Development Credit Bank (DCB) - ZENMoney

Company Profile: Development Credit Bank (DCB) is one of the smallest scheduled commercial banks in India with around 94 branches (FY13). It is promoted by Aga Khan Fund for Economic Development (AKFED), an international development enterprise, which has a 19.2% stake in it. The bank operates under following segments: Retail, Micro-SMEs, SMEs, Mid-Corporate, Agriculture, Commodities, Government, Public Sector, Indian Banks, Cooperative Banks and Non Banking Finance Companies (NBFC). The largest business unit for DCB is it's retail banking business, which offers a wide range of financial products and services to retail customers, including MSMEs. The company mostly has presence in Maharashtra, Gujarat and Andhra Pradesh, which accounts for about 60-70% of it's branches.

Strengths:

- The bank is backed by a strong promoter group which can provide it with funding needs whenever needed.

- The bank focuses on achieving a balance between Micro SME, SME, Retail Mortgages, Mid-Corporate and Agri /Inclusive Banking.

- The bank takes a conservative approach toward lending and hence has control over its NPAs.

Concerns:

- The bank's exposure to small and medium enterprises puts it at a higher credit risk.

- The current weak macro economic situation may hurt the corporate loan segment.

Outlook: DCB's restrustructuring efforts since the last couple of years is yielding results as reflected in better NIMs, improved asset quality and decent CASA ratio. Going forward, the bank expects healthy growth from the micro SME, SME, Retail Mortgages, Mid Corporate and Agri & Inclusive Banking Segments. Further, it also wants to focus on treasury and liquidity management for its future growth. DCB' does not have any large corporate accounts and hence the bank's portfolio of restructured loans has been quite small. The company is also trying to strengthen it's balance sheet and concentrate on Tier 2 to Tier 6 cities for it's future growth.

Source : Equity Bulls

Keywords