Asset quality remains stable for Dhanlaxmi Bank in the June 2019 quarter but it was a sequentially weak period due to a decline in other income. The bank reported a profit of Rs 19.84 crore in the quarter ended June 30, compared to a loss of Rs 45 crore in the year-ago period.

“We expect to do a minimum recovery of Rs 40-50 crore in the coming quarter (in Q2) vis-à-vis slippage of Rs 8-10 crore in this quarter,” said T Latha, MD and CEO. The bank expects the cost to income ratio to be below 55 percent by March 2020, she said.

“The fresh slippages are less than Rs 10 crore and the recovery is also Rs 10 crore. So there is no change in asset quality over March,” she added.

On gross NPA front, Latha said, “It continues to be at the same level but definitely it will be coming down in the next quarter because we already have few accounts lined up for recovery and we hope to bring it down to less than 7 by September quarter. Therefore, going ahead, the credit will definitely grow by about 10 percent.”

Speaking about net interest margins, she said, “Our NIM was 2.74 percent in June 2018, which was 3 percent in March 2019 and now has gone up to 3.15 percent. Our provision coverage ratio (PCR) coverage has gone up to 85 percent and our net NPA has drastically come down from 3.79 percent in June 2018 to 2.35 percent in June 2019.”