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DCB to seek more time from RBI to trim promoters’ stake

The Rs 250-crore QIP last month got the promoter shareholding down by two percentage points to 16.4 per cent, a top official said.

DCB to seek more time from RBI to trim promoters' stake

Having got promoters’ shareholding down to 16.4 per cent following a Rs 250-crore QIP issue, private-sector DCB Bank  has said it will be approaching the Reserve Bank again seeking more time to bring it further to the mandated 10 per cent.

The Rs 250-crore QIP last month got the promoter shareholding down by two percentage points to 16.4 per cent, a top official said.

“We were required to get it down to 10 per cent by March 2014, which we could not do and we had been granted more time.

We will be approaching the RBI again seeking a new extension and submit a roadmap with a plan to bring down the holding to the desired level,” Managing Director and Chief Executive Murali Natrajan told PTI.

It can be noted that with the intent of having a cross ownership in banks, the RBI has always been insisting lenders to get their promoter holding down. DCB Bank, promoted by the Aga Khan Fund, got converted into a private sector bank recently and has been asked to reduce its shareholding, along with its peers like Kotak Mahindra Bank.

The bank reported a 24 per cent increase in its September quarter net at Rs 41 crore, driven largely by an increase in the net interest income to Rs 118 crore from Rs 91 crore in the year-ago period.

The total provisions for bad assets doubled to Rs 14 crore, but Natrajan explained that spike in provisions for bad assets has been commensurate with the loan growth and the excess is coming because of the jump in countercyclical provisioning.

On the margin front, its decision to repay high cost borrowings resulted in an expansion to 3.72 per cent but Natrajan opined that the bank will not be able to sustain this high NIM and gave a guidance of 3.3-3.5 per cent.

Mortgages account for 40 per cent of the bank’s asset book, followed by 24 per cent for corporates, 15 per cent for small business and around 15 per cent for agriculture, he said.

However, it is not looking to raise any money from the long-term infra bonds against its affordable housing portfolio, he said, adding that the bank will first like to use up the refinance facility offered by the National Housing Bank.

DCB Bank stock price

On October 31, 2014, DCB Bank closed at Rs 91.35, up Rs 1.30, or 1.44 percent. The 52-week high of the share was Rs 92.45 and the 52-week low was Rs 46.80.


The company’s trailing 12-month (TTM) EPS was at Rs 5.44 per share as per the quarter ended June 2014. The stock’s price-to-earnings (P/E) ratio was 16.79. The latest book value of the company is Rs 42.01 per share. At current value, the price-to-book value of the company is 2.17.

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