase of 18.9%.
• Advances for the year stood at Rs 343.8 bn as compared to Rs 291.0 bn during FY22, a rise of 18.2%.
• Cost of deposits for DCB BANK fell 0.6% and stood at 5.4%, while yield on advances rose to 9.9%.
• The lender's investments rose to Rs 125.8 bn during the year from Rs 90.5 bn in FY22.
• Borrowing stood at Rs 41.2 bn, a growth of 0.9% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 523.7 bn as against Rs 447.9 bn during FY22, thereby witnessing a rise of 16.9%.

DCB BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	40,475	45,630	12.7%
Advances	Rs m	290,958	343,807	18.2%
Deposits	Rs m	346,917	412,389	18.9%
Yield on advances	%	9.7	9.9
Cost of Deposits	%	5.4	5.4
Investments	Rs m	90,507	125,825	39.0%
Borrowings	Rs m	40,818	41,181	0.9%
Total Assets	Rs m	447,926	523,659	16.9%

Current Valuations for DCB BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 14.9, an improvement from the EPS of Rs 9.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 118.4, stands at 7.0 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.8 times, while the price to income ratio stands at 0.8 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	113.0	134.8
Earnings per share (Unadj.)	Rs	9.2	14.9
Diluted earnings per share	Rs	9.2	14.9
Avg P/E ratio	Rs	9.9	7.0
Avg P/ABV ratio	Rs	0.6	0.8
Avg Market Cap	Rs	28,377	32,762
Dividends per share (Unadj.)	Rs	1.00	1.25

Ratio Analysis for DCB BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio deteriorated and stood at 83.4x during FY23, from 83.9x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio increased and stood at 9.94x during FY23, from 9.58x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): DCB BANK's capital adequacy ratio (CAR) was at 17.6% as on 31 March 2023 as compared to 18.9% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 10.2% during FY23, from 7.1% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.89% during FY23, from 0.64% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 10.51% during FY23, from 8.05% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. DCB BANK's gross NPA ratio stood at 3.2% as of 31 March 2023 compared to 4.3% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of DCB BANK was 1.0% in financial year 2023. This compared with 2.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	83.9	83.4
Debt to Equity Ratio	x	9.6	9.9
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	18.9	17.6
Return on Equity	%	7.1	10.2
Return on Assets	%	0.6	0.9
Return on Capital Employed	%	8.1	10.5
% of Gross NPAs	%	4.3	3.2
% of Net NPAs	%	2.0	1.0
Yield on Advances	x	9.7	9.9
Yield on Investments	x	7.4	5.7

To see how DCB BANK has performed over the last 5 years, please visit here.

DCB BANK Share Price Performance

Over the last one year, DCB BANK share price has moved up from Rs 84.0 to Rs 118.4, registering a gain of Rs 34.4 or around 41.0%.

Meanwhile, the S&P BSE BANKEX is trading at 49,961.1 (down 0.1%). Over the last one year it has moved up from 41,088.4 to 49,961.1, registering a gain of 8,872.7 points (up 21.6%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, you can check out historical annual results for DCB BANK here and quarterly results for DCB BANK here)