Rising star

DCB Bank is poised to take a big leap on the back of its expansion plans.

- Jash Kriplani

The Oracle of Omaha, Warren Buffett, once said, “Bank-ing is a very good business, unless you don’t do anything dumb.” By the looks of it, Mumbai-headquartered DCB Bank has not done anything dumb for quite a while now. The numbers tell us the story. Over the last five years, the bank’s interest income has grown at 24%, while its profit has grown 37% every year. Its net interest margin (NIM) at 3.9% stands higher than the industry average of 3.3% and gross NPA and net NPA of 1.6% and 0.7% indicates that the bank has a tight leash on its asset quality.

And what’s more, at the end of FY16, the bank’s management set itself a target of doubling its loan book in the next three years through rapid branch expansion and cross-selling of its products. While things are looking pretty for the bank, it has survived through some really rough times to get here.

BACK FROM THE BRINK In 2008, the bank was in so much trouble that the current CEO, Murali Natrajan did not want to associate with it when headhunters initially approached him. “When I was approached for the job, I didn’t even want to consider the idea,” he recalls.

He was not wrong in being wary. The asset quality was in shambles due to the aggressive bumping up of its loan book through personal loans prior to FY08. At the end of FY08, the gross NPAs stood at 1.5% and net NPAs stood at 0.7%. A year later when the financial crisis imploded, gross NPAs had climbed to 8.8% and net NPAs were at 3.9% by the end of FY09.