Private sector lender Dhanlaxmi Bank, which returned to profitability in the June quarter after years, is looking at moderate growth this fiscal by focusing on branch-level profitability, improving net interest margin and asset quality and better recoveries.
"Things are looking up finally. I believe the worst is almost over and we can expect improvement in earnings performance in the coming quarters. There is tremendous support from our investors, the public and more importantly from the staff for the measures we have taken in the past two years to stabilise the operations and come out of the crisis.
"We are lending carefully, mostly against collaterals, and monitoring our asset quality closely. We are trying to improve operating efficiencies, cut costs and grow our low-cost deposit base," Dhanlaxmi Bank MD & CEO P G Jayakumar told PTI.
For the three months to June, the 85-year-old lender had reported net profit at Rs 3.03 crore. It had reported Rs 252 crore net loss for the full fiscal ending March 2014, which was attributed to a Rs 100-crore hit on treasury operations. In FY 2013, it had reported a marginal profit of Rs 2.6 crore while in FY 2012 a net loss of Rs 115.6 crore.
He also said, "Going forward we are not looking at a break-neck growth, which had brought us down in the past, but a moderate, say 10-15 per cent growth. My focus is to improve the NIM (net interest margins) to at least 3 per cent by March and aggressively go about recovery. Another key area of focus is asset quality."
In June quarter, Thrissur-based bank had a NIM of 2.4 per cent, he said, but noted this was only 1.8 per cent earlier.
Branch-level profitability means putting a full-stop to branch expansion, he said, adding new branches may begin only from next fiscal. Currently, the bank has 280 branches and close to 400 ATMs at 160 centres in 14 states, serving 1.6 million.
However, he was quick to add that no branches will be shut.
This strategy also involves tapping the potential of operations in Mumbai and Delhi, where it had opened many branches during 2010-12, he said.
Blaming the unbridled expansion for the present situation, Jayakumar, who took charge in May 2012, said: "We have high levels of non-performing assets because of the old loans. We have been making provisions affecting our profitability."
During the past two years, the bank had slashed its employee strength to 2,500 from 4,500 and also massively cut salaries. During the previous management under Amitabh Chaturvedi, the bank had given huge salary hikes and increased the head count to 4,500 from 1,250, which increased the operating expenses by over five times, he said.
