Dhanlaxmi Bank aims for a healthy balance sheet

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The bank expects net interest income and net interest margin to improve further in the coming quarters as it begins to accrue interest on the increase in the loan portfolio.

Dhanlaxmi Bank believes it has passed the milestone and is poised to post a healthy balance sheet over the next few quarters as it recorded operating profit growth for the first three quarters of the fiscal year in prices despite falling Treasury yields. The lender has recently made headlines for governance issues and a fallout between major shareholders and the board.

JK Shivan, managing director and CEO, said interest income rose 2.45% in the third quarter on a sequential basis, while interest expense remained more or less at the same level.

The bank expects net interest income and net interest margin to improve further in the coming quarters as it begins to accrue interest on the increase in the loan portfolio. Shivan said the bank was taking prudent steps to ensure healthy growth and no high-value accounts showed stress on its book.

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

The drop in net profit is due to statutory provisions and provisions on the restructured portfolio. Major slippages occurred in the first quarter of this fiscal year and were part of the stress seen in the economy due to Covid-19 restrictions and a major business account. The scenario improved over the next two quarters. The strengthening of the credit monitoring and administration department could significantly reduce the SMA-2 pound, from Rs 254 crore in the first quarter to Rs 161 crore in the second quarter and Rs 99 crore in the third quarter,” he said. declared.

Shivan said the lender could recoup Rs 108 crore and upgrade Rs 197 crore in the nine-month period from slippages of Rs 355 crore in the same period last year. In the third quarter, slippages were Rs 25 crore and recovery and upgrades amounted to Rs 60 crore.

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

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