DHANBANK - Dhanlaxmi Bank

📊 NSE: DHANBANK 🏢 Banks - Private Sector 📅 Last Updated: 12/13/2025 21:30

💰 Financial Performance

Revenue Growth by Segment

Total business grew 14.31% YoY from INR 24,687.21 Cr to INR 28,219.11 Cr. Total operating income increased 9.49% from INR 1,360 Cr in FY24 to INR 1,489 Cr in FY25. Treasury segment booked an aggregate profit of INR 49.65 Cr, including a trading profit of INR 13.19 Cr compared to a trading loss of INR 2.29 Cr in the previous year.

Geographic Revenue Split

The bank has a heavy geographic concentration in South India, with over 80% of its 261 branches located in Tamil Nadu, Andhra Pradesh, Telangana, Kerala, and Karnataka. Kerala remains the primary hub for operations and financial literacy initiatives.

Profitability Margins

Operating Profit Margin improved by 25.54%, rising from 5.09% in FY24 to 6.39% in FY25. Net Profit grew 15.25% from INR 57.82 Cr to INR 66.64 Cr. However, Return on Net Worth (RoNW) declined by 20.76% from 7.13% to 5.65% due to a significant capital infusion of INR 368.60 Cr.

EBITDA Margin

Operating Profit as a percentage of Working Funds improved by 30.23%, increasing from 0.43% to 0.56% YoY. Core profitability remains constrained by a high operating cost-to-income ratio of 88.1% as of 9M FY2025.

Capital Expenditure

The bank is focusing on infrastructure management through branch shifting and renovations to curtail rental and operational expenditure. While specific total CAPEX figures are not disclosed, the bank successfully raised INR 297.5 Cr via a rights issue in February 2025 to fund growth.

Credit Rating & Borrowing

ICRA assigned a rating of [ICRA]BBB- (Stable) to INR 150 Cr Basel III Tier II bonds. CARE Ratings withdrew its rating on Tier II bonds as the bank repaid the outstanding amount in full. The yield on the investment portfolio was 6.23% as of March 31, 2025.

⚙️ Operational Drivers

Raw Materials

Not applicable for banking; however, the 'cost of funds' is driven by deposits. Total deposits stood at INR 16,013.45 Cr as of March 31, 2025.

Import Sources

Not applicable for banking operations.

Key Suppliers

Not applicable; the bank relies on a diversified depositor base where the top 20 depositors account for 22.3% of total deposits.

Capacity Expansion

Current network includes 261 branches and 282 ATMs as of December 31, 2024. Employee strength increased 4.15% from 1,686 to 1,756 personnel to support strategic expansion.

Raw Material Costs

Interest expenses are the primary cost. The bank's Net Interest Margin (NIM) is impacted by a suboptimal credit-to-deposit ratio of 73.5% compared to the private sector bank average of 91%.

Manufacturing Efficiency

The bank's credit-to-deposit ratio stood at 73.5% as of December 2024, up from 70.7% in March 2024, indicating improving but still suboptimal asset utilization.

Logistics & Distribution

Distribution is handled through 261 branches and 282 ATMs, primarily concentrated in South India.

📈 Strategic Growth

Expected Growth Rate

10.00%

Growth Strategy

Growth will be driven by the INR 297.5 Cr rights issue capital infusion, focusing on Retail and MSME segments to boost interest revenue. The bank plans to leverage digital channels, Fintech opportunities, and decentralized loan sanctioning with data analytics to scale operations.

Products & Services

Retail loans, MSME loans, corporate banking, CASA deposits, SLR/Non-SLR investments, and forex forward contracts.

Brand Portfolio

Dhanlaxmi Bank.

New Products/Services

Focus on digital learning platforms and enhanced digital channel offerings for business growth; specific revenue contribution percentages for new products are not disclosed.

Market Expansion

Expansion is targeted through 17 Business Correspondents (BCs) and a focus on under-banked areas via financial inclusion initiatives like PMJDY.

Market Share & Ranking

The bank holds a small market share of approximately 0.1% of the net loan book in the Indian banking industry.

Strategic Alliances

The bank has engaged 4 Financial Literacy Centres in Kerala and utilizes 17 Business Correspondents for market reach.

🌍 External Factors

Industry Trends

The industry is shifting toward digital-first banking and Fintech integration. Dhanlaxmi is positioning itself by leveraging Fintech opportunities and digital channels to overcome historical growth restrictions under PCA.

Competitive Landscape

Competes with larger private sector banks that have higher CD ratios (91% vs Dhanlaxmi's 73.5%) and lower operating cost-to-income ratios.

Competitive Moat

The bank's moat is its 97-year track record and established retail franchise in South India. This is sustainable due to long-standing customer relationships and a healthy share of retail deposits.

Macro Economic Sensitivity

Sensitive to interest rate variations; the bank measures impact on Economic Value of Equity (EVE) monthly using Duration Gap Analysis.

Consumer Behavior

Increasing demand for digital banking and retail/MSME credit over traditional corporate lending.

Geopolitical Risks

Not specifically detailed, but the bank aligns KYC/AML policies with FATF recommendations to combat global financial crimes.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Banking Regulation Act 1949, RBI Master Directions on KYC, and Basel III Capital Regulations. The bank was previously under the Prompt Corrective Action (PCA) framework until Feb 2019.

Taxation Policy Impact

The Finance & Accounts department manages TDS/TCS and GST compliance; specific tax rate % is not disclosed.

Legal Contingencies

The bank manages taxation-related litigations and has taken corrective steps regarding monetary penalties levied by the RBI during the financial year. Specific INR values for pending cases are not disclosed.

⚠️ Risk Analysis

Key Uncertainties

Asset quality remains a monitorable risk, especially in the retail segment. Fresh NPA generation was 1.48% in 11M FY2025. The vulnerable book (SMA 1 & 2 and restructured) stands at INR 155 Cr (17.6% of Tier I capital).