Initiating Coverage | 24 March 2015
Sector: Financials
DCB Bank
STOCK
RE-RATING
MARKET SHARE
GAIN
PRODUCTIVITY
ENHANCEMENT
STRONG
CONTROL OVER
NPA
BALANCE
SHEET
CONSOLIDATION
BUSINESS
REALIGNMENT
TIGHT
LEASH
ON OPEX
Wheels of growth in motion
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);+91 22 3982 5415
Vallabh Kulkarni
(Vallabh.Kulkarni@MotilalOswal.com);+91 22 3982 5430

DCB Bank
DCB Bank: Wheels of growth in motion
Summary
.....................................................................................................................
3
DCB: Timeline
..............................................................................................................
4
Impressive turnaround in operations
........................................................................
5
Balance sheet re-aligned; focus on scale now
...........................................................
7
How DCB plans to improve profitability?................................................................... 15
Core earnings to remain healthy
................................................................................
16
Initiating coverage with a target price of INR155
......................................................
22
Financials and valuations
............................................................................................
24
Investors are advised to refer through disclosures made at the end of the Research Report.
24 March 2015
2
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

DCB Bank
Initiating Coverage | Sector: Financials
DCB Bank
BSE Sensex
28,162
S&P CNX
8,543
CMP: INR106
TP: INR155 (+46%)
Buy
Wheels of growth in motion
To capitalize on ‘pool of wealth’ |Re-rating imminent
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
Financial Snapshot (INR b)
Y/E Mar
2015E 2016E
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh.INR
P/E(x)
P/BV (x)
RoE (%)
RoA (%)
5.1
2.8
1.7
3.8
6.0
11.8
55.2
17.6
1.9
12.8
1.2
6.1
3.6
2.0
3.7
7.3
21.1
62.1
14.5
1.7
12.5
1.2
DCBB IN
280.8
127/57
-2/14/53
30.9
0.5
138/1,504
83.6
2017E
7.5
4.6
2.6
3.6
9.4
29.2
71.3
11.2
1.5
14.2
1.2
DCBB, one of the 10 private banks that received licenses in 1994, has undergone
significant restructuring over the last five years: (a) Loan book realignment to
secured and lower ticket size loans, (b) Cost rationalization through manpower
optimization, branch relocation, and cutting flab, and (c) Focus on building a
granular liability profile.
Structural and operational changes by the management to improve productivity
and efficiency (post 2009) are leading to improvement in core PPP. Having
achieved PBT of 1.5% (as percentage of assets) from a loss of 1.3% in FY09, the
management's focus would shift to scalability.
Given its strong SME presence, expanding branch network (now 145 branches)
and healthy capitalization (tier-I ratio at 14.5%), we believe DCBB is well poised to
capitalize on the ‘pool of wealth’ [click
here
for our theme report, “Pool of
Wealth” dated March 3, 2014]. The bank’s loan market share (15bp currently)
should improve, aided by loan CAGR of ~30% over FY15-17.
Significant focus on core operating profitability, and strong growth in granular
retail and niche small-ticket SME loans would drive further re-rating. We initiate
coverage with a target price of INR155 (2.2x FY17E BV).
Balance sheet re-aligned; focus on scale now
DCBB posted loan CAGR of 24% over FY11-14, despite realignment of retail
(unsecure to secure) and SME loans (ticket size reduced), and move to lower
ticket corporate loans. With loan realignment behind, scale build-up in niche
areas of presence, branch expansion, and healthy tier-I ratio, we estimate loan
CAGR of 30% (~14% CAGR for the industry) over FY14-17. Focus on granular and
collateralized SME and retail loans would keep asset quality healthy.
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
16.4
18.4
18.5
DII
24.3
16.4
15.0
FII
15.5
14.8
11.9
Others
43.8
50.4
54.6
Note: FII Includes depository receipts
Productivity gains to add 25bp+ to pre-tax RoA
To cut flab in the system, DCBB relocated some branches, reduced branch size,
controlled overheads, and rationalized manpower over FY09-14. This led to
~100bp reduction in opex to assets to 2.6%. Tight control over cost and
productivity improvement, coupled with high growth would boost profitability
going forward. C/I ratio should fall to ~54% (63% in FY14) and productivity gains
to contribute 25bp+ to PBT by FY17. However, ROAs would decline marginally as
DCBB moves to full tax rate in FY15.
Stock Performance (1-year)
DCB Bank
Sensex - Rebased
Core earnings to remain healthy; re-rating to continue
We expect core revenues to clock a healthy CAGR of 26% over FY14-17, driven
by strong loan growth and largely stable margins. Controlled opex and decline in
C/I ratio would drive core PPP/PBT CAGR of ~35%, though increase in tax rate to
30% would keep earnings CAGR lower at 20%. Return ratios are likely to be in-
line/better than industry average. As the bank delivers on core profitability,
asset quality and market share, re-rating would continue. We initiate coverage
with a target price of INR155 (2.2x/16.4x FY17E BV/EPS).
140
115
90
65
40
24 March 2015
3

DCB Bank
DCB BANK: TIMELINE
Number of branches
increase to 145
Raised INR2.5b
through QIP at INR82
2014
2013
2010
2009
2006
2005
Re-alignment of
loan book;
consolidation in
unsecured book
Focus on cutting
costs
Rating upgrade by CRISIL
to 'CRISIL A-/Stable'
Expansion in branch
network resumes
Raised INR1,860m
through IPO; Issue
subscribed 36x
GNPA ratio at a new
high of 15%
DCB appoints Mr. Murali
M. Natrajan as MD &
CEO
Classified as a "New
Generation Private
Sector Bank" by RBI
Bank gets a Private
Banking License;
becomes
Development Credit
Bank (a Scheduled
Commercial Bank)
Origin of the bank
goes back to a series
of mergers of Co-
operative banks in
1930
AKFED infuses capital in the
bank; Mr. Nasser
Munjee appointed as
Chairman
However, DCB reports PBT
loss of due to ongoing stress
Consolidation efforts begin
2004
2003
1995
1981
1930
GNPA ratio increased to
double digits (11.6%) led
by higher stress in
corporate book
Named Development
Co-operative Bank Ltd
post amalgamation of
Ismailia and
Masalawalla co-
operative banks
24 March 2015
4

DCB Bank
Impressive turnaround in operations
Consolidated operations by focusing on granular and secured loans
Until FY09, DCBB was saddled with significantly high impaired loans (GNPA of 8.4%)
and low productivity (opex-to-assets of 3.6%). The new management, which took
charge in May 2009, has achieved an impressive turnaround in operations. As at the
end of 9MFY15, GNPA was 1.9% and opex-to-assets stood at 2.7%.
With stability at the top management level (in turn business strategy) and focus on
niche areas (SME loans and mortgages), DCBB has seen improvement in productivity
and profitability (RoA of 1.3% in FY14 versus loss of 1.3% in FY09). Execution in all
three phases (consolidation, rebalancing, and scale-up) has been commendable.
Frequent management/business strategy changes impacted performance
Focus on revenue growth to
cover costs led to
compromise on asset
quality
Led by frequent management change and in turn business strategies, DCBB
remained a laggard among the 10 banks that were awarded private bank
licenses in 1993.
Over FY03-06, DCBB reported losses, led by higher slippages in the corporate
segment, resulting in low NIMs and higher credit cost. In FY05-06, it reported
operating loss too.
Strong expansion (employees up from 1,279 in FY06 to 2,235 in FY08), and CBS-
related cost led to high opex growth over FY06-08. To cover higher costs, the
management focused on rapidly expanding revenues.
Focus on revenues coupled with strong capitalization and excess liquidity in the
system led to high risk appetite. DCBB expanded aggressively in unsecured retail
and CV loans.
Aggressive growth in risky products, global financial crisis and RBI’s tough
measures for recovery of retail loans impacted operations yet again and DCBB
slipped into the red.
Since May 2009, there has been an impressive turnaround
Opex to average assets
down from 3.6% in FY09 to
2.6%
Immediate focus of the new management (joined in May 2009) was to realign
organizational structure to bring cost efficiencies and consolidate balance sheet
growth (loans CAGR of 3% over FY08-11). Cost rationalization by branch
reallocation, cutting flab, and focusing on productivity improvement resulted in
a fall in opex to average assets from 3.7% in FY08 to 3.2%. Opex CAGR during
the period was -2%.
Saddled with high NPAs (GNPA of 9% as at the end of FY09), the management
focused on running down unsecured exposure and making attempts to boost
recoveries. The bank’s loan portfolio shrank 15% over FY08-10. The share of
these unsecured loans has declined from 32% in FY08 to less than 2% in
9MFY15.
Gradually, the management started focusing on granular retail and SME loans
and reduced reliance on large ticket corporate loan exposure. Scaling down of
operations in large corporate business also impacted bulk deposits. However,
the bank welcomed this, as it was de-growing on the assets side.
24 March 2015
5

DCB Bank
Exhibit 1:
Opex CAGR 6% FY09/14; Ratio at a decadal low…
Opex/Avg assets (%)
25
Exhibit 2:
…led by cutting the flab in the system
Other opex / avg. assets (%)
49
38
32
4
-12
1.5
2.3
2.2
-2
-18
2.3
1.4
1.4
1.2
1.3
1.3
2.0 1.9 1.6 1.5
-3
Other opex growth (%)
18 22 18 16
10 15
2.3 2.7 3.3 3.6 3.8 3.7 3.6 3.3 3.2 3.0 2.8 2.6 2.7 2.6 2.5
1.3
2.2
Exhibit 3:
Controlled opex and healthy revenues driving C/I
ratio lower (%)
90
76
86
78
71
69
72 73 72
75 74
72 73 72
Exhibit 4:
Slippages and credit costs spiked during
FY08-10, partially led by decline in loans
8.6
Credit Cost (%)
7.5
5.9
Slippage Ratio (%)
69
62
60
66
63 62
53
61 60
2.9
4.3
2.9
3.9
1.9
1.0
1.9
4.1
3.4
1.5
1.2
1.6
0.5
Exhibit 5:
Mortgages key driver of growth
Mortgage (% of loans)
36.0
25.0
11.9
29.0
38.0
43.0
Exhibit 6:
SME volume growth healthy; Shift to lower
ATS leading to decline in proportion (%)
28
24 25
17
30
SME loans proportion (%)
27 26 26
25
23 22
20 19
16 16 15
14
3.8
8.1
2.7
14
Exhibit 7:
Steady decline in exposure to top-20 accounts (%)
21.4
% of Loans
17.0
14.0
11.8
21.5
FY10
17.0
FY11
14.2
FY12
11.9
FY13
10.5
10.8
FY14
% of Exposure
Exhibit 8:
… resulted in considerable decline in NPAs (%)
12
9
6
3
0
GNPA
NNPA
Source: Company, MOSL
24 March 2015
Source: Company, MOSL
6

DCB Bank
Balance sheet re-aligned; focus on scale now
Market share gain to accelerate
Post the consolidation phase, DCBB’s focus shifted to improving the share of granular
business on both assets and liabilities side. On the assets side, mortgages (largely LAP),
low-ticket SME exposure, and agri-banking were the key focus areas.
On the liabilities side, focus was not only to provide stability via high share of retail
deposits but also to minimize asset-liability mismatches. The management had taken a
conscious decision of not increasing the share of bulk deposits to over 25%.
DCBB is now focusing on building scale with tight leash on opex, well balanced
granular loan mix, and improved risk management.
Low ticket secured loan exposures – a key focus area for growth
Post consolidation, the management led by Mr. Natrajan focused on secured
retail loans (LAP and HL), low-ticket SME loans (exposures up to INR100m), agri
and inclusive banking (to reduce drag of PSL), and trade-related corporate loans
for incremental growth. DCBB consciously moved away from unsecured
personal loans, CV loans (however, it is now back in the market for PSL loans),
and bulky corporate loans.
Apart from in-house sourcing, DCBB also relied on DSAs and acquired portfolios
for growing mortgage loans due to constraints on opex.
Scale-up of branch network, with focused strategy (either #1 or #2 private bank
in the area and largely SME cluster areas), strong capabilities in SME and retail
loans, and healthy risk management practices will help DCBB to grow at least 2x
faster than the industry. DCBB’s targeted long-term loan mix is: Retail 40%,
MSME 25%, Corporate (largely trade related) 25%, and AIB 10%.
Reducing ticket size on SME loans in a high risk environment
The proportion of SME
loans declined from 30% in
3QFY12 to 14% in 9MFY15;
the portfolio is now more
granular and healthy;
expect growth to resume
An important focus area for the new management was to capitalize on DCBB’s
niche presence in the SME segment (strong relationships with the trader
community). Initially, the target for SME loans were customers with business
turnover of INR100m-INR1b and lines up to INR100m. However, with increasing
risk in the system, DCBB moved to the relatively lower ticket size of INR30m-
60m.
In absolute terms, SME loans have been flat since FY12. As a percentage of the
overall loan book, SME loans have declined from a peak of 30% in 3QFY12 to
16%, led by higher repayments/non renewal of high ticket SME loans.
DCBB’s current SME loan book is more granular. Small ticket loans, especially
working capital loans, provide DCBB diversification, strong risk-adjusted yields,
adequate collateral, and PSL exposure. With improving macroeconomic
conditions and the bank’s niche expertise, we expect this business to scale up.
The management expects a CAGR of 25%+ over FY14-17.
24 March 2015
7

DCB Bank
Exhibit 9:
Increasing NPAs in SME loans led to risk aversion…
SME GNPA (INRm)
SME GNPA (%)
6.5
7.5
Exhibit 10:
…and decline in proportion of SME loans
SME loans (INRb)
SME loans (% of loans)
28 30 27 26 26
25 23
24 25
22 20
19
16 16 15 14
3.9
2.0
1.1
123
FY10
110
FY11
1.0
141
FY12
576
FY13
873
FY14
927
9MFY15
Source: Company, MOSL
Source: Company, MOSL
Exhibit 11:
DCBB - Deep dive into SME segment
Share in loan book
Key products
Ticket size
Yield
Fees
14% as on 9MFY15
Business banking, working capital financing, and CC/OD
INR30m-60m
Interest rate on SME book is 13-14%
Bank earns 1-1.5% fees on SME products, higher transaction-related fees
from CC/OD, and trade income
•
•
•
Over the years, DCBB has developed a strong credit risk team
Sanctioning authority based on loan application amount
Business development and credit approval/risk team are separate
verticals, with separate management reporting
Primary residential property of the promoter
Linking of cash flows to repayment schedule is important
Dedicated sourcing team works closely with branches for sourcing of
SME loans
Most customers are clients of state-owned banks, unhappy with their
execution capabilities; DCBB consistently provides low TAT and
competitive yields
DCBB extensively relies on in-house servicing and dependence on DSAs
is on the lower side
SMEs with turnover of INR30m-60m
Customers typically unhappy with client servicing of state-owned
banks
NBFC clients in need of larger bouquet of products
Source: MOSL, Company
Assessment capabilities
Post consolidation in SME
portfolio, management is
again looking at growing
this segment aggressively
Security/Collateral
•
•
•
•
Sourcing
•
•
•
•
Customer profile
Exhibit 12:
Advantage DCBB vs NBFCs
Differentiator
Pricing
Products
Cash Management
Details
DCBB’s pricing is at least 200-500bp lower than NBFC peers.
NBFCs offer a bouquet of products including working capital financing, term
loans, non-funded facilities, and salary accounts.
Various cash management products are also a key differentiator vis-à-vis
NBFCs.
Source: MOSL, Company
24 March 2015
8

DCB Bank
Secured mortgages – a key growth driver
Focus on growing secured
loan book and decline in
overall loans (led by
unsecured loans) led to
higher share of mortgages
in overall loans
While DCBB consciously slowed down growth in personal and CV/CE loans, it
enhanced focus on mortgages. Over FY09-9MFY15, its mortgage portfolio grew
at a CAGR of 57% against 20% CAGR in overall loan book. Mortgages now
constitute ~43% of its loan book against just 8% in FY09.
The bank has built its mortgage portfolio, both directly through its own
branches as well as by acquiring portfolios. While growth in the acquired
portfolio has been significant, it has also demonstrated traction in its self-
originated mortgage portfolio.
Loans against property constitute ~65% of its mortgage portfolio, while home
loans constitute ~35%. Risk management practices are in place and the
management is focused on growing this book. We believe DCBB is well placed to
gain market share in this segment.
Careful selection of DSAs and an aged portfolio, which has stood the test of
time, have helped the bank to grow as well as manage asset quality. GNPA and
NNPA have declined from a peak of 11.3% and 4.9% in 2QFY10 to 1.9% and
1.0%, respectively in 9MFY15, and credit cost has declined from a peak of 4.1%
in FY09 to 0.4% in FY14
.
•
•
•
•
43% as on 9MFY15
LAP accounts for ~65% of mortgages segment
Loans against property (LAP)
Housing loans
Exhibit 13:
DCBB: Deep dive into mortgages segment
Share in loan book
Key products
Ticket size
INR3m-6m
•
•
•
•
•
•
•
•
•
•
Yield on LAP book is 13-14%
Home loan (HL) yield is 12-13.5%
Contract maturity of ~12 years
However, LAP is generally repaid in six years
Primary residential property of the promoter
Linking of cash flows to repayment schedule is important
~50% of LAP sourced through client referrals
Balance transfer from NBFCs accounts for significant proportion of
new disbursals
Mostly SME customers residing in primary residential properties
Mainly non-salaried borrowers for housing loans
Source: MOSL, Company
Mortgage segment would
remain a key growth driver
for the bank
Yield
Tenure
Security/Collateral
Sourcing
Customer profile
Exhibit 14:
Significant rise in proportion of mortgage loans…
Mortgage
36.0
25.0
11.9
29.0
38.0
43.0
Exhibit 15:
…has managed asset quality well
Mortgage GNPA (%)
4.1
3.8
8.1
2.7
1.3
0.7
0.9
0.8
0.9
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 9MFY15
Source: Company, MOSL
FY10
FY11
FY12
FY13
FY14
9MFY15
Source: Company, MOSL
24 March 2015
9

DCB Bank
Focusing on working capital loans in corporate segment
Focusing on working capital
financing in corporate
segment
Small balance sheet size restrains DCBB’s growth in the corporate segment. Its
small size affects its ability to absorb asset quality shock.
DCBB has been focusing more on working capital loans in the corporate lending
business. It does not actively participate in project loans as part of consortiums;
its size limits its bargaining power.
The decline in its exposure to top-20 accounts from 21%+ in FY10 to 10.5% in
FY14 reflects its diversification strategy and focus on building a granular book.
Exhibit 17:
GNPA ratio in the corporate portfolio steadily
declining; high write-offs in recent quarters led to sharp drop
7.2
Corporate GNPA (%)
7.7
5.3 5.0
4.2
Exhibit 16:
Working capital financing is a key focus area
for corporate loan growth
34
32 33
26 26
24
Corporate Loans (%)
22 21
23 23 23 24 24
21
23 24
26
24 24 24
5.4 4.9 5.1
5.9
5.3
6.4
3.8 3.6
3.0
3.5 3.1
0.7 0.8
1.3 1.1
Exhibit 18:
Steady decline in exposure to top-20 accounts (%)
Exhibit 19:
Has diversified corporate portfolio (%)
21.4
% of Loans
17.0
14.0
11.8
21.5
FY10
17.0
FY11
14.2
FY12
11.9
FY13
10.5
10.8
FY14
Trade, 10
Others, 35
NBFC, 6
Food
Processing,
6
CRE, 6
% of Exposure
Housing
Loans, 7
Retail
Business
Loans, 22
Agriculture,
8
Source: Company, MOSL
Source: Company, MOSL
Poised to deliver above industry growth, gain market share
We factor in loan CAGR of
~30% over FY14/17 with
market share rising to 0.2%
- significant scope for
increase
Capitalization/ expansion
no longer a constraint like it
was in the previous growth
cycle
With portfolio realignment behind and given DCBB’s strong expertise in the SME
segment, we now expect it to gain market share. Demand for mortgages, loans
against property (LAP) and SME loans remain healthy – a key focus area for
DCBB.
Post consolidation over FY08-10, DCBB almost doubled its balance sheet (~24%
loan CAGR) over FY11-14. It has a market share of just ~15bp in systemic loans.
DCBB is focusing on expanding to tier-II and below cities, where it would be the
number-1 or number-2 private sector bank and have a large catchment to cover
for SME loans.
Given its small size (DCBB’s loan market share is <0.15%) and strong growth
opportunities in its focus areas, we expect DCBB’s overall growth to remain
healthy at ~30%. Capital is unlikely to be a constraint with CET1 of 13.6%.
24 March 2015
10

DCB Bank
Exhibit 20:
Capitalization was a concern in first growth phase;
Exhibit 21:
Asset quality impacted growth; with volatility
now at healthy level (%)
behind, expect sustainable market share gains (%)
Tier I Capital
42
9
53
MS
24 23 25
2
-14 -13
-20
6
YoY Gr.
24 25
30 30
0.3 0.3 0.2 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2
Source: Company, MOSL
Source: Company, MOSL
Exhibit 22:
Phase of loan realignment, during which…
Loan (INR b)
100
75
50
25
0
Loan Gr. (%)
60
35
10
-15
-40
Exhibit 23:
…DCBB shifted focus towards mortgages (YoY
growth; %)
Mortgages
27.9
25.7
41.0
19.5
6.0 -0.1
-10.2 -7.0
-9.3
-3.7
-1.6
-5.0
54.6
SME
43.9 38.9
34.8 30.5 29.0 36.4 42.2
Source: Company, MOSL
Source: Company, MOSL
Exhibit 24:
Loan mix in favor of granular - secured loans (%)
SME/MSME
PL
14 17 24
28 32
26
17
25 20
10 3
2
18 8 25
8 12
Exhibit 25:
GNPA and NNPA declined considerably (%)
12
GNPA
NNPA
Corporate
CV/CE/STVL
AIB
Mortgages
Others
9
6
3
0
25 28 30 27 26 26 25 23 22
24 22 21 23 23 23 24 24 21
12
17 9 10 15 13 11 10 12
2
2 2
1 1 0.5 2 2 2
30 35 35 29 33 34 36 36 40
20 19 16
23 24 26
9 12 14
2 2 2
41 39 38
16 15
24 24
14 13
2 2
14
24
13
2
40 42 43
Source: Company, MOSL
Source: Company, MOSL
24 March 2015
11

DCB Bank
Exhibit 27:
…expect gradual growth increase in these
Exhibit 26:
Sharp reduction in risky retail assets… (% of loans) segments as CV picks up
CV/CE
14.4
17.8
17.6
10.1
FY07
FY08
FY09
(30)
2.0
0.2
FY11
2.0
0.1
FY12
2.0
FY13
2.0
2.0
FY08
FY09
FY10
FY11
FY12
FY13
FY14 9MFY15
(58)
15
22
24
PL
101
YoY Growth (%)
5.3
29
19.0
8.2
2.8
FY10
(75)
FY14 9MFY15
Source: Company, MOSL
Source: Company, MOSL
Increased reliance on retail deposits to fund growth
Proportion of bulk deposits
is sub-20%, one of the
lowest among peers
Increase in branch network
to aid traction in retail
deposits growth
With the intention to de-risk its balance sheet, DCBB shifted its focus to CASA
and retail deposits during the consolidation phase. This led to the proportion of
retail deposits + CASA deposits increasing from 52% in FY08 to 78% in FY13,
lending access to a stable funding source. The proportion of wholesale deposits
is just 18%, at least 10% lower than most of its larger peers.
DCBB’s branch network is primarily concentrated in the metros, within which
the top-4 cities contribute significant proportion of business.
Further, expansion would help DCBB to accelerate CASA growth and maintain
healthy momentum in retail term deposits.
Focus was not only on increasing granularity, but also on improving asset-
liability management. In some buckets, DCBB’s deposit rates remain 25-50bp
higher than peers
.
Exhibit 29:
Healthy growth in retail term deposits (YoY
growth; %)
40
30
20
10
0
CASA Gr.
Retail TD Gr.
Exhibit 28:
Wholesale deposits remain lower than peers (%)
Source: Company, MOSL
Source: Company, MOSL
24 March 2015
12

DCB Bank
Increased footprint to help augment CASA
Stability/improvement in
CASA ratio, which has
declined significantly in the
last few years, would help
contain cost of funds and
favorably impact NIM
With higher loan growth (CAGR of 24% over FY11-14) and moderation in CASA
growth (CAGR of 10% over FY11-14), CASA ratio declined from 35% to 25%.
Besides economic factors, the reasons for moderation in CASA growth are
stagnant branch network (94 branches at the end of FY13; added 14 branches
over FY08-13), increased competition following deregulation of SA rates (DCBB
offers 4%), and decline in systematic CA ratio.
DCBB has resumed its expansion strategy and added 36 branches in FY14. This
should help improve customer acquisition and CASA growth, and contain the
sharp fall in CASA ratio. However, expected strong loan growth and heightened
competition would continue to drag CASA ratio.
Exhibit 30:
DCBB: Main criteria and process of opening a branch
Step
Action
1
Select a village with 5,000 middle income households
2
Penetration of private banks should be low
Town should be on the periphery of a large town or town is expected to
3
become an industrial town/smart city in future
4
5
Credit repayment culture with the state/district is critical
Town should be in the vicinity of an existing cluster
Source: MOSL, Company
Exhibit 31:
CASA ratio has moderated with acceleration
in growth (%)
Exhibit 32:
However, proportion of retail term deposits
rising (%)
Source: Company, MOSL
Source: Company, MOSL
Greater focus on asset quality; credit cost to remain low
Comfort on asset quality,
led by improved risk
management and higher
proportion of secured
loans; credit cost is
expected to be at a low of
~40bp
Asset-side restructuring also led to sharp improvement in asset quality, even
during the most trying times for the Indian economy. GNPA and NNPA fell from
8.7% and 3.1%, respectively in FY10 to 1.7% and 0.9% in FY14 (1.9% and 1.1% in
9MFY15). Standard restructured loan portfolio remains low at ~1% of loans.
With systems and processes in place, strong backend technology, and the bank’s
prudent approach, we expect asset quality to remain healthy (NNPA below
1.5%) and credit cost to be contained (0.4% over FY14-17).
PCR (including technical write-offs) remains strong at ~77%, the best in the
sector, which provides comfort.
24 March 2015
13

DCB Bank
Exhibit 33:
DCBB: Strong collection mechanism to support asset quality performance
Overdue for
Action
Before due date
Phone call from the centralized call center
SMS notification
0-30 days
30-60 days
60-90 days
90+ days
Based on payment default (bounce) data, follow up through call
center begins (soft calling)
Follow-up by branch staff
Rigorous collection efforts through cluster-based collection team
(~50% of overdues generally get cleared through this)
Account becomes NPA; legal proceedings including SARFASI initiated
Source: MOSL, Company
Exhibit 34:
Improved risk management practices, prudency
and higher proportion of secured loans to help sustain strong
Exhibit 35:
NNPA near historical lows; PCR (including
asset quality performance
technical write-offs) at 77% in 9MFY15
9.0
7.2
5.4
3.6
1.8
0.0
27
45
54
Credit Cost (%)
Slippage Ratio (%)
73
GNPA
NNPA
84 87 77
47 48 46 47
PCR (%)
70
58 56
66
Source: Company, MOSL
Source: Company, MOSL
24 March 2015
14

DCB Bank
How DCB plans to improve profitability?
Opex ratios to soften, led by innovative cluster-based model | Balanced scorecard to aid total income
Cost savings through Cluster
based business model
Cluster based audit and training team saves
frequent travelling costs
Localized loan sanctioning authority have
better understanding of the polito-economic
situation of the area
Coordinated recovery and collection efforts
State
Maharashtra
Mumbai & suburbs
Gujarat
Andhra Pradesh
Odisha
Madhya Pradesh
Others
Total
Branches
35
27
23
15
14
13
45
145
% share
24
19
16
10
10
9
31
100
Sample cluster
Cluster is a network of nearby branches
Diagrams for the purpose of representation only
DCB: Balance scorecard aimed at improving productivity matrix
Individual targets
(Disbursements/Fees/
Opex) for branches will
go a long way in
improving productivity
matrix of DCB Bank
FINANCIAL TARGETS
Total income, incl. fees
Cost to income ratio
Slippage to NPA
CUSTOMERS
Build relations
Target segmental market share
Referrals
INCLUSIVE
APPROACH TO
GROWTH
INTERNAL BUSINESS
Innovative products & services
Best-in-class leadership
Operation excellence
LEARNING & GROWTH
Core competencies
Training
Job rotation
Diagrams for the purpose of representation only
24 March 2015
15

DCB Bank
Core earnings to remain healthy
Capacity additions to aid growth | Productivity gains to drive C/I ratio lower
DCBB has again begun investing in branches and people. Incremental branches are
coming up in tier-II to tier-VI centers, where operating costs are lower and breakeven
time is less than in tier-I centers. We believe productivity gains would more than
compensate for the increase in costs.
NIMs are expected to be stable, as (a) DCBB is poised to benefit from declining
systemic interest rate (higher proportion of liabilities maturing within a year
compared to loans), (b) augmentation of retail deposits to help contain cost of funds,
and (c) growth in high yielding loans remains strong. NII CAGR of ~27% and operating
leverage would drive core PPP CAGR of 35%+.
Prudent and secured lending would keep credit cost low at 0.5% (similar to FY14
levels), resulting in PBT CAGR of 35% over FY14-17. Earnings CAGR would be lower at
~20% due to expected increase in effective tax rate.
Cost-to-average-assets fell
from 3.6% in FY09 to 2.6%
in FY14 – focus on
improving productivity
Resumption of investment into creating long-term business model
Further improvement in
productivity to bring down
cost-to-income ratio to 56%
and cost-to-average-assets
to 2.4%
DCBB’s high cost structure coupled with lower productivity impacted its ability
to deliver higher return ratios. In FY10, its cost-to-income ratio was 90%+ and
opex-to-average-assets was significantly higher than peers at 2.7% (2.2% for
private bank universe).
During the consolidation phase, DCBB focused on improving productivity. It
opened only 15 branches over FY09-13. As of FY09, employees per branch were
significantly lower than peer banks. To improve productivity, it moved a large
proportion of the employees to client facing or revenue generating activities.
DCBB has begun making fresh investments in network expansion. It has added
36 branches in FY14 and 15 branches in 9MFY15 (versus 15 branches over FY09-
13). The bank has directed a large part of its fresh investments outside tier-I
centers, where operating costs are lower and breakeven can be achieved
quicker. DCBB is expanding into locations where it would be either the first or
the second private sector bank, enabling it to achieve higher retail and SME
business growth.
DCBB’s operating ratios are below industry average and it is on track to improve
them. Enhanced efficiency should more than compensate for the cost of
expansion. We expect opex-to-average-assets to decline to 2.4% and cost-to-
income to decline to 56% by FY17.
Exhibit 36:
DCBB has started expanding its network after four
Exhibit 37:
Focus continues to be on improving productivity
years (branches)
(INR m)
145
130
80 80 80 80 85
94
Loans per branch
CASA per branch
Deposits per branch
SA per branch
72
62 67 67 67
Source: Company, MOSL
Source: Company, MOSL
24 March 2015
16

DCB Bank
Exhibit 38:
Focus on cutting the flab (%)
CAGR over FY09/14
4.9
1.7
3.6
4.1
Exhibit 39:
Significant saving on overhead expenses (%)
Employee exp
2.2 2.3 2.3 2.2
1.5
2.0
Other exp
1.9
1.6
1.5
1.4 1.3
1.3
Rent
Printing &
Stationery
-6.3
Adv &
Publicity
1.0
Dep
Others
1.1 1.1
1.5 1.5 1.5 1.5 1.6 1.5
1.4 1.3
1.2
Source: Company, MOSL
Source: Company, MOSL
Exhibit 40:
Other opex per branch higher than old generation
banks though lower than IIB and YES (INR m)
Exhibit 41:
Cost per employee among the lowest (INR m)
DCB
32
24
16
8
0
FY09
FY10
FY11
FY12
FY13
FY14
IIB
VYSB
FB
YES
1.2
1.0
0.8
0.6
0.4
FY09
FY10
FY11
FY12
FY13
FY14
DCB
IIB
VYSB
FB
YES
Source: MOSL, Company
Source: MOSL, Company
Exhibit 42:
Loans per branch steadily rising (INR m)
DCB
2000
1500
1000
500
0
FY09
FY10
FY11
FY12
FY13
FY14
IIB
VYSB
FB
YES
Exhibit 43:
SA per branch needs improvement (INR m)
DCB
200
150
100
50
0
FY09
FY10
FY11
FY12
FY13
FY14
IIB
VYSB
FB
YES
Source: Company, MOSL
Source: Company, MOSL
24 March 2015
17

DCB Bank
Exhibit 44:
Fee income generation significantly lower
(INR m per branch)
DCB
40
30
20
10
0
5
-20
IIB
VYSB
FB
YES
55
30
Exhibit 45:
Profitability per branch rising, led by operating
leverage and better asset quality performance (INR m)
DCB
IIB
VYSB
FB
YES
Source: MOSL, Company
Source: MOSL, Company
Exhibit 46:
Branch mix: focus to increase on Tier 2-6 centers…
Exhibit 47:
High presence in central and western India
Others
31%
Semi-urban/
Rural
45%
Metro/Urban
55%
Madhya
Pradesh
9%
Odisha
10%
Andhra
Pradesh
10%
Gujarat
16%
Maharashtra
24%
Source: MOSL Company
Source: MOSL Company
NIM expanded over FY10-14, helped by asset quality improvement
Expect DCBB to report
sharp improvement in NIM
from 2.8% in FY10 to 3.6%,
partially helped by capital
infusion in FY12
NIM remained steady at 2.8-2.9% over FY08-10, despite (1) capital raised in
2HFY07, (2) 12% improvement in CD ratio, and (3) 10% increase in CASA ratio.
Stress increased sharply, as GNPA worsened from 1.5% to 11%+ in 3QFY10
(sharp rise in interest income reversals), and winding up of high yielding
unsecured retail assets (personal and CV/CE loans) impacted margins.
However, the new management’s initiatives on both the assets and liabilities
side helped DCBB to report sharp improvement in NIM from 2.8% in FY10 to
3.6%. Margin expansion was partially helped by capital raised in FY12.
Improvement in margins is commendable considering that the contribution of
high yielding personal and CV/CE loans has declined sharply.
Exhibit 48:
NIM has improved significantly compared to the previous cycle (%)
Phase of asset qualit pain resulted into weak
NIMs which negated benefit of capital raised, CD
ratio and liability mix improvment
NIMs sustained led by better asset quality
performance even as unsecured loan proportion
came down sharply
3.7 3.6 3.6 3.7 3.7 3.7
2.9 2.9 2.9
2.4
2.6
3.1 3.0
2.9 2.8
2.5 2.6
3.5 3.4
3.3 3.1 3.1 3.1 3.2 3.1 3.4 3.4
3.2 3.4
3.1 3.2
Source: Company, MOSL
24 March 2015
18

DCB Bank
To benefit from declining interest rates
54% of DCBB’s liabilities are
likely to be re-priced within
a year as compared to 27%
of assets; it stands to
benefit in a falling interest
rate environment
The bank’s asset-liability profile is such that it stands to benefit from fall in
systemic interest rate. As at the end of FY14, 54% of its liabilities were expected
to re-price within a year as compared to 27% of its assets. In a falling interest
rate environment, liabilities would re-price faster and benefit margins.
Further, expected rise in unsecured retail loans and increase in the share of SME
loans would help the bank to improve yields and maintain margins.
While we expect stable loan spreads over FY14-17, decline in investment spread
and increase in leverage will lead some pressure on margins.
Exhibit 50:
Cost of funds highly correlated with 12-month CD
rates (%)
11.0
9.0
7.0
5.0
2
3.0
Cost of funds
12M CD Rates
Exhibit 49:
Asset-liability profile skewed towards short-term
funding (years)
Deposits
55
45
27 28
15
19
43
35
40 38
Borrowings
Advances
Investments
53
<1 Year
1 to 3 yrs
> 3 yrs
Source: Company, MOSL
Source: Company, MOSL
Conservatively we factor in 20bp moderation in margins
Over the medium term (a) DCBB is poised to benefit from declining systemic
interest rate (higher proportion of liabilities maturing within a year compared to
loans), (b) augmentation of retail deposits to help contain cost of funds, and (c)
growth in high yielding loans remains strong.
Considering strong growth and increasing competition in LAP and SME business
conservatively we have factored in 20bp decline in NIMs over FY15-17.
However, there are levers (as discussed above) that could help NIM to improve,
if they play out well.
Fee income drag, now behind
Expect fee income to
average assets to stabilize
at 0.8% post a 50bp fall
over FY08-14
One of the drags on RoA was the sharp drop in fee income to average assets
from 1.9-2% during FY07-08 to 90bp in FY14. Absence of high asset related fees,
lower share of unsecured retail loans, and moderate growth in project lending
had impacted growth.
Levers available for fee income are limited. However, increased focus on fee
income, launch of new products, and higher cross selling would help fee income
to grow in line with balance sheet growth. The sharp drag is behind, we believe
.
We factor fee income CAGR of ~23% over FY14-17. Fee income to average assets
should sustain at current levels of 0.8-0.9%.
24 March 2015
19

DCB Bank
Exhibit 51:
Fee income stabilizing; expect growth to
resume (%)
Fee income Gr. (LHS)
Loan Gr. (RHS)
Exhibit 52:
Share of fees to stabilize over FY14-17 (%)
60
0.9
30
0
-30
0.7 0.6
0.7
1.3 1.3
1.1 1.1
1.0 1.0
0.9 0.8 0.8 0.9 0.8
90
60
30
0
-30
Winding of unsecured
retail loan where
processing charges
would have been high
Source: Company, MOSL
Source: Company, MOSL
Core PPP growth of 35%+; Higher tax rate to drag down PAT growth
Core PPP and core PBT to
grow at 35%+ CAGR over
FY14-17
We expect core PPP to grow at a CAGR of 37% over FY14-17, led by NIM
expansion, higher loan growth, and benefit of operating leverage continuing.
Asset quality should remain healthy, keeping credit cost low. We expect 35%
CAGR in PBT over FY14-17.
As the bank has become profitable and the benefit of accumulated losses is
behind, effective tax rate would increase from 2HFY15 and impact earnings
growth. We factor tax rate of 18% for FY15, 28% for FY16, and 30% for FY17. We
expect earnings CAGR of 20% over FY14-17. RoA would be 1.2% and RoE to
improve to ~14% by FY17 (despite full tax rate and capital raising)
Exhibit 54:
Core PPP growth to sustain at 35%
(YoY growth, %)
38 22
-48
-55
94
47 48 55 27 32
24
Exhibit 53:
Core income growth to improve (YoY growth, %)
59
26
3
-12
41
9
-26
24
18
22
27
35
22 23
-52 -27
-17
-277
-349
Exhibit 55:
Core PBT growth to accelerate as credit cost
remains contained (INR m)
Exhibit 56:
Return ratios to improve (%)
RoE
RoA
3
-4 -18 -75 -55
8
-15 -15
4
8
12 15 13 13 14
2
0
-2
-3
-5
Source: MOSL, Company
Source: MOSL, Company
24 March 2015
20

DCB Bank
Exhibit 57:
Dupont – Steady improvement in core profitability; however, full tax rate to keep return ratios stable
% of average assets
Net interest Income
Fee income
Fees to core income (%)
Core Income
Operating expenses
Cost to core income (%)
Employees
Emp cost to Opex (%)
Others
Core PPP
Trading and others
Operating profits
Provisions
NPA
PBT
Tax
Tax rate (%)
ROAA (%)
Leverage (x)
ROAE (%)
FY08
2.71
1.32
32.7
4.02
3.71
92.1
1.51
40.8
2.19
0.32
1.39
1.71
1.14
1.09
0.56
-0.03
-6.1
0.60
13.6
8.13
FY09
2.92
1.14
28.0
4.05
3.58
88.3
1.54
43.1
2.03
0.47
0.64
1.11
2.39
2.17
-1.28
0.02
-1.7
-1.30
11.6
-15.13
FY10
2.35
1.10
31.9
3.45
3.32
96.4
1.46
43.8
1.87
0.12
0.67
0.80
2.00
1.88
-1.20
0.09
-7.8
-1.30
11.2
-14.54
FY11
2.79
0.98
25.9
3.77
3.18
84.3
1.57
49.4
1.61
0.59
0.68
1.27
0.84
0.69
0.43
0.12
26.7
0.32
12.3
3.89
FY12
2.83
0.98
25.7
3.81
3.04
79.8
1.55
51.0
1.49
0.77
0.27
1.04
0.36
0.30
0.68
0.00
0.1
0.68
11.8
8.06
FY13
2.85
0.90
23.9
3.75
2.76
73.7
1.38
50.1
1.38
0.99
0.28
1.26
0.24
0.18
1.02
0.00
0.0
1.02
11.4
11.66
FY14
3.04
0.84
21.5
3.88
2.64
68.0
1.30
49.2
1.34
1.24
0.31
1.55
0.30
0.30
1.25
0.00
0.0
1.25
11.8
14.70
FY15E
FY16E
FY17E
3.52
3.45
3.38
0.85
0.85
0.85
19.35
19.84
20.10
4.37
4.31
4.23
2.73
2.62
2.46
62.5
61.0
58.3
1.36
1.32
1.26
49.7
50.2
51.0
1.37
1.31
1.21
1.64
1.68
1.76
0.32
0.33
0.32
1.96
2.01
2.08
0.52
0.41
0.39
0.45
0.41
0.39
1.44
1.60
1.69
0.26
0.45
0.51
18.0
28.0
30.0
1.18
1.15
1.19
10.84
10.86
11.94
12.79
12.53
14.15
Source: Company, MOSL
24 March 2015
21

DCB Bank
Initiating coverage with a target price of INR155
Productivity gains, improvement in return ratios to drive re-rating
Consistent improvement in
core operating parameters,
coupled with strong growth
and asset quality, would
continue the re-rating
process
Since the management change, DCBB’s core operating parameters have improved
consistently. Pre-tax RoA has increased by ~250bp.
We expect productivity gains to continue accruing, led by higher proportion of
branches in urban/metropolitan regions, investment in technology, increasing
footprint in semi-urban and rural areas, and rising economic growth.
Consistent improvement in core operating parameters, coupled with strong growth
and asset quality, would lead to continued re-rating. Buy with a target price of INR155
(46% upside).
Exhibit 59:
One-year forward P/B
8 Yrs Avg(x)
P/B (x)
6.0
4.5
17.6
3.0
15.0
1.5
0.0
Negative
Earnings
Cycle
Exhibit 58:
One-year forward P/E
60
45
30
15
0
Negative
Earnings
Cycle
15.6
P/E (x)
5 Yrs Avg(x)
5 Yrs Avg(x)
8 Yrs Avg(x)
1.8
1.3
Source: Company, MOSL
Source: Company, MOSL
Exhibit 60:
Assets per branch (INR m)
2,426
1,862
1,192 1,323
1,021 1,035
18
99
145 173 291
Exhibit 61:
Opex per branch (INR m)
9.8
5.9
7.0
7.9
5.3
3.7
0.6
0.7
0.8
1.3
Source: Company, MOSL
Source: Company, MOSL
Exhibit 62:
Loans per branch (INR m)
1,480
Exhibit 63:
CASA per branch (INR m)
425
363
655 663
745
141
19
24
57
146
194
188
11
46
76
80
180
354 385
Source: MOSL, Company
Source: MOSL, Company
24 March 2015
22

DCB Bank
Comparison with peer banks (when they had ~150 branches) – DCBB undervalued on most parameters
Exhibit 64:
Market capitalization per branch (INR m)
577
427
281
209
120
307
0.09
0.21
0.16
0.24
0.27
Exhibit 65:
Market capitalization to assets (x)
0.36
IIB
DCBB
AXSB
ICICIBC
HDFCB
YES
IIB
ICICIBC
DCBB
YES
AXSB
HDFCB
Source: Company, MOSL
Source: Company, MOSL
Exhibit 66:
Market capitalization to deposits (x)
0.48
0.32
0.26
0.20
0.11
0.32
Exhibit 67:
Market capitalization to CASA (x)
3.07
1.93
1.08
1.18
0.72
0.85
IIB
ICICIBC
DCBB
AXSB
YES
HDFCB
ICICIBC
IIB
DCBB
HDFCB
AXSB
YES
Source: MOSL, Company
Source: MOSL, Company
Exhibit 68:
Market capitalization to loans (x)
1.21
Exhibit 69:
Market capitalization to total income (x)
38
33
21
21
0.73
0.32
0.16
0.39
0.46
17
18
IIB
DCBB
YES
ICICIBC
AXSB
HDFCB
IIB
DCBB
ICICIBC
YES
HDFCB
AXSB
Source: Company, MOSL
Source: Company, MOSL
24 March 2015
23

DCB Bank
Financials and valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest Income
Change (%)
Non Interest Income
Net Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Core PPP*
Change (%)
*Core PPP is (NII+Fee income-Opex)
Balance Sheet
Y/E March
Equity Share Capital
Reserves & Surplus
Net Worth
Deposits
Change (%)
of which CASA Dep
Change (%)
Borrowings
Other Liabilities & Prov.
Total Liabilities
Current Assets
Investments
Change (%)
Loans
Change (%)
Fixed Assets
Other Assets
Total Assets
ASSET QUALITY
GNPA (INR M)
NNPA (INR M)
GNPA Ratio
NNPA Ratio
PCR (Excl Tech. write off)
E: MOSt Estimates
2010
4,594
3,174
1,420
-28.0
1,071
2,491
-21.5
2,008
483
-35.9
1,210
-727
57
-7.8
-785
-10.9
307
-55.2
2011
5,363
3,471
1,891
33.2
1,121
3,012
20.9
2,152
861
78.3
568
293
78
26.7
214
-127.3
597
94.3
2012
7,170
4,893
2,277
20.4
1,004
3,281
8.9
2,443
838
-2.6
287
551
0
0.1
551
157.0
739
23.7
2013
9,161
6,317
2,844
24.9
1,170
4,014
22.3
2,753
1,261
50.5
241
1,021
0
0.0
1,021
85.4
1,086
47.1
2014
11,283
7,599
3,684
29.5
1,387
5,071
26.3
3,191
1,880
49.0
366
1,514
0
0.0
1,514
48.3
1,609
48.1
2015E
14,260
9,206
5,055
37.2
1,673
6,728
32.7
3,916
2,812
49.6
748
2,064
371
18.0
1,692
11.8
2,497
55.2
(INR Million)
2016E
2017E
17,305
21,469
11,178
13,936
6,127
7,534
21.2
23.0
2,103
2,609
8,229
10,143
22.3
23.2
4,660
5,499
3,569
4,643
26.9
30.1
724
864
2,845
3,780
797
1,134
28.0
30.0
2,049
2,646
21.1
29.2
3,169
4,168
26.9
31.5
2010
2,000
3,990
5,990
47,873
3.0
16,928
17.5
5,056
2,447
61,367
3,323
20,179
24.4
34,597
5.7
1,358
1,909
61,367
2011
2,002
4,185
6,187
56,102
17.2
19,755
16.7
8,635
3,205
74,129
4,871
22,950
13.7
42,817
23.8
1,275
2,215
74,129
2012
2,407
6,179
8,585
63,356
12.9
20,347
3.0
11,263
3,565
86,768
4,566
25,178
9.7
52,844
23.4
1,846
2,335
86,768
2013
2,501
7,499
10,000
83,638
32.0
22,716
11.6
15,286
3,863
112,788
8,833
33,587
33.4
65,861
24.6
2,394
2,114
112,788
2014
2,503
9,007
11,510
103,252
23.5
25,813
13.6
8,631
5,839
129,231
6,896
36,342
8.2
81,402
23.6
2,386
2,205
129,231
2015E
2,808
12,734
15,542
126,999
23.0
30,496
18.1
8,110
7,006
157,658
8,086
40,703
12.0
104,194
28.0
2,469
2,205
157,658
(INR Million)
2016E
2017E
2,808
2,808
14,623
17,212
17,430
20,019
161,924
207,263
27.5
28.0
36,043
42,618
18.2
18.2
10,007
12,316
8,057
9,266
197,418
248,864
10,070
13,395
46,809
53,830
15.0
15.0
135,453
176,089
30.0
30.0
2,551
2,634
2,536
2,916
197,418
248,864
3,192
1,076
8.7
3.1
66.3
2,636
412
5.9
1.0
84.4
2,418
302
4.4
0.6
87.5
2,150
491
3.2
0.7
77.1
1,385
740
1.7
0.9
46.5
1,952
1,021
1.9
1.0
47.7
2,555
1,375
1.9
1.0
46.2
3,263
1,732
1.8
1.0
46.9
24 March 2015
24

DCB Bank
Financials and valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield-Earning Assets
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost-Int. Bear. Liabilities
Avg. Cost of Deposits
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
Int. Expense/Int.Income
Fee Income/Net Income
Non Int. Inc./Net Income
Efficiency Ratios (%)
Cost/Income*
Empl. Cost/Op. Exps.
Busi. per Empl. (INR m)
NP per Empl. (INR lac)
* ex treasury
Asset-Liability Profile (%)
Loans/Deposit Ratio
CASA Ratio
Investment/Deposit Ratio
G-Sec/Investment Ratio
CAR
Tier 1
Valuations
Book Value (INR)
Change (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Change (%)
Price-Earnings (x)
Dividend Per Share (INR)
Dividend Yield (%)
E: MOSt Estimates
2010
8.5
10.7
5.2
6.1
6.0
2.4
2.6
2011
8.8
10.4
6.1
5.9
5.6
2.9
3.1
2012
9.9
11.2
7.2
7.0
6.8
2.9
3.1
2013
10.0
12.0
6.7
7.3
7.3
2.7
3.1
2014
10.1
11.8
7.0
7.2
7.1
2.9
3.3
2015E
10.7
11.8
7.3
7.5
7.0
3.2
3.8
2016E
10.4
11.7
7.1
7.3
6.8
3.1
3.7
2017E
10.2
11.4
6.8
7.1
6.7
3.1
3.6
-14.5
-1.3
69.1
93.0
43.0
3.9
0.3
64.7
91.3
37.2
8.1
0.7
68.2
97.0
30.6
11.7
1.0
69.0
95.6
29.2
14.7
1.3
67.3
94.7
27.3
12.8
1.2
64.6
95.3
24.9
12.5
1.2
64.6
95.1
25.5
14.2
1.2
64.9
95.3
25.7
86.8
43.8
67.6
-4.9
78.0
49.4
55.1
1.0
77.2
51.0
68.3
2.7
71.0
50.1
78.1
4.6
65.8
49.2
79.4
5.6
60.7
49.7
90.7
5.9
59.0
50.2
107.3
6.8
56.3
51.0
129.4
8.4
72.3
35.4
33.0
78.2
14.9
11.9
76.3
35.2
31.2
76.3
13.3
11.1
83.4
32.1
31.9
80.3
15.4
13.8
78.7
27.2
29.1
72.4
13.6
12.6
78.8
25.0
27.2
77.2
13.7
12.9
82.0
24.0
27.0
84.2
15.3
14.5
83.7
22.3
25.0
86.5
13.3
13.0
85.0
20.6
24.0
92.4
12.0
11.7
27.1
-12.3
3.9
23.4
4.5
-3.9
-10.9
-27.0
0.0
0.0
28.2
3.8
3.8
26.7
4.0
1.1
-127.3
99.0
0.0
0.0
33.4
18.7
3.2
32.6
3.3
2.3
157.0
46.3
0.0
0.0
38.5
15.1
2.8
37.1
2.9
4.1
85.4
26.0
0.0
0.0
45.1
17.3
2.3
43.0
2.5
6.0
48.3
17.5
0.0
0.0
55.2
22.3
1.9
52.6
2.0
6.0
11.8
17.6
0.0
0.0
62.1
12.6
1.7
58.7
1.8
7.3
21.1
14.5
0.0
0.0
71.3
14.9
1.5
67.0
1.6
9.4
29.2
11.2
0.0
0.0
24 March 2015
25

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