DCB Bank has announced its highest ever quarterly profit of INR 184 crores for the second quarter of fiscal year 2026, marking a significant milestone in the bank's financial performance. The bank's earnings per share reached 5.84, reflecting strong growth and improved profitability.

Robust Growth in Deposits and Advances

The bank reported impressive growth in both deposits and advances:

This marks the fifth consecutive quarter of high growth for DCB Bank, demonstrating consistent expansion in its core banking operations.

Improved Net Interest Margin

Despite recent repo rate cuts, DCB Bank managed to improve its net interest margin (NIM) from 3.2% to 3.23%. This improvement was achieved through effective management of the bank's cost of deposits, which decreased by 16 basis points to 6.96%.

Credit Costs and Asset Quality

The bank maintained low credit costs at 31 basis points for the quarter, indicating strong asset quality management. Management expects full-year credit costs to remain below 45 basis points, suggesting continued focus on maintaining a healthy loan book.

Operational Efficiency

DCB Bank demonstrated significant improvements in operational efficiency:

• Reduced employee base by 9% (1,118 employees) while maintaining growth
• Cost-to-average assets declined to 2.43%, showing better cost management

Future Outlook

The bank's management has set targets for return on equity (ROE):

• FY27 ROE target: 13.5%
• FY28 ROE target: 14.5%

These targets indicate the bank's confidence in its growth strategy and operational improvements.

Co-Lending Book

The co-lending book currently represents 16.22% of total advances. Management plans to reduce this to below 15% by the end of the fiscal year, aligning with their strategy to focus on core lending operations.

DCB Bank's strong performance in Q2 FY26 showcases its ability to navigate a challenging economic environment while delivering robust growth and profitability. The bank's focus on operational efficiency, asset quality, and strategic growth initiatives positions it well for continued success in the coming quarters.

DCB Bank shares experienced a significant boost following the release of its September quarter results, marking its best single-day gain since April 2022. The stock jumped 13.5% before closing 12.5% higher at ₹145.1, extending its year-to-date gains to an impressive 20%.

Key Financial Highlights

The bank's performance showed robust growth across various metrics:

Improved Asset Quality

DCB Bank demonstrated significant improvement in its asset quality:

• Credit costs declined to 0.31% from 0.59% in the June quarter
• This figure is well below the bank's projected range of 45-55 basis points
• Provisions nearly halved sequentially

Future Outlook

Despite facing rate cut pressures, DCB Bank managed to expand its Net Interest Margins (NIM) by 3 basis points to 3.23%. The bank has set a target for its NIM, aiming for a range between 3.5% and 3.65%.

Analyst Sentiment

The strong performance has resonated well with market analysts:

• All 22 analysts covering the stock maintain buy ratings
• Consensus price targets suggest a 15.6% upside potential

This positive sentiment from analysts, coupled with the bank's strong financial performance, appears to be driving investor confidence in DCB Bank's stock.

The bank's ability to improve its asset quality while growing its core income and profitability has been well-received by the market. If DCB Bank can sustain this performance and achieve its targeted NIM range, it could potentially lead to further upside in the stock price. However, investors should always consider market risks and conduct their own research before making investment decisions.