Heard the whole concall and found Praveen kutty quite energetic and frank and very confident person. He also says that he is not happy with the way, “We’ve been acting like an NBFC—disbursing loans and walking away. That has to change.”
These are not just HL or LAP customers. They are full banking relationships. We must serve their savings, credit, insurance, and trade needs. What really was a surprise was the small ticket secured DAs… these were cherry-picked customers, yet they underperformed."
The bank uses DA as a sandbox to test asset classes (e.g., school finance, unsecured business loans). Some past experiments (e.g., CV loans) didn’t work out well, and now secured DA showed similar stress.
We try, validate, and either scale or ditch a product. This quarter reminded us again—some experiments can fail.
We’ll continue to experiment, but this quarter is a reminder to manage even cherry-picked pools cautiously."
Disclaimer: Taken help of AI, to write the post. Still confident on management worthiness.
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I have highlighted the key moat answer at 41:40 which i asked in the group few days back but got the answer toady from CEO sir. Do listen this from last quarter concall of 24-25
Hi guys…this quarter results were good…stress in secured da and mfi has reduced although not gone completely…credit costs are at an all time low…nim benefits due to rate cuts have started to appear…in the next 12 months we will see full benefits…roa is close to 0.94…roe is 13%+…price to book is still below 1…management has also guided cross selling other type of loans to secured da holders…keeping a close watch…we might see stark improvements in the next year or so in the bank’s overall metrics.
Good results by DCB bank. However following points are needed to be considered:
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Management sacrificed higher yield loan for better asset quality. This will lead to only one lever in increasing NIM which is cost of fund. Advantage of cost of fund will retain upto next quarter as per management.
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ROA is also peaking in near term due to very low credit cost in its operational history i.e. 0.45.
Ultimately things will come to CASA for DCB which very long term metric to improve. It takes almost 3-5 years for CASA improvement.
Disclaimer: Holding and biased from 110 levels and watching what next for DCB. Requesting fellow members to give their valuable opinions. Criticism of my understanding will be learning for me.
One thing more , praveen kutty has great sense of humour. In one of the question about good q4 results, is there any seasonality or pattern in it?
Praveen says one liner answer that our appraisals are in April. Great sense of humour. Me along with my wife are laughing after reading this.
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