Dhanlaxmi Bank aiming at healthy balance sheet

Dhanlaxmi Bank believes it has turned the corner and is poised for a healthy balance sheet in coming quarters, as it reported growth in the operating profit for the first three quarters of the current fiscal despite a decline in treasury yields. The lender recently was in the news for governance issues and a fallout between large shareholders and the board.

JK Shivan, managing director & CEO, said interest income grew 2.45% in Q3 on a sequential basis while interest expenses remained more-or-less at the same level.

The bank expects net interest income and net interest margin to further improve in coming quarters as it starts accruing interest on the increased loan book. Shivan said the bank is taking cautious steps to ensure healthy growth and there are no large-value accounts showing stress in its book.

Dhanlaxmi reported an 83% year-on-year decline in its third quarter net profit to Rs 2.03 crore.

The decline in the net profit is due to statutory provisions and provisions on the restructured book. Major slippages happened during Q1 of this financial year and were as part of stress witnessed in the economy due to Covid-19 restrictions and a major corporate account. The scenario improved in the subsequent two quarters. Strengthening the credit monitoring and administration department could reduce SMA-2 book considerably, from Rs 254 crore in Q1 to Rs 161 crore in Q2 and to Rs 99 crore in Q3,” he said.

Shivan said the lender could recover Rs 108 crore and upgrade Rs 197 crore during the nine-month period, against slippages of Rs 355 crore during the same period last year. In Q3, slippages were at Rs 25 crore and recovery and upgrades stood at Rs 60 crore.

The asset quality improved, with gross NPA as a percentage of gross advances being at 7.55% for the quarter under review, compared with 8.67 % in the second quarter and 5.78% in the year-ago period. The net NPA ratio was at 3.83%, compared to 4.92% in Q2 and 1.11%  in the third quarter of the last fiscal.

from Banking & Finance – The Financial Express https://ift.tt/hjqNzUX