Managing director eyes 15-20pc growth in current year
KOCHI: Dhanlaxmi Bank, working hard to ward off the spectre of intermittent loss-making quarters, seems to have shifted its focus more on to retail portfolio as part of the new thinking in the board.
The bank, which posted losses of Rs17.16 crore for the quarter ending March 31, 2018 and Rs24.87 crore for the reporting full year, witnessed a substantial growth in retail revenue, from Rs69.73 crore during the last quarter ending March 31, 2018, to Rs106.22 crore – representing a surge of 53.33 per cent.
During the period, the corporate revenue took a plunge from Rs124.03 crore to Rs90.02 crore. “We have changed our strategy, and now corporate loans will take a backseat for some time,” said G Sreeram (seen in the picture), the managing director and CEO of the bank, while talking to businessbenchmark.news.
He said the board has taken an informed decision not to grow the corporate book as the bank had done in the past. Explaining the reason for the accumulation of bad loans, the bank chief said until 2013 the bank had been aggressive on building asset base and had pushed loans through direct selling agents (DSAs).
“This had, to an extent, led to the build-up of bad loans in our books. Things are changing now and we are slowly getting out of the rut and today we have a provision coverage ratio (PCR) of above 80 per cent,” Sreeram said.
The profit eluded Dhanlaxmi Bank, the smallest among all the four Kerala-based banks, this quarter too despite reporting a healthy operating profit of Rs62.96 crore for the reporting quarter ending March 31, 2018.
Blame it on the extra-ordinary provisions to the tune of Rs80.12 crore the bank had to make during the quarter alone – which was close to the full year provision the bank set aside for 2016-17, at Rs81.69 crore.
Businessbenchmark.news could not ascertain whether the large provision the bank made against a gems & jewellery account has been responsible for the damage that caused to the bank’s bottom line during this reporting quarter.
The bank said in its footnotes to its financials that “In respect of a Gems and Jewellery borrower, where fraud was declared by some banks, Dhanlaxmi has declared it as fraud and fully provided for the entire funded exposure of Rs50 crore.”
Dhanlaxmi’s credit-deposit ratio at 55.96 per cent can work in its favour moving forward as the bank sits on a comfortable capital and a capital adequacy ratio (CAR) of 13.87, which according to Sreeram gives the bank a head room for 15-20 per cent growth in the current year.
During the quarter ended March 31, 2018, the bank had raised Rs150 crore of Basel 3 Tier 2 bond. It had also raised capital of Rs119.99 crore by issuing equity shares at Rs27.80 per share including a share premium of Rs17.74 on preferential allotment basis
The bank decided not to use the facility announced by RBI to spread the impact of change in gratuity ceiling and the mark-to-market losses on investments held in available for sale (AFS) and held for trading (HFT) portfolios, across four quarters and opted to absorb the negative impact in one go in the reporting year itself.