Kerala-based Dhanlaxmi Bank has firmed up plans to raise Rs 130 crore through a rights issue. This will improve its capital adequacy ratio (CAR) by 105 basis points. 

The private lender is working on the timing of the issue. “We are planning to have the rights issue in the first quarter of the current financial year but it may get rolled over to the next. The rights issue will help us to shore up our capital adequacy ratio,” Dhanlaxmi Bank managing director and CEO JK Shivan told Indianbankingnews.com.

The bank posted a net profit of Rs 38.17 crore in the fiscal fourth quarter ended March 2022, up 63% from Rs 23.42 crore a year ago, on the back of a fall in provisions and improvement in asset quality.

While the bank’s net interest income (NII) rose 19.5% year-on-year to Rs 115.2 crore in the quarter ended March 2023, the credit-to-deposit ratio improved to 73.80% from 68.08%. In Q4FY22, NII stood at Rs 96.4 crore.

“The profitability is due to the improved NII and other income with the exception of treasury. We have taken a Rs 40 crore hit toward MTM (mark-to-market) and provisions in the investment book. In the previous financial year, we had reported a gain of Rs 70 crore in this segment,” Shivan said.

For the full-fiscal ended March 2023, the bank’s net profit rose 37% to Rs 49.36 crore from Rs 35.90 crore a year ago. The operating profit was Rs 123.20 crore while the standalone operating profit for Q4 was Rs 38.56 crore.

The lender’s NII rose 31.31% to Rs 475.76 crore for FY23, from Rs 362.31 crore a year ago. Net interest margin (NIM) improved to 3.6% from the earlier 3%.

The bank’s asset quality improved, with the gross non-performing assets (NPAs) declining to 5.19% in Q4FY23 from 6.32% in Q4FY22 and 5.83% in Q3FY23.

In the March 2023 quarter, net NPA declined to 1.16% from 2.85% in Q4FY22 and 1.82% in Q3FY23. 

In value terms, the gross NPA was at Rs 511.14 crore in Q4FY23, down from Rs 533.54 crore a year ago and Rs 539.11 crore a quarter ago.

The bank also improved its provision coverage ratio to 90.61%from 80.64% in the previous year. Provisions declined to Rs 18.14 crore in Q4FY23 from Rs 39.01 crore in Q4 of FY22. Provisions were at Rs 32.58 crore in December 2022 quarter.

“We have made provisions of Rs 70 crore for two large value accounts classified as fraud. We will start reaping the gains through recovery in subsequent years,” Shivan said.

The bank’s total business rose 11.32% to touch Rs 23,206 crore as on 31 March 2023, from Rs 20,847 crore a year earlier. 

Deposits grew 7.65% over the previous year to reach Rs 13,352 crore as on 31 March 2023, from Rs 12,403 crore a year ago. The CASA share of the bank was 31.91% of total deposits in the reporting period.

Gross advance grew 16.7% YoY to Rs 9,854 crore on 31 March 2023, from Rs 8,444 crore a year ago. The gold loan portfolio grew 23.39% YoY to Rs 2,274 crore, from Rs 1,843 crore in the earlier year.

The retail loan book grew 16% to Rs 4,295 crore. The agri and loans to micro-enterprises rose 12% to Rs 914 crore while corporate advances grew 13% to Rs 2,910 crore and SME advances 29% to Rs 1,736 crore. Vehicle loans grew the fastest by 73% to Rs 220 crore.

The bank's total income grew 5.53% to Rs 1,145.75 crore from Rs 1,085.75 crore.