Dhanlaxmi right-sizes its balance sheet

Posts Rs27.61 cr Q4 profit; 80 pc drop in provisions

 THRISSUR: Dhanlaxmi Bank, the smallest among the Kerala-based banks, has gone in for a right-sizing of its balance sheet with the asset base falling from Rs12,286.46 crore to Rs11,798.89 crore during the year.

In order to attain this, the bank had reduced its deposits and borrowings during the year by more than Rs500 crore. On the asset side, the bank could reduce cash & balances with RBI as well as the balances with banks and money at call, with the latter being cut down by more than Rs200 crore during the year.

The bank seems to be slowly moving to strengthen the retail book at the cost of corporate loans. While the retail assets expanded from Rs3093.65 crore to Rs3695.10 crore, the corporate book shrank from Rs4200.98 crore to Rs3703.98 crore during the year.

The 80 per cent drop in provisions in the fourth quarter of the just concluded financial year that ended March 31, 2019, from Rs80.12 crore to Rs16.27 crore, landed the Thrissur-based Dhanlaxmi Bank in fourth quarter profit of Rs 27.61 crore compared with Rs17.61 crore loss the bank posted for the same quarter last year.

For the full year ended March 31, 2019, the bank turned in a net profit of Rs11.67 crore against a loss of Rs24.87 crore for the previous year.

Dhanlaxmi, which escaped from the RBI’s prompt corrective action (PCA) a few months ago, has also reported a full year profit of Rs11.61 crore for 2018-19 against Rs24.87 crore loss in the previous year.

The bank with a total equity of Rs621.45 crore that includes paid up capital of Rs253.01 crore and reserves to the tune of Rs368.44 crore, currently sits on a comfortable capital adequacy ratio (CAR) of 13.75 per cent as of March 31, 2019.

The bank chief executive officer (CEO) had a few months back told businessbenchmark.news that the bank intended to almost double its paid up capital within a year once shareholders’ approval is in place, and this could provide ample headroom for growth in the future.

The proactive provisioning has reduced the net NPA ratio from 3.19 per cent to 2.41 per cent even as the gross NPA ratio inched up from 7.35 per cent to 7.47 per cent during the year.

Dhanlaxmi currently boasts one of industry’s highest provision coverage ratio (PCR) at 84.72 per cent as of March 31, 2019.



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