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Axis Securities Report
FY23 was a year of recovery for DCB Bank Ltd. The bank proactively pushed the growth pedal during the year, accelerating growth on both sides of the balance sheet.
Its asset quality concerns continued to ebb as collections improved and the recovery pipeline continued to be strong even as slippages remained elevated.
In an increasing interest rate environment, DCB Bank witnessed significant margin expansion in FY23. This was supported by lower slippages YoY, faster loan repricing, and a lag in rate transmission in cost of fund, which enabled DCB to exit FY23 with net interest margins at a multi-year high (highest since FY19).
The improved demand outlook and the management's guidance of doubling the balance sheet size in the next three-four years should keep the bank's credit/deposit book healthy at ~18%/17% compound annual growth rate over FY23-25E.
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