Development Credit Bank Ltd. Annual Results –FY 2008-09 · 2015. 11. 18. · • 80 branches in...

© Copyright IBM Corporation 2008Private & Confidential

Marine Plaza, Mumbai

June 24, 2009

Development Credit Bank Ltd.

Annual Results – FY 2008-09

© Copyright IBM Corporation 2008Private & Confidential

Safe Harbor

Neither the information nor any opinions expressed in this presentation

constitutes an offer, or invitation to make an offer, or to buy any securities

issued by the Bank. This presentation contains predictions, estimates or other

information regarding the Bank’s operations which are forward looking in

nature. While these forward looking statements represent our best current

judgment on what the future holds, they are subject to risks and uncertainties

that could cause actual results to differ materially and may involve risk and

uncertainty. This presentation is prepared for general purposes only and does

not have any regard to the specific investment objectives, financial situation

and particular needs of any specific person. No liability for any loss will arise

with the Bank as a result of the action taken on the basis of information

contained therein.

For a discussion of the risks and uncertainties that may cause results to differ,

you should review the Bank’s filings with Stock Exchanges, including annual

report and qualifying disclosures.

© Copyright IBM Corporation 2008Private & Confidential 3

DCB strengths

• In India since 1930, deep roots

• Dependable customer base in Retail, SME and mid

Corporate

• Ismaili community loyalty

• 80 branches in 28 cities. (Favors SME)

• Comprehensive product range

• Strong management team and board

• Modern systems and infrastructure to support growth

(Finnacle, Finone, CMS, Internet and Mobile)

• Strong promoter AKFED (26 % stake) present in 16

countries employing over 30,000 people


As on 31-Mar-2008As on 31-Mar-2009

CategorySr.

34.561,07,60359.111,54,457SUB TOTAL II

20.891,06,11437.881,52,667OTHER RESIDENT

SHAREHOLDERS

b

% of Paid-up

Capital

No. of

Shareholders

% of Paid-up

Capital

No. of

Shareholders

100.001,08,229100.001,55,216GRAND TOTAL (I+II)

13.671,48921.231,790DOMESTIC COMPANIESa

DOMESTIC HOLDINGII

65.4462640.89759SUB TOTAL I

1.075861.14739NON RESIDENT INDIANSd

9.2339.003FOREIGN COMPANIESc

30.03355.6515FOREIGN INST. INVESTORSb

25.10225.102AKFEDa

FOREIGN HOLDINGI

Share Holding Patterns


Net Interest Income (NII)

120

174

197

0

20

40

60

80

100

120

140

160

180

200

220

FY 07 FY 08 FY 09

13%

Y-o-Y

45%

Y-o-Y

Rs. in crores


Net Interest Margin (%)

2.72.8 2.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

%

FY 07 FY 08 FY 09


Yield on Total Advances (%)

10.1%

13.3% 13.2%

0%

4%

8%

12%

16%

FY 07 FY 08 FY 09

Yield on Total Advances


45. 210.715.623.23.23.8Commission on Life Insurance

(69.6)7.32.2(94.3)2.30.1Commission from Mutual Fund

(30.8)173.6120.1(58.1)59.424.9Total

(66.8)42.814.2(83.4)29.74.8Misc Income (incl. net lease income)

(12.2)67.359.0(7.2)13.213.1Commission, fees & brokerage

(89.2)18.12.0(8.1)1.90.2Profit on sale of investments/IPO

30.017.222.4259.40.82.9Profit on exchange transactions

(53.9)10.24.7-8.3(0.0)Profit on sale of property

GrowthFY 08FY 09GrowthQ4

FY 08

Q4

FY 09

Non Interest Income

Rs. in crores


Deposit Composition

30.9%24.2%CASA Ratio

67.9%51.9%Retail Deposit / Total Deposit

4,6476,075Total Deposits

399519Others

2,8104,084Term Deposit

1.4381,473CASA

31-Mar-0931-Mar-08

Rs. in crores


CASA

4,415

1,252

6,075

1,473

4,647

1,438

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

FY 07 FY 08 FY 09

Total Deposits CASA

28% 24% 31%

Rs. in crores


Balance Sheet Size

5,262

7,582

5,943

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

FY 07 FY 08 FY 09

Rs. in crores


as on Mar. 31, 2008 as on Mar. 31, 2009

MFRB

2%

Others

3%

SME

4%

HL / HE

4%

LATD

2%

Corporate

46%

Agri Comm.

5%

CE

5%

CV

11%

PL

18%

MFRB

8%

Others

5%

SME

14%

HL / HE

6%

LATD

4%Corporate

28%

Agri Comm.

7%CE

5%

CV

13%

PL

10%

Mar 31, 2009Mar. 31, 2008

22%37%Retail Unsecured / Total Retail

47%46%Retail Advances / Total Advances

Net Advances


Non Performing Assets (%)

5.1

1.6 1.5

0.7

8.8

3.9

0

2

4

6

8

10

%

FY 07 FY 08 FY 09

Gross NPA Net NPA


Provision Coverage

76.4%66.2%Unsecured PL NPA Coverage Ratio

53.4%48.4%NPA Coverage Ratio

3,2744,069Net Advance

20636NPA Provision

3.4804,105Gross Advance (excluding Bills Rediscounted)

31-Mar-0931-Mar-08

* Standard Assets provisioning surplus of Rs. 11 crs. as on 31st March 09

Rs. in crores


Operating Profit

51

110

8

75

0

20

40

60

80

100

120

Q4 FY 08 FY 08 Q4 FY 09 FY 09

Rs. in crores


Net Profit After Tax

-8

38

-91

-88

-100

-80

-60

-40

-20

0

20

40

Q4 FY 08 FY 08 Q4 FY 09 FY 09

Rs. in crores


Capital Adequacy Ratio (%)

8.4

2.9

11.8

1.6

11.6

1.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

%

FY 07 FY 08 FY 09

Tier I Tier II

11.3

13.4 13.4


Cost Income Ratio (%)

80.7%

68.5%76.3%

0%

20%

40%

60%

80%

100%

120%

FY 07 FY 08 FY 09

Cost Income Ratio


Financials 2008-09

(168.2%)(2.2)1.5(44.6%)16.59.1Provision for Taxes (FBT & DTA)

120.4%73.5162.0115.5%41.890.0Provision Contingencies

(19.5%)4,068.83,274.0(19.5%)4,068.83,274.0Total Advances

(23.5%)6,074.94,646.9(23.5%)6,074.94,646.9Total Deposits

(329.8%)38.3(88.1)(1100.8%)(7.6)(91.3)Net Profit after Tax

(339.6%)36.1(86.6)(1028.4%)8.9(82.2)Net Profit before Tax

(31.3%)109.675.3(84.6%)50.67.8Operating Profit

1.7%238.0242.0(17.5%)69.557.3Operating Expenses

(8.7%)347.6317.3(45.8%)120.165.1Total Income

(30.8%)173.7120.1(58.1%)59.424.9Non Interest Income

13.4%173.9197.2(33.8%)60.740.2Net Interest Income

GrowthFY 08FY 09GrowthQ4

FY 08

Q4

FY 09

Rs. in crores


Investments

1,622

1,081

78

463

1,622

354

1,268

Total AmountAs at 31st March, 2009

HTM

Non-SLR Investments

SLR Investments

Total

Total

HFT

AFS

Modified duration of HTM is 2.80

Modified duration of AFS+HFT is 0.19

Rs. in crores


Highlights

• Increase in NPAs and provisions

• Drop in income due to balance sheet contractionWhat did not?

• NIM maintained at 2.8%

• CASA ratio improved to 30.9% up from 24.2%

• Robust bancassurance business – up 45% year on year

• Retail deposits contribution increased from 52% to 68%,

liquidity well managed

• Strong performance in lending to Agri / Microfinance

• Retail unsecured / Total Retail advances down to 22%

from 37%

• Collection and recovery actions

• Capital adequacy at 13.44% (Tier I – 11.62%)

• Costs trending down, declined by 18% in Q4 09 vs Q4 08.

Reduction in headcount

What went

well?


Summary

• Sudden change in environment in mid-2008 resulted in increase in provisions for NPAs. Unsecured personal loans largest contributor to the increase. Also, DCB has adopted stringent provisioning norms in unsecured personal loans

• Bank acted quickly to de-risk balance sheet, exited retail loans and anxiety corporate accounts. This resulted in slow down of income. Further, non funded income affected by reduction in trade volumes

• Strong capital position and underlying attributes enabled DCB to endure net loss of Rs 88.1 Cr in 2008-09


Outlook - 6 to 12 months

• Month on month personal loan provisions is expected to

stabilize and then start to decline by end of 2009-10

• Cost reduction initiatives will take effect

• Initially, month on month income is expected to decline

before trending up as assets start to build up

• Operating profit will narrow and is expected to expand in

later part of the year

• Capital released from declining asset products (eg.

personal loans) will be used to grow home loans, SME

and mid Corporate

• If necessary, both Tier I and Tier II options can be

pursued to support further growth


Approach

2009 2010 2011 2012 2013

StabilizeIncrease spe

ed

Accelerate


Double balance sheet in 3 years

Cost / Income Ratio 55% in 2 years

ROE > 15%

Target

1. Grow assets prudently - secured retail, SME, mid Corporate, Agri

and Microfinance

2. Deepen relationship with customers (Retail, SME and mid

Corporate and Ismaili community)

3. Further increase share of retail to total deposits, maintain CASA

ratio around 25 to 30%

4. Step up fee income – Bancassurance, Mutual Fund distribution,

Trade, FX and Cash Management

5. Address Cost / Income ratio

6. Intensify recoveries

Strategy

Strategy


Q & A

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