Dhanlaxmi Bank reports losses, CAR dips below 9% RBI mandate

MUMBAI: Private lender Dhanlaxmi Bank has become the first bank in many years to report lower than mandated capital adequacy ratio on account lower income and higher provisions for bad loans. The bank’s capital adequacy ratio stood at Rs 7.51% on the back of Rs 131 crore losses for fourth quarter ending March 2016, which half of corresponding period last year at Rs 266 crore.

The RBI has mandates banks to maintain capital adequacy capital ratio – the capital that banks set aside as a cushions against losses. The CAR is set to rise from 9% in 2016 to 10.25% for March 2016. The bank has not declared any dividend due to losses. Despite this shares of the bank rose 6.6% to trade at Rs 19.20 at the Bombay Stock Exchange.

Dhanalaxmi Bank’s gross non-performing stood at 6.35% and post provisions Rs 107 crore for full year it fell to 2.78%. The bank’s provision coverage ratio – the money that it has aside to cover for loan loss- improved to 75%. Interest earned on loans fell 6.9% to Rs 293 crore while other income like fee income and treasury income rose 41% to Rs 30 crore.