Good News For DCB Bank’s Account Holders: DCB Bank Eyes 18–20% Loan and Deposit Growth in FY26

This article explores DCB Bank’s strategic roadmap for FY26, focusing on its ambitious projections for loan and deposit growth, profitability metrics, and operational transformation. It analyses how the mid-sized private sector lender plans to sustain its double-digit growth while managing asset quality, improving margins, and leveraging digital initiatives in a competitive banking environment.

Growth Ambitions: Loans and Deposits

DCB Bank has projected a robust 18–20% growth in both advances (loans) and deposits for FY26, highlighting confidence in its operational resilience and the ongoing momentum in credit demand. As of September 2025, the bank reported 19.14% year-on-year (YoY) growth in advances and 18.8% YoY growth in deposits, demonstrating that it is already close to meeting its FY26 targets.

This parallel rise in both lending and deposits ensures that the loan-to-deposit ratio (LDR) remains stable, reducing funding mismatches and maintaining liquidity comfort — a key priority for mid-sized private lenders like DCB Bank.

DCB Bank’s Key Growth Indicators (FY25 Actual vs FY26 Target)

Before the table, it’s important to note that these figures represent the bank’s operational performance and forward-looking guidance for the current financial cycle.
 

After the table: These figures reveal that DCB Bank’s FY26 goals are not overly aspirational but a continuation of its current trajectory. The slight improvement in margins and reduction in slippages underline management’s intent to balance growth with stability and quality.

Business Strategy and Operating Levers

DCB Bank’s growth model is anchored in secured small-ticket lending — primarily targeting the micro, small and medium enterprise (MSME) segment, alongside mortgage-backed retail loans. The lender has consciously limited unsecured lending to mitigate risk exposure and ensure steady asset quality.

The bank’s co-lending partnerships, which account for roughly 15–16% of its loan book, have been optimised to expand reach without compromising credit discipline. Moreover, digital innovation remains a key enabler. DCB Bank is actively deploying data analytics, artificial intelligence (AI), and natural language processing (NLP) to enhance customer experience, automate underwriting, and improve cross-sell ratios across retail and SME clients.

On the liabilities front, the bank is focusing on expanding its low-cost CASA deposits, which are crucial for controlling the cost of funds. A moderate decline in deposit costs during the last quarter suggests that this strategy is beginning to yield results.

These combined levers, technology-driven lending, prudent risk management, and liability optimisation, position DCB Bank to sustain high growth with operational efficiency in FY26.

Asset Quality, Profitability, and Long-Term Outlook

Asset quality remains central to DCB Bank’s strategic plan. The slippage ratio, currently at 3.17%, is expected to fall to around 2.5%, while credit costs are projected to stay below 45 basis points in FY26. This reflects strong underwriting standards and effective monitoring of existing accounts.

Profitability continues to strengthen as well. DCB Bank’s Q2 FY26 net profit stood at approximately ₹184 crore, marking an 18% YoY rise. Return on Equity (RoE) improved to 12.39%, with a management target of 13.5% by FY27 and 14.5% by FY28.

Profitability and Asset Quality Trends at DCB Bank
 

After the table: The consistency in profit growth and improving efficiency metrics underscore DCB Bank’s successful shift from pure growth-driven lending to sustainable, risk-adjusted profitability.

Industry Context and Key Risks

DCB Bank’s bullish growth forecast comes amid an increasingly competitive and margin-sensitive banking environment. Across the sector, deposit costs have risen due to liquidity tightening, while loan yields are gradually compressing. Consequently, maintaining NIMs above 3% will require disciplined balance sheet management.

Potential risks for DCB Bank include slower deposit mobilisation, higher competition from larger private banks, and minor asset quality challenges in specific segments such as gold loan co-lending, which the bank has already started addressing through tighter controls.

Nonetheless, its proactive stance in expanding secured lending, diversifying income streams, and maintaining operational efficiency provides resilience against these external pressures.

Conclusion

DCB Bank’s FY26 vision reflects a pragmatic mix of ambition and discipline. With well-balanced growth targets of 18–20% in both loans and deposits, an improving profit profile, and a renewed focus on asset quality, the bank is demonstrating that sustainable expansion is achievable even in a cautious market.

While risks from competitive pressures and deposit dynamics persist, DCB Bank’s strong execution track record, digital integration, and steady improvement in core metrics suggest that it is well-positioned to deliver growth with quality, a key differentiator for India’s emerging mid-tier private banks.
 

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