DCB Bank Q3 Profit Soars 22%, Share Price Hits 6-Year High

Introduction

Shares of DCB Bank Ltd surged by over 8% on Tuesday, reaching a six-year high of ₹198 on the National Stock Exchange (NSE). The significant rally was triggered by the private sector lender's strong financial performance for the third quarter of fiscal year 2026, which ended on December 31, 2025. The bank reported a robust 22% year-on-year increase in net profit, coupled with healthy growth in its loan book and deposit base, signaling strong operational momentum and improved asset quality.

Stellar Quarterly Performance

DCB Bank announced a net profit of ₹185 crore for Q3 FY26, a 22% rise from the ₹151 crore reported in the same quarter of the previous fiscal year. This growth was achieved despite the bank absorbing a one-time expense of ₹26.87 crore related to the implementation of 'New Labour Codes'. According to Managing Director & CEO Praveen Kutty, this marks the bank's highest-ever quarterly profit after tax.

The bank's core income streams also showed healthy growth. Net Interest Income (NII) for the quarter increased by 15% year-on-year, climbing to ₹625 crore from ₹543 crore in Q3 FY25. Total income for the period grew by 16% to ₹846 crore. The Net Interest Margin (NIM) remained stable at 3.27% for the December quarter.

Robust Business Growth

The bank's balance sheet expanded significantly, reflecting its ability to attract capital and deploy it effectively. Total deposits grew by 20% year-on-year, reaching ₹67,754 crore as of December 31, 2025. Simultaneously, net advances saw an 18% year-on-year increase, standing at ₹56,600 crore. This balanced growth across both sides of the balance sheet underscores the bank's sustained business momentum. The bank's strategy focuses on retail deposits, which provides a stable and granular funding base.

Key Financial Highlights: Q3 FY26 vs Q3 FY25

Significant Improvement in Asset Quality

DCB Bank demonstrated notable improvement in its asset quality during the quarter. The Gross Non-Performing Asset (GNPA) ratio declined to 2.72% as of December 31, 2025, compared to 3.11% in the same period last year and 2.91% in the preceding quarter. The Net Non-Performing Asset (NNPA) ratio also improved, falling to 1.10% from 1.18% a year ago and 1.21% in the previous quarter. Management noted that both GNPA and NNPA are at three-year lows, indicating benign credit costs and reduced slippages. The Provision Coverage Ratio (PCR) stood strong at 75.35%.

Management Commentary

Praveen Kutty, Managing Director & CEO of DCB Bank, expressed confidence in the bank's performance. He stated, "The growth momentum in both advances and deposits continues to be robust. As indicated in the last quarter, the NIM continues its upward trend in this quarter as well. Fee income momentum continues to remain strong. Credit costs remain benign with slippages reducing and GNPA & NNPA at their three-year lows."

Market Reaction and Technical Outlook

The strong quarterly results were well-received by the market. DCB Bank's stock jumped 8.26% to hit ₹198, its highest level since January 21, 2020. The counter witnessed heavy trading, with 9.4 million shares changing hands on the NSE. The bank's market capitalization stood at ₹6,296.3 crore following the rally. Over the last 12 months, the stock has delivered a return of over 66%, significantly outperforming the Nifty 50 index.

Technical analysts also turned bullish on the stock. Vikash Yadav of Kedia Advisory noted a strong breakout from a rounding bottom pattern, suggesting a medium-term trend reversal. He pointed out that the stock is trading above its 50-day and 200-day moving averages, with the Relative Strength Index (RSI) positioned in a bullish zone, reflecting strong buying momentum.

Strategic Focus and Future Targets

DCB Bank remains well-capitalized to support future growth, with a Capital Adequacy Ratio of 15.84% as per Basel III norms. The bank continues to invest in its digital capabilities, with 99% of its total transactions in Q3 FY26 being conducted through digital channels. Looking ahead, the bank aims to double its balance sheet size every three to four years and achieve a Return on Assets (ROA) of 1% or higher in the near term. The management is also focused on maintaining a healthy loan book, targeting a Gross NPA below 2.50%.

Conclusion

DCB Bank's performance in the third quarter of FY26 highlights its strong execution capabilities, resulting in robust profitability, healthy balance sheet growth, and improved asset quality. The positive market reaction, which sent the stock to a six-year high, reflects investor confidence in the bank's strategy and future prospects. With a clear focus on sustained growth and operational efficiency, DCB Bank is positioned to continue delivering value to its stakeholders.