DCB Bank Limited delivered strong financial performance in the third quarter of FY26, reporting significant growth across key metrics. The private sector bank's net profit surged 22% year-on-year, demonstrating robust operational efficiency and improved asset quality.

Financial Performance Highlights

The bank's financial results for Q3 FY26 showed substantial improvement across multiple parameters:

For the nine months ended December 31, 2025, the bank maintained strong momentum with net profit reaching ₹525.91 crore compared to ₹438.27 crore in the corresponding period of the previous year, marking a growth of 20.0%.

Asset Quality and Capital Position

DCB Bank demonstrated significant improvement in asset quality metrics during the quarter:

The bank maintained a robust capital adequacy ratio of 15.84% under Basel III norms, providing a strong buffer for future growth. Return on assets improved to 0.91% from 0.86% in the previous year, reflecting enhanced profitability.

Segmental Performance Analysis

The bank's business segments showed varied performance during the quarter:

Retail Banking remained the largest contributor to both revenue and assets, while Treasury Operations provided significant support to overall profitability.

Strategic Developments and Capital Initiatives

During the quarter, DCB Bank completed several important strategic initiatives. The bank successfully raised ₹83.00 crore through preferential allotment of 60,58,394 equity shares to its promoter, Aga Khan Fund for Economic Development S.A (AKFED), at ₹137 per share. This transaction received approval from the Reserve Bank of India on September 29, 2025.

The bank also undertook revaluation of its immovable properties during the quarter, resulting in a revaluation surplus of ₹106.83 crore. This surplus was credited to revaluation reserves, bringing the total revaluation reserve to ₹390.06 crore as of December 31, 2025.

Operational Metrics and Provisions

DCB Bank's operational efficiency remained strong with controlled expense growth. Operating expenses increased to ₹523.25 crore from ₹455.81 crore in the previous year. The bank maintained floating provisions of ₹195.79 crore on advances and ₹12.07 crore on investments as of December 31, 2025.

Employee costs included an estimated incremental impact of ₹26.87 crore due to the implementation of New Labour Codes notified by the Government of India on November 21, 2025. The bank continues to monitor developments regarding the finalization of Central and State Rules under these codes.

DCB Bank Limited has received a credit rating reaffirmation from CRISIL Ratings Limited on January 21, 2026, with the agency maintaining its 'CRISIL AA-/Stable/CRISIL A1+' ratings across various instruments while enhancing the Certificate of Deposits programme limit from ₹1,500 crore to ₹2,000 crore. The ratings reflect the bank's healthy capitalization, established market position in the small and medium enterprise segment, and experienced management team.

Rating Reaffirmation Details

CRISIL has reaffirmed multiple ratings for DCB Bank's financial instruments:

Financial Performance and Capitalization

The bank demonstrates healthy capitalization metrics as of September 30, 2025. The Tier 1 Capital Adequacy Ratio stood at 14.00% while the overall CAR was 16.40%, compared to 14.30% and 16.80% respectively as of March 31, 2025. The bank reported tangible networth of ₹5,973 crore with networth coverage for net NPAs at 9.30 times.

Business Growth and Market Position

DCB Bank's net advances increased to ₹52,975 crore as of September 30, 2025, from ₹51,047 crore as of March 31, 2025, registering an annualized growth of 7.60%. The bank maintains its focus on the SME segment with mortgages constituting approximately 43% of advances and SME/MSME book accounting for 4% as of September 30, 2025.

The deposit base grew by 15.80% (annualized) to ₹64,777 crore as of September 30, 2025, from ₹60,031 crore as of March 31, 2025. However, the CASA ratio marginally declined to 23.50% from 24.50% during the same period. The retail deposits ratio remained healthy at approximately 71% as of September 30, 2025.

Asset Quality and Risk Management

The bank's asset quality metrics show improvement with Gross NPA ratio at 2.90% as of September 30, 2025, compared to 3.00% as of March 31, 2025. The mortgage book's GNPA ratio stood at 2.80% while the SME/MSME book's GNPA ratio was 7.00% as of September 30, 2025. The restructured portfolio constituted less than 3% of gross advances and is entirely out of the moratorium period.

Operational Challenges and Outlook

CRISIL noted certain challenges including average earnings profile with operating expenses at 2.50% of average total assets in the first half of fiscal 2026. The Net Interest Margin moderated to 3.00% in the first half of fiscal 2026, resulting in Return on Assets remaining range-bound at 0.90%. The agency maintains a stable outlook, believing DCB Bank's capitalization will remain adequate to meet business growth and manage asset-related risks.

The bank operates through a network of 468 branches as of September 30, 2025, and maintains strong liquidity with a Liquidity Coverage Ratio of 123.22%. AKFED and its Indian associate, Platinum Jubilee Investments, remain the largest shareholders with a combined stake of 14.66% as of September 30, 2025.