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Dhanlaxmi Bank is looking to raise Rs 500 crore equity capital before May-end to boost its capital adequacy ratio.
This capital raising proposal comes in the wake of the old generation private sector bank's capital adequacy falling to 11.8 per cent from 12.99 per cent as on March 31, 2011.
Working out modalities
The bank is currently working out the modalities of the capital raising exercise.
In January this year, the bank had said it would raise up to Rs 1,000 crore in the 2011-12 fiscal, in order to support its business growth and expansion plans.
In the quarter ended March 31, 2011, the bank posted a net profit of Rs 11 crore, an increase of 96 per cent over Rs 5.6 crore in the corresponding quarter last year.
During the quarter, the bank's business grew by 78 per cent to Rs 21,595 crore (Rs 12,105 crore).
The bank's strategy to enter new geographies and diversify its business streams in order to increase fee income has helped achieve this growth, said Mr Bipin Kabra, Chief Financial Officer, Dhanlaxmi Bank.
The bank's board has recommended a dividend of 5 per cent of Rs 0.5 per share having face value of Rs 10 for the year ended March 31, 2011.
For the full-year, net profit increased to Rs 26 crore, up 13 per cent from Rs 23 crore in the previous fiscal.
Within advances, retail assets accounted for 41 per cent, large corporate – 38 per cent, SME-19 per cent and agriculture – 5 per cent.
In the current fiscal, there will be more growth from SME segment, even as retail will continue to grow.
“We need to push SME. In retail, we will continue to grow our secured assets. We are not getting into credit cards or personal loans for now. Our balance-sheet is not big enough to take the risk,'' Mr Kabra said.
Retail advances
Loans against gold jewellery account for 30 per cent of retail advances, he added.
Currently, the bank has a network of 275 branches and 459 ATMs. While the bank may not open new branches this year, it may add 10 per cent to its current staff strength of 4,260 employees, Mr Kabra said.
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