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DCB BANK: Take A Look at Me Now!
‘Everyman’ banks’ selective approach has paid it dividends
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It is a bank that hardly calls out for your attention. If you were to point this out to DCB Bank’s MD & CEO, Murali Natrajan, he would most likely tell you, “It doesn’t matter as long as our clients know us well and we are able to service their needs.” The bank has done a good job of it, and in the process, made it as joint-winner as ‘Best Small-sized Bank’ in BW Businessworld Best Banks’ Survey 2016 along with City Union Bank.
DCB Bank is about the aam aadmi. “If you look at the profile of our customer base, it is mainly the self-employed and small business segment; that is traders, shop keepers, small- and medium- enterprises. We have chosen to have limited presence in the salaried segment,” says Natrajan.
The self-employed and small business segment is usually an area that many banks find it a headache to service. DCB Bank’s comfort level in dealing with this universe in large part comes from the fact that the bank’s roots lie in the urban co-operative banking dating back to the 1930s. DCB Bank, as we know it, today is an upgrade of the erstwhile Development Co-operative Bank in the mid-90s. Its current promoter group – the Aga Khan Fund for Economic Development, and Platinum Jubilee Investments holds over 16 per cent stake in the bank.
What The Numbers Say
At end-March 2016, the Mumbai-headquartered DCB Bank posted a 26 per cent rise in operating profit at Rs 349.03 crore; Net profit was up two per cent at Rs 195 crore. The balance-sheet grew by 19 per cent to Rs 19,119 crore and our net interest margin improved to 3.94 per cent (3.72 per cent). Both gross and net non-performing assets fell to 1.51 per cent (1.76 per cent) and 0.75 per cent (1.01 per cent).
In October 2015, DCB Bank went in for a doubling of the branch network to over 300. Despite the general downturn in lending at the systemic level, Natrajan felt “it (the banking industry) appears to be set for a new exciting phase. We have come a long way in the last six years. We have a decent track record and a proven business model. That the time is right for us to step up our expansion plans”.
In fiscal 2016, the branch network was up by 44 which was split equally between retail and agri- and inclusive banking. Approximately 24 per cent of the branches were in rural areas and 27 per cent in semi-urban areas. The intention is to create a uniform appearance in all branches to provide customers with a familiar “look and feel” and pleasant experience. Of course, this expansion saw the cost to income ratio go up 58.4 per cent (58.8 per cent).
In the preceding years to fiscal 2016, DCB Bank set up about 80 branches. At the time of the doubling of the network in October 2015, Natrajan had said, “Our experience indicates if properly executed, branches generally achieve break even between 18 and 22 months and payback in 36 and 40 months”.
The low-profile bank has also gone in for an image makeover; just that the decibel level is low. DCB Bank has realised that marketing and brand awareness leads to a different kind of dividend. Fiscal 2016 saw it tie-up with BITS Pilani for “Conquest 2015”, a startup competition in the IT space. The bank was also the official partner for Kings XI Punjab, which helped boost its image in northern India.
But for a bank that usually doesn’t call out for your attention, its shareholders got to cheer when the bank declared a dividend after 13 long years.
Now that’s something worth taking a look at!