Kerala-based private sector lender Dhanlaxmi Bank has reported a sharp rise in earnings for the July–September quarter, with standalone net profit more than doubling to ₹48.55 crore in Q2 FY27 from ₹23.20 crore in the same quarter a year ago. The results, approved by the bank’s board on 26 October 2026, point to stronger core income, lower provisions and a cleaner loan book.
Core income leads the turnaround
Net interest income (NII), the gap between what the bank earns on loans and pays on deposits, grew 32.6% year-on-year to ₹187.7 crore, up from about ₹142 crore in Q2 FY26. Interest income climbed 23% to roughly ₹471 crore, while total income for the quarter rose about 24% to ₹518.6 crore.
Other income also contributed, rising to about ₹47.4 crore from ₹34.5 crore a year earlier. According to the bank’s filing, recoveries from technically written-off accounts and loan processing charges were among the key components for the half year.
Operating profit before provisions rose to about ₹69.8 crore from ₹28.2 crore a year ago. Profit before tax stood at ₹64.13 crore. Unlike the year-ago quarter, which carried no tax expense, the bank provided about ₹15.58 crore for tax this time — making the jump in post-tax profit all the more notable.
Asset quality keeps improving
The lender’s balance sheet continued to strengthen. Gross non-performing assets (GNPA) eased to 1.76% of gross advances as of 30 September 2026, compared with 3.10% a year earlier and 1.82% in the June quarter. Net NPA fell to 0.45% from 1.12% a year ago and 0.47% sequentially.
Provisions dropped about 64% quarter-on-quarter to roughly ₹6 crore, while the provision coverage ratio, including technical write-offs, stood at 92.86%. Capital adequacy under Basel III was a comfortable 18.86%, and annualised return on assets improved to 0.85% from 0.49% a year earlier.
Half-year picture
For the first half of FY27, net profit rose to about ₹73.5 crore from ₹35.4 crore in H1 FY26, on total income of roughly ₹1,003 crore. Net worth increased to about ₹1,332 crore from ₹1,197 crore a year ago.
Market reaction
Despite the stronger numbers, investors took a cautious view. Dhanlaxmi Bank’s shares fell as much as 13–14% on 26 October to around ₹30.8, trimming the stock’s year-to-date gains to about 23%. Part of the quarter’s profit growth was supported by other income and lower provisions, which market participants are likely to watch for sustainability in the coming quarters.
Why it matters
Dhanlaxmi Bank’s results add to a strong Q2 season for India’s smaller and mid-sized lenders, where loan growth, recoveries and falling bad loans have lifted profitability. With the RBI shifting to a tighter policy stance and asset-quality concerns emerging in drought-hit regions, the focus for the Thrissur-headquartered bank will be on sustaining core income growth, margins and a clean loan book through the rest of FY27.
