Thank you, Yusuf. Good evening, ladies and gentlemen.

Welcome to DCB Bank's Quarter 4 earnings call. In line with what we've said before, consistency, predictability, repeatability are very critical to us.

This is the eighth successive quarter I've been presenting the results, and I'm happy to say that the bank continues to grow in line with the stated milestones and the objectives that we have articulated in the last two years. Bottom line first.

The profit after tax for Q4 is at ₹206 crores, and the full year is at ₹722 crores, both of which are the highest ever in the history of the bank. This is the third successive quarter of registering highest quarterly profit, underlining the inherent consistency of our output.

The bottom line is keeping pace with the top line, and the operating jaws are widening. 16% income growth, 11% expense growth, full-year operating profit 25%, which is the highest in the last eight years.

You'll be hearing this sentence quite a lot in the next 10 minutes of my opening speech. In Q4, advances have grown by 18% on a year-on-year basis and 6% in the sequential quarter.

Deposits have grown by 21% on a Y-o-Y basis and 7% in sequential quarter. We continue to ensure that the deposit growth outpaces the advances growth.

The good part of the deposit growth is that the granularity of the portfolio continues to improve. Top 20 ratios well under 7%, 6.55 against 6.61 in the previous year.

Further, this growth is coming at lower costs. Cost of deposit in Q4 is 44 basis points lower this year as compared to Q4 of last year.

The advances growth is coming from chosen products, the secured, small ticket, and granular. Mortgage, corporate, gold loan, agri, tractors, KCC, construction finance, educational institution loans have contributed heavily to this particular growth.

I want to take you through some of the commitments made in the beginning of the year, one of which was that we said that the co-lending book at the end of the year would be less than 15%. It is at 13.9%.

Actually, the co-lending book has decreased in absolute terms between Q3 end and Q4 end. On net interest margin, the uptick continues.

A 3.39%, which we record in Q4, is 12 basis points higher than the sequential quarter and 10 basis points higher that the previous period at the same period last year. Remember, we also had a 25 basis point rate cut's full impact happening in Q4.

Treasury had a very muted quarter as far as fee is concerned, as expected. Our third-party distribution and other fee avenues demonstrated a fairly healthy growth, resulting in our core fee income growth of ₹198 crores, which is highest ever in the history of the bank.

Gross NPA, coming to the portfolio quality, is at 2.45%. Net NPA is at 0.89%.

Both of which are at seven-year lows. Our full-year credit cost is 40 basis points.

I want to hark back to the Q1 guidance in which I said we had a 59 basis points credit cost in Q1, and I had assured that there is no way we're going to be higher than 45 basis points credit cost for the year, and we clocked in 40. Our upgrades and recoveries during this quarter was 109% of fresh slippage.

Our absolute gross NPA of ₹1,496 crores at the end of the year is lower than what it was in the beginning of the year. This is all about the output.

What gives us confidence going forward is that the slippage ratio is 2.28%, down from 3.09%. That can only augur well for the future as far as the portfolio quality is concerned.

We continue to improve our cost to average assets. Our cost to average assets for the full year is 2.5%, despite taking what we took last in Q3, ₹27 crores because of the new wage code.

For Q4, the cost to average assets is 2.47%. Our cost-to-income ratio has decreased by three 300 basis points last year compared to this year.

In November, during our Investor Day, many of you were kind enough to attend, we had reiterated quite a lot of things. We reiterated our stance of changing our mortgage mix of home loan and business loan, improving our average ticket size, increasing direct sourcing vis-à-vis DSA.

We see the benefits of these flowing in. Our employee productivity is historically the highest.

Our OpEx cost increases are marginal. Remember, 16% growth in incomes, 11% growth in expenses, widening jaws.

We've been able to drop moderately on the yield on advances due to the rate cuts to a certain extent by the gains on yield on account of the mix change. Over the year, Q4 of last year versus Q4 of this year, the yield on advances has decreased by 56 basis points, despite we having a 100 basis point rate cut applicable for this financial year.

In Q4, our ROA is 0.97% and our ROE is 13.53%. The full-year ROE is 12.77%, the highest in the last 11 years.

In fact, it is the highest ever since the bank became a full tax-paying entity. That's all of the past.

On a go-forward basis, the fundamentals of business that we've sowed and harvested for several years are continuing to bring in consistent, predictable, repeatable outcomes. We're confident that it should continue in the future as well.

There are clouds on the horizon on account of West Asia crisis. We have been cautious.

We have overstocked on our liquidity. We have done detailed assessment, and we don't see an immediate impact on the portfolio performance.

Again, depends upon how long this imbroglio lasts. That's it.

Now I'll leave the floor open for questions or clarifications. Operator, could you come in, please?

Good evening, sir. Thanks for the opportunity, and congrats on a good set of numbers.

My first question is on margins. NIMs have continued their robust upward trajectory.

Previously, you had guided for benefits from the deposit repricing to continue until Q2. If you can get some color on the repricing benefit, which is still pending, and how is the bank progressing on HL to BL incremental sourcing?

Is it still 60:40?

See, we expect the deposit repricing benefit to come till late Q2, perhaps early Q3. That's it, not beyond that, okay?

That's the answer to your first question. HL to BL is much more than that.

It's like we are almost 70:30, and that's really helping us. It's helping us in terms of yield.

It is helping us in terms of credit cost, and the fact that we have also gone slightly higher ticket size has helped the cost consistently. That possibly is reflecting in the new slippages coming down from 3.09 to 2.28.

It's certainly a part contributor to that.

Right, sir. In terms of asset quality, which continues to be very strong, do you expect this trend to sustain or should we anticipate normalization towards your through-the-cycle guidance of 45 to 55 bps, the business model guidance barring this West Asia conflict?

See, as of now, we're sticking to the 40 and to be below 45 bps, okay? Currently, we're at 30 32, 33 bps.

See, I don't see us in the short term increasing anywhere around the 45 basis points mark. Our model continues to be 45 to 55.

Fairly strong on that, and I would expect a similar trend to continue. There's no reason to believe that in the short term, we would have any reversal coming through.

Very well, sir. In terms of fee growth, which has been very strong for many quarters now and with the latest quarter at 9% Q-o-Q, what are the key drivers for this quarter and how should we see sustainability going forward?

Is it still third-party distribution or is there some other drivers? If you can help with some color, sir?

Thank you.

It's the same. See, the leopard never changes its spots.

We are like that. Nothing happens all of a sudden.

We continue to be well, high on third-party distribution. Forex income is decent.

Trade is our area of concentration. The repeatability of income is something which we are focusing on.

Treasury gave us nothing in Q4, nothing. We expect that trend possibly to continue.

Core fee income is a key driver for fee going forward.

Right, sir. My last question is on branch expansion and headcount.

What's the outlook going forward? I understand you added 11 11 branches in full year and employees around 400 on net basis.

How should we think about investments on this front going forward? See, yeah,

if you see the number of employees, you see a U-shape coming through. If you were to see the number of employees that we have in let me get the year right, '24 end, you see that, or rather September of 20 24, we had 11,900 people.

We still are lower than that. I expect us to hit a 13,000 kind of number by the end of this particular year.

We're still a people-driven business. A lot of our sales are assisted sales.

There'll be more people coming in. Branches are optional.

We don't necessarily need to have more branches to grow. People are required.

Having said that, there is a very high probability that we'll cross the 500-branch mark during this year.

Very well, sir. Thank you very much for answering all my questions.

All the best.

Hi, sir. Thanks a lot for the opportunity.

My first question is on [unclear]

Sorry to interrupt, Mr. Parth, your voice is breaking.

I'm so sorry, I don't know whether you can hear me, but we just can't hear you.

Yeah.

Yeah. My question was on margins.

If I look at your yield on advances, it was flat quarter-on-quarter. Cost of funds have declined slightly.

The liquidity on the balance sheet has gone up quarter-on-quarter. Ideally margins should have been not improved by 12 bps or should have improved marginally is what the calculation suggests.

Are there any one-offs in the margins?

No, there are no one-offs in the margin. We are not a one-off business.

It's not being a retail environment and have one-offs. What you could have is skews at the month end.

The liquidity build-up could be towards the end rather than the other way around. One of the key factors in NIM is the quality of portfolio.

If you recover 109% of your fresh slippage, it is bound to have an impact not only on the NNPA and the GNPA, but also on your NIM.

Fair enough. Perfect, sir.

My second question was on the cost to assets, considering for the full year, we are at around 2.45. What is the

For the full year, we are at 2.5. For the quarter, we're at 2.47.

What is the further juice left here, or what will lead to the further improvement of cost to assets from here on? Or it would be stable around these levels?

See, this is a bit like the earlier question which was asked on credit cost. Our model suggests 45 bps to 55 bps of credit cost.

Model suggests 2.5% of cost to average assets. Reality, we are slightly better than that.

I'd be very happy at 2.5. Remember, there's going to be an increase in the number of people, which will also result in more productivity.

There's already been one. There'll be a linear increase through the year of number of people.

Those investments are critical, and despite that, we're reasonably confident of our 2.5% cost to average assets going through.

Perfect. Just one last question if I can squeeze in.

Because the war was persisting, large part of the March month, have you tweaked any of your risk filters while sanctioning and disbursements to pure MSME customers?

I think we were lucky more than we'd never predicted this. Going up the ladder of ticket size, it was meant to be an operation productivity exercise that has resulted in lower bounces, and we sacrificed a bit of a yield, but we're getting better quality customers.

That's reflecting on fresh slippages being better. All these things happened much before the war actually manifested itself.

Now, see, if this continues, it'll affect everybody. People at the lower end of the economic pyramid will get impacted more.

This specific problem will have. If hydrocarbon prices go up, everyone is going to get affected.

The effect will be largely felt by people who do not have the security of a cushion to take care of this extra expense in their monthly pool. I would tend to think that re-profiling and going up the ticket size about a year and a half back is helping us compared to where we would have been had we not moved the needle.

This is not a reaction to the war at all. It just so happened that it helped us that we've done these things much beforehand.

Sure, sir. Thanks a lot, sir.

You're welcome.

hi. Just two questions from my side.

When you speak to your collection teams, and when they're reporting such strong numbers, would you ascribe this on the ground that their leverage levels for the borrowers have come down? Their access to credit has improved?

What is the general feedback as to what constitutes a better recovery, number one? Second one is that if assuming that we are into this slowdown, and there is a slowdown in the next six to nine months, would you say that the book today is better than where it was in 2023 when we had the slowdown led by unsecured loans and MFI, or would you say that the book is broadly the same?

I think

let me answer your first question first. What has really happened is if you were there in the Investor Day presentation, I made this statement saying that we moved from managing NPA to managing 1 DPD, as in one days past due, okay?

When we make this statement, we already implemented that. We did put in more people.

We significantly improved our early bucket collection. The intensity is increased significantly.

What you see in March is the result of those activities, which is in somewhere around June, July and then persisted with it. That's the way I see it.

It's more of intensity, it is more of focus in the earlier buckets, which we were not really focused upon. Otherwise, your slippage ratio would never have come down.

You could have any kind of recovery, 109% recovery. It'll help the NNPA more certainly, but that'll not help the slippage.

One particular metric you can look at is, for the first time, we've given slippages of gold loan separately, okay, in the investor presentation. Now that clearly is an indicator of the pressure in the market because we don't do early bucket collection in gold loan.

It's not worth our while, right? Because the gold is there.

Why call on the 30th day, and that's an operational cost. There's a natural delinquency which we see on the gold loan.

I would tend to imagine that as a reasonably good barometer for the pain at the lower end of the pyramid. If you were to look at that, page number, I think it is 26, okay, the bottom left-hand corner, you can see there's marginal improvement.

I'll just read out the number for those people who haven't seen this. It used to be 6.29 a year back.

Now it is 5.3. There's natural repayment or natural slippage which really happens.

The real action happens near NPA rather than at the beginning.

Perfect. Thank you.

To the question that you're seeing with respect to the portfolio that you're carrying today versus where you were probably about two years back?

See, two years back, our credit cost was in the region of 0.3 somewhere about 0. somewhere between 0.38 and 0.42.

Currently, we're at 0.4. What we have done is we have ridden the wave.

If history were to repeat, we will also repeat the particular performance. You see marginal increase in our credit cost.

Still, we will be below 45 bps. It's a very strange statement to make because if freight prices were to shoot up post, you could see a situation whereby inflation really, really is impacted.

Second-order issues of petrochemical-oriented products not coming to the market could keep the supply chain inefficient. It is not just about inflation alone.

It's about everybody's impacted. Unlike COVID, you can't do quantitative easing and get out of this.

You will have to and it's not going to be that easy. At the moment, it's good to be in a position where your slippage ratios are lower, where your NNPAs are lower, your recoveries are higher.

It's a good place to be in.

Just to clarify, in your assessment, when you are looking at those borrowers, are you seeing a situation where those borrowers' leverage levels is similar to where they were two years back or they're better or worse off in your assessment of the customers that are coming to the portfolio?

The reason I'm not able to give you a straight answer is the customer stock which we had two years back is very different from the customer stock that we're having today. Because over the last two years, the kind of ticket size of customers that we've onboarded, the kind of profile of customers that we've onboarded are different.

Our MFI book has dramatically come down. At one point of time, it was a ₹1,400 crore book.

Now it is, what, ₹600, ₹600, ₹700? Yeah, ₹600, ₹700-odd crore crore book.

It's not the same. While the balance sheet has grown by 20-odd percent, the customer advances have grown by about 18%, the fact remains that they're not that comparable.

Perfect. Thank you, sir.

Thank

you, and all the best. You're welcome.

Good evening, sir. Thanks for the opportunity,

and

congrats on a good set of numbers.

Thank you very much. My question is, sir,

this is on the yields. Yields have been flat-ish Q-on-Q.

What we had explained earlier in the call for this, our book on the mortgages, especially, that is fixed to floating, when we see gradual repricing over some period. With repo cuts happening, what has helped us sustain yields at this level, especially with corporate disbursement also picking up?

Have we taken any increase in spreads on incremental lending or what has helped that? If you can explain that?

Yeah. Frankly, if you see, our co-lending book has come down.

Co-lending book is a low-yield book. It comes at low cost, but low yield.

This is a product mix game. If you see, we have grown 6% quarter-on-quarter sequentially, and our co-lending book has degrown.

The low-yielding book has degrown, and higher-yielding book has grown, which has resulted in incremental yield being higher. It has absorbed the 25% 25 bps, 25 bps repo rate cut, full impact of which we had in Q4.

Sure, sir. Sir, secondly, if you look at slippages ex-gold, it has fallen to 1.5%.

1.47.

1.47. Just trying to get a sense given how the macro is evolving right now and there's uncertainty on how things will shape up, given your interaction with the clients, is this sustainable going into FY '27?

Especially with negative net slippages, can this trend continue in FY '27?

Very difficult to answer because there's so many unpredictable, unponderables there. What you see day one is very different from what you see on day two.

Right? There is so much of change happening, which makes prediction really, really very difficult.

What I'm confident of is that I don't see our net NPA going back above 1%. We said that I don't know whether you remember in the Q4 in Q3 call, I said we will be below 1%.

We are there, and we intend to stay there. Like I said in the opening remark, the benefit is coming through lower slippage, higher focus on the early buckets.

If an SME customer does not get the component that he wants to complete his product, he will suffer. Along with him, we also will suffer.

We are aware of that. Far, we're not seeing that happening.

That is not a guarantee for the future.

Sure. Sir, lastly, what will drive your NIMs towards your business model NIMs target of 350 to 365, and what is your timeframe expectations around that?

See,

if there is one thing I'm not happy in a very decent quarter or a decent year, for that matter, is there are so many things which are good. One thing which I'm not very happy about is the current account pick-up.

We're focused on it. Our SA growth was 10%.

Our CA growth was flat. That's not a good thing to happen.

We're putting resources behind it. We're putting effort behind it.

We're putting focus behind it. That has to improve.

Now practically everything that we put focus on, you see an improvement happening. It's time it happens in the current account portfolio as well.

That's one big driver. We've really moved the needle on engagement with our savings customers.

There is a whole host of cross-sell activities happening on our asset customer base. It's still a snowball.

It hasn't reached avalanche. Sustained efforts over a period of time, retail was that way.

The good work that we've done about a year and a half back, you're seeing the result of it now. We're at it.

We just keep progressing on the right path, trust the process, and the results will happen.

Sure, sir. Sir, thanks.

Thanks a lot for the opportunity.

You're welcome.

Hi, good evening, Praveen. Thanks for the opportunity.

I have a few questions. One is, if I look at your slippages number, right, just a broad calculation, overall slippages are 2.28, excluding gold is 1.47, and gold is 5% roughly.

The number somehow does not tally in the sense that gold is supposedly if I do the reverse calculation, it looks like gold is 20% of the portfolio to drive that change from 2.28 to 1.47. These are gross slippages number only, right?

That is why I'm assuming these are gross slippages, 1.47 and 5% of gold.

That's right. These are actual numbers.

I can put you on to my finance folks or collection folks and can have a discussion on that. Can take you through the numbers.

2.28 is our slippage. It's come down from 3.09.

Right. Okay.

That is anyway, I'll check that offline. Second is, sir, on the growth front, right?

We have done 18% growth, which is much faster than the industry. Somehow, as you also mentioned in the opening remarks, the co-lending has declined Q-o-Q, and rightly, you had highlighted at the beginning of the year also that at some point of time it will moderate.

The growth of the core businesses like mortgage, 10, 11%, MSME flat or negative, and as you said, co-lending, I believe this co-lending is a function of CLM transition. How should we look at the next year going ahead when mortgages is 10, 11% and MSME is still yet to pick up?

Far, the growth has been coming from CLM.

Let's look at that. It's a good question.

I'm sure my answer will help a lot of people in this call. Finally, look at quarter, okay?

Look at the quarter and look at the mortgage growth in this quarter. You want me to tell you the page number?

Yes, sir. 3.8%.

Okay. For sake of argument, let's say 4%, okay?

If you have to multiply by four, you're talking about 16. What you've seen is while the bank has grown 18% in this year, 24% the last year, we have been busy re-engineering the mortgage business, okay?

We have really turned it around because that is contributing delinquency. It is a lower ticket issue which was vulnerable.

We have really, really changed the wheels of the train while the train is still moving. You haven't felt it because other products contributed to that particular growth.

Now what's happening is a better BL/HL skew, a better self-sourced versus DSA-sourced mortgage is up and running. Every quarter, that growth is better than the previous Q-on-Q growth.

What you've seen, the 10% of growth that you saw in the year, I would look at it slightly differently and say 6.5% was the growth in the first nine months and 3.5% was the growth in one single quarter. That 3.5% of the mortgage book that we are growing in the quarter is of a supremely better quality than the kind of book that we had a year back.

Are you with me? Hello?

Yes. Yes, sir.

This part is understood. Yes, sir.

Clearly, there is a take-off happening on that count. My finance folks have just come in with some dark math.

Can I go to the earlier question?

Sure, sir.

All right. Vishal, you want to explain this?

Yeah.

Gold have a weightage of 21% and a slippage of 5.3%, and other than gold have a weightage of 79% and a slippage of 1.47%. Overall it's coming to 2.28% at bank

level.

No, sir. You're right.

If the gold weightage is 20%, then the math sticks. 21.

21.21%. That covers the discussion.

Okay. That's the second question.

Now can I ask you a question, Jai?

Please, sir.

Do you remember in the Investor Day, we were standing outside, and then you told me at that time, our NNPA was 1.22%, and you told me, for a business of our type, you remove the 22 basis points from the ROA. Do you remember the conversation?

Yes, I do, sir.

I want to tell you, you don't have to do that anymore. We are at 89 bps.

Yeah.

Direct,

congratulations, sir. Yes.

No, no.

Once again, I want you to know that. Thank you for it because this kind of conversation helps us also.

Now we're at 89 bps. I just want to tell you that there are not promises.

The intentions that we say, we take it extremely seriously, and we demonstrated by the performance. You'll see that coming through in the next few quarters as well.

Great, sir. Appreciated, sir, yes.

Thanks. Okay.

No, sir, sorry, just to come back. Gold loan proportion is 20, 21%, but in this table, the advances mix, the gold loan proportion looks like 7, 8%.

I believe the co-lending plus gold plus it is also somewhere sitting somewhere.

Absolutely.

Co-lending,

we have about ₹8,300 crores, ₹8,366 crores of co-lending, bulk of which is gold. Then you have normal gold, our own gold, of about ₹4,000-odd crores.

Right. Okay.

Sure. Sir, then going ahead, mortgage, I take your point, sir, that mortgage has accelerated, and maybe it will sustain.

Far this quarter, the growth has also been contributed by corporate and MFI institution, which may or may not be desirable or we can still sustain. I'm saying that in case of co-lending not being a meaningful contributor to the growth, which portion will do the heavy lifting apart from?

Now

I want to repeat what I said earlier, consistently been saying throughout. I will tell you this.

Our co-lending growth in '24-'25, it is not in this book, but if you have to look at the previous book, was 108%, 108%. This year, it is 24.9%.

That is '25-'26. In the current year, '26-'27, I'm not telling you the percentage, but it will be exactly the same as the overall asset growth of the bank.

Are you with me? 108 has been brought down to 24.9, and in the current year, '27-'28, '26-'27, we will be exact, meaning co-lending growth will be exactly similar to the overall asset growth of the bank.

That's one part of it. It'll not be zero, and it's not even advisable.

Right? It'll be steady normal growth happening there.

You will have growth coming in from the mortgages. There are some impact players like SME, MSME, and construction finance, where a lot of effort has gone into it.

The output is yet to come. It'll not remain like that forever.

We'll see contribution coming in from these core segments. The agri segment, I don't know how fertilizer prices will be affected by this West Asia crisis.

Assume that life is normal, I would tend to think that our tractors, KCC, growth will happen. I'm not a big fan of MFI.

We do MFI only to meet the small farmer, marginal farmer requirement. It's not meant for balance sheet growth or You have to do it, you have to do it, right?

The history has not proved very, very good either for us or the industry. It will be the BC MFI growth will be sufficient to meet our small farmer, marginal farmer appetite.

That's the way we see this. I think, do the math.

6% is the quarter-on-quarter growth. You remove co-lending.

It comes to 8.6% non-co-lending growth, right? 8.

I'm not saying 8.6 into 4. I wish I could say that.

My senior leadership team also is sitting here. Just imagine 8.6 into 4, and then I could be leaving home at 4:00 every day.

Right. Sir, any guidance or, I think in the analyst day, you had said that this 18, 20% kind of a growth, we should be delivering that still remains the broad guidance, right?

See,

in these times when there are clouds, etc., on the horizon, 18, we are cautious as a very, very we only know the pains of getting a 1.22% NPA, NNPA, to 0.89. Our team is fully aware of the pain of getting a 3.32% gross NPA eight quarters back to 2.45.

These are hard, not to talk about slippage. We have hard-earned lessons.

We are very confident about growth, what kind of growth that we want, and we think we're fairly on a good track as far as the portfolio is concerned.

Right. The last question, sir, on co-lending CLM change, correct me, my understanding is that it has now changed from discretionary to non-discretionary.

Which is why you may have some disruption in the March quarter. Has that been sorted already or you believe there could be some more teething issues when you align towards the new guidelines?

One good thing about the bank, Jai, one good thing about the bank is the quality of tech, okay? That is one really good thing that we have.

That doesn't guarantee everything because partner's tech also should be up to gear. We acted pretty much early around September, October on this, and we got it absolutely right.

Some of the big gold loan players are our partners, and it's working very well. It's very, very well with it.

Probably you, since you're all in the financial industry, you'll be covering them also. I invite you to even speak to them and figure out how this particular thing is progressing.

We're very comfortable with them. They're very comfortable with us.

I'm sure some of these guys are part of your coverage.

Right. No, sir, just to coming to the question is that disruption, the transition is over and even incrementally you said that co-lending will be growing as much as the overall growth.

I would believe that the entire transition is over, right? There is no more.

For us, it is. See,

why I'm not giving you a straight answer on that is it is over for gold. It is not over for, see, we do educational institution financing, we do that is school financing, we do LAP, we do See, we keep doing various things.

In areas of little volume consequences, we are a bit slow. At a bank level, is it done?

Fully, no, but as far as our gold loan is concerned, which is our lion's share of our co-lending, we are very comfortable. The reason why gold loan is a lion's share of co-lending is because you can accurately predict the loss.

Correct. Does this change anything, sir, structurally, the transition, one means, I believe you may not have discretion in terms of how you partner with the partner?

Is there anything also changes or nothing?

We had this partnership, Jai, okay, with one of our partners from 2022, okay? That partner was our single-largest partner until February of 2024.

Then we had a second big partner coming through. We're talking about four-year history.

We're talking about two-year history. There is a it's like a full-fledged, I can do a PhD on co-lending, gold co-lending, at least,

right?

These are kinds of relation and partnership that we have for the co-lending part. I don't see any disruption coming in.

Sorry.

Lastly, sir, if I may ask, why is there seasonality in the fourth quarter? Is this a normal seasonality in terms of lower slippages, higher recovery or there is something more fundamental in the product that we have?

All banks have seasonality, which is favorable seasonality in 4Q, but for our case, looks slightly more pronounced. Any reason or it's like business-as-usual thing?

Thank you.

Our appraisal is in April. I can't give a better reason, Jai.

Sorry.

Okay. No, no issues, sir.

Thank you, and all the very best, sir. Yeah.

Thank you.

Thank you.

Yeah. Hi, sir.

Thanks for the opportunity, and congratulations on a good set of results.

Hi, Aditya. Hi, sir.

Sir, my first question was on NIMs. How should we see the NIM trajectory now from here on?

Do you see them still improving? Because while your deposits are still getting repriced, but your CASA share has been reducing, rates industry-wide have been hardening, and also your reliance on bulk deposits has been increasing.

It is now 20% of your deposits. How do you see the NIMs for the bank going forward?

I want to focus on cost of deposit because the ultimate truth, which is a mixture of the CASA, institutional deposits, excess liquidity that we keep for a rainy day, all that is reflected in cost of deposit. Right?

Have a look at the trend line of the cost of deposit. Our belief is that if you are to renew as much as we renew normally, we should be having some advantage going all the way into Q2.

After that, that advantage will stop. That's only part of the story.

In the Investor Day, I had mentioned this, and this is public information. Just do this: look at the peak retail term deposit rate of three of the biggest private sector bank and three of the biggest public sector banks and come at the composite peak retail term deposit rate.

Compare that with DCB Bank's and see how convergence is happening. This number, the difference between the composite rate of the six largest banks in India and us, at one point of time was about 1.27.

It is 0.89, if I remember right, in March. It's there in my Investor Day presentation.

The 0.89, we brought it down to something like 0.6 60 or 61.

0.61.

0.61. It's publicly available.

Why we're not doing it with bulk deposit is I'm not aware because many banks don't publish that. We do.

Right? That way it's slightly unequal.

This is the indication. One is of longer-tenor deposit maturity and you're having a benefit of renewal repricing.

The second is even fresh deposit. This bank used to be a bank which was in the top three of highest interest rate.

Please look at the website of similar-sized banks. We are no longer there.

The bank has learned to sell liability products on items other than price also. Price still a big, big component.

We're not anywhere where we need to be. The reason why people bank with you earlier used to be the rate.

Today, it is changing, and it's been hard work for the last 1.5 years. Our branch banking team has done a fantastic job of switching it.

The proof of the pudding is look at the website. Look at the website and find out.

I don't want to name banks now. We've grown 20.91%.

Look at our rates. Look at similar-sized, even bigger-sized banks.

If you're not lower than them, the distance between the two has dropped. That's how we're seeing it.

Like I told another gentleman earlier, we're really working hard on getting our story on current account right. Effort has gone into it.

Results have not come in yet, but we're not people who give up easily.

Understood. Now, sir, I understand that we have been more aggressive in cutting rates as compared to other banks.

Now, when I look at the deposit growth, so that has majorly been coming from bulk deposits. Our retail deposits have not been keeping up pace with the overall deposit growth.

How do you see that going forward?

For us, there are two things which really, really matter in the order of priority. We should be liquid.

Being liquid is not a choice, so that pure play liquidity is important. Cost of deposit is important.

Long tenor is important. Now, if we meet these conditions, frankly, if it is a SA coming in really doesn't matter.

There was a time when the bank used to give 8% rate on savings account. Today, I think it gives 6.7%, okay?

That's the rate that the bank gives. That's why I said, it's easy to grow bulk SA and show a better CASA ratio.

We prefer to grow deposits and keep the cost of deposit down. Whereas CA is an equal story.

You can compare CA across banks. SA comparing doesn't really make sense because one day you can put money into savings account and get in our bank itself, 6.7%.

It's really expensive. It helps in terms of saying publicly CASA ratio is good.

I would tend to think you should look CA and SA separately. While we don't publish it, our SA weighted average pricing on a SA has come down significantly.

If 25 basis point rate cut happened and we have reduced our cost of deposits in Q4, which is a traditionally very liability-hungry market, it comes because we are getting the right kind of deposit.

Sure, sir. Just last bit on this deposit part.

Now,

DCB is generally known for being focused on granularity, either be on advances or on deposits.

Now

bulk deposits is currently 20%. Is there any percentage beyond which you won't be comfortable going bulk deposits?

Like I told you, we have to ensure that if we get a bulk deposit which is of a lower rate of interest, earlier we were giving it up. Now we are managing three things: we're managing granularity, we're managing ROI, and we're also managing the

tenor.

It is a uneven battle. We triangulate these three things.

Earlier, we used to take a stance saying that even if the rates are lower, we will not take bulk because it doesn't meet our small-ticket criteria. In a time like now when there is chaos, liquidity is important for us.

It is good to have extra liquidity, even if it means there's a higher carrying cost. We do have bulk deposit.

Do we have a number on retail term deposit? Yes, of course, we have to grow that.

We want to grow that. This is a good buffer to keep for keeping your cost of deposit down.

Sure, sir. Understood.

Sir, on your ROE, for your ROE to improve from here, I believe NIMs would be the major lever for us to grow because your credit cost and OpEx cost are pretty much under control. For the NIMs to improve from here, would cost of deposits be the only trigger for us to improve our NIMs?

Yes. We don't want to go into a higher-yield segment because this is not really the time to go to a high-yield segment.

It comes with a sting in the tail. Improvements will come because we're keeping a tighter rein on the cost of deposit.

Understood. Got it.

Now, sir, on this SME book, this ₹2,000-odd crores book, how big is the trades part because we were looking to degrow that part of the book? How is the book apart from trades growing for us, the COD part?

It's not growing. That's why I said we are putting some effort into it.

It's not growing. It is stuck where it is.

If I see it's a flat kind of thing quarter-on-quarter. It has decreased by about 13% year-on-year.

We're kind of relaunching that. We've got a new vertical to look at the greater than ₹3 crore.

There are a lot of good customers who are above a particular threshold, ₹3 crores, were leaving the bank because it was meant to be a small-ticket program. We said, "Look, that doesn't make any sense.

You're just filling up the bank." From July onwards, we've been having this channel.

It is just getting set and ready. That's where the momentum we see happening, the SME comeback will happen.

TReDS is about ₹300 crore book, hardly anything. It used to be 300, it continues to be 300, there's no change.

Understood. Sir, just last question.

What is the bank's now position on fundraising? We have got an enabling provision for fundraising.

How is the bank looking?

In the next two, three quarters or next two quarters maybe, either late Q2 or early Q3, we should be going in for our fundraising because we see that as a bank, we will be continuing to grow at this kind of pace. If we do continue to grow at this kind of pace with a similar kind of portfolio mix, probably we'll reach our internal red flag by Q1 of '27-'28.

We don't want to wait that long. Maybe Q2 end, Q3 beginning.

Somewhere around that. Sure.

Sir, thanks, sir, for answering my questions.

Not at all.

Hi. Thanks for taking my question, and

congrats

on a good quarter.

Thank

you. Firstly, on the board enabling resolution for the capital raise, is it just procedural or are we looking at something?

And ₹1,500 crores seems a largeish number,

too. Maybe I'd be happy with something somewhere between, I don't know, ₹1,100, ₹1,200-odd crore.

It's good to keep some ₹1,500 crore enabling resolution done. Yeah, $100 million not slightly more maybe, somewhere in that particular region.

See, the thought process behind it is simple: take what you need right now at the price prevailing at this particular point in time. Our belief is that if we continue performing like this, the next raise will be at a different level.

Don't overdiverse at this point in time. Just do what is required to continue this particular growth moment.

Then when the next level of expansion happens hopefully soon, we'll be raising again at a slightly different level with the fundamental numbers looking even better than what it's looking today. That's what is driving the management thought process.

Perfect. Perfect, Praveen.

Makes a lot of sense. Secondly, on your provision coverage ratio, this quarter it's gone up sharply.

What level are we broadly comfortable with?

See, 78-plus is good. As a company, we'd like to keep those provisions.

Anything above 75 is okay. If you remember, we had some MFI loans had gone bad in the last year, Q1, Q2, etc.

We want to ensure that the aging provision of that should not stutter us. We have kind of sufficiently ensured provisioning in these unsecured, small ticket, microfinance kind of loans off of Q1 so that there is some evenness in the way things will happen going forward.

Got it. Lastly, on the quarter, your NIM is up 12 basis points, right?

Now, is there some day count or something impacting that? Because your NII is broadly in line with your loan growth and your asset growth, right?

So 12 basis point uptick, I'm just trying to reconcile with the quarter-on-quarter 5% NII growth.

See, what I look at it, instead of worrying about day count, I just compare ours with Q4 of last year. Last year Q4, we were 3.29.

Neither was last year a leap year nor is this year a leap year, I think so. You're talking about similar kind of day.

If you're having a 10 bps improvement on NIM despite having a 100 basis point repo rate cut impact, not doing too badly.

No, I was looking at the quarter-on-quarter sort of movement.

Quarter-on-quarter, 12

basis points, that's right.

The NIM is up 12

basis points,

yeah. I would tend to think I always look at Jan, Feb, March to the Jan, Feb, March, and April, May, June, so that in case there are any abnormalities of number of days coming into play, comparison with similar kind of timeframe the previous year is a good indicator are we making progress or not.

Perfect. That's all I had.

Congratulations on the quarter once again.

Thank you very much.

Yeah. Hi, thank you for taking my question.

Hi, Akshay. How are you?

Hi, I'm good. I'm good.

Thank you. Praveen, just wanted to ask you, you mentioned of increasing employees headcount to 13,000 from current.

Right.

Around 13,000 from current. Yes.

So 1,500 addition for the next year. Just wanted to understand in which areas are you looking to add on and how would we ensure that our cost to income, the trend that has been there and we have maintained reducing our cost to income, how would we ensure that in spite of adding employees that we will maintain that trend?

Because we haven't added employees in last a year or so, yeah, a part. Right.

I know

we kept on adding and we kept on getting rid. It is not as if we never added.

Our exit process was really sharp and good. Where I see this coming in is it's not for this year.

We see practically all these folks going into the liability and deposit acquisition. We'll put more people in the branches, we'll put more people on the distribution front.

The basic math tells us that between a self-sourcing sales network on mortgages and their DSA dependent sourcing, initially, you may feel that 2% or 2.5% to the DSA is cheaper. We've seen that the loans stick with you for two years, 2.5 years, whereas self-sourcing loans stick with you for six, seven, higher than six years.

You're getting the benefit coming through the BTs, the balance takeouts are considerably less. You own the customer, not somebody else.

The credit quality on these loans are really better than what the DSA sourced loans are. They are a necessity.

I'm trying to find another word for evil. They are a necessity.

We can't live without them. Our dependence has to necessarily come down.

I don't mind putting in the people there because I'm very confident that the team has shown it to me that from a longevity perspective, from a balance BT out perspective, from a coupon perspective and a credit perspective, these customers over the currency of loan in our bank are far, far better quality than DSA. Where is the basic math of 2.5% per ticket size with a ₹5 lakh salary of a sales executive may initially look like it's a bad call.

It is not. If you know how to run the non-DSA channel.

Sure,

sure. My second question was on the line of cross-sell.

At the Analyst Day, we had indicated of DCB Niyo cards, where we would like to cross-sell.

Then

in terms of liabilities like OD facility, we were wanting to offer. What kind of progress have we made there?

I'm very happy to say that a sizable chunk of the 3.8% Q-on-Q mortgage growth has come from the branch banking channel. Look, this is bread and butter for most companies.

For us, it is not. For us this is a low-hanging fruit and just kind of is kicking in.

This is not being used at all. Honestly, this should have been the way things should happen.

Anyway, let's not complain. Clearly that is coming through from the branch banking channel, less so from the digital channel.

That's one. Our credit bureau-linked interventions on our liability base is where these LAP loans and home loans are coming through.

We've been reasonably happy with that. I'm not particularly happy with the level of cross-sell that we have achieved so far.

Again, that is not stopping us from trying. There is a pressure within.

It is difficult. It's not an easy thing.

We're at it. It is giving us results.

I knew it would be a painfully slow process. It is certainly a painfully slow process.

It is directionally, is it going okay? Yes.

From a volume sense, it's a bit frustrating at times. There's no choice.

I'll keep at it, and we'll see the benefit of it coming through.

Sure, sure. Thanks, Praveen.

Thanks for answering my questions.

Not at all.

Hello, sir. Am I audible?

Oh, you're very much audible. Yes.

Yeah. Sir, firstly on the margin front.

Like this quarter, the firstly if you could explain where the 12 bps Q-o-Q is coming from? Secondly, if you are looking at, from a next year from our next year perspective, is it fair to assume that, given that we have a lot of bulk deposits and yes, we are growing our mortgage book pretty well, despite that we will get some decline from funding cost, like we can expect like margins to be range-bound or around these levels because, because of these two factors?

Any comment on that?

It can happen. Can it be range-bound in this particular level?

Possible. Like I told the gentleman earlier also, compare us quarter-on-quarter with the same quarter of the previous year.

If it happens, it primarily will be a execution issue because our ability to get the liabilities at a cost that we want is a journey that we are taking. We're very happy with the first nine months of that progress.

Our people have learned that you don't need to be the highest rate or one of the highest rate provider to get liabilities into the bank. That I would see as a execution risk rather than a strategic risk.

It's worked very well so far. In Q4, if you can get that kind of volume and still keep the rates not talking about the cost, the rate, the offered rates on the website lower than who we used to have a difference with other banks who had a margin with.

It's a good thing going. There's an institutional resilience building on ability to get lower cost of deposit.

Nowhere are we near the big six or big seven. We're not the bank that we were a year and a half back.

All

right. Thanks.

On the growth front, I know you have mentioned in your presentation that in three to four years, you aim to double the balance sheet. Given the fact that now the way you highlighted that the gold loan book, it is already at a decent base, the co-lending book.

Is it fair to assume that growth will be around these levels for the next couple of years or so, or you are targeting still the 20% level plus?

I think 18, 20% is a given. You just look at our March '22 liability numbers and multiply by two.

You just multiply our March '22 asset numbers and see where we are.

₹39,800

was our asset number in March '22. Today you're at 60,000.

Right.

Your liability number was 35,000 or slightly 36,000. Yeah, 35,000 in March '22.

Today you are at 72,000. That's four years.

That a four year where one year, our bank was recovering from COVID. Getting up to speed.

In that tough times and we can do that, we had a microfinance kind of problem hitting us, secured DA problem hitting us. Despite all this, we are managing both the credit quality and the growth.

These things will happen. That's why we are paid in the first place, right, to manage these imponderables.

Something is going to hit you. You don't know what it is.

How well you manage that is the resilience of an institution.

Right. Okay.

That's it from my side, sir. Thank you.

Okay. Thank you very much.

Thank you very much for your attention, and watch the space 90 days from now.