Dhanlaxmi Bank shares rallied 5 percent today on the back of 23 percent growth in its gold loan book. The bank has also witnessed growth of 7.45 percent in total deposits and 16.85 percent in gross advances as disclosed by the bank in a filing with the BSE today.
The Bank's credit-to-deposit (CD) ratio has grown by 5.96 percent on-year and its total business has surged 11.26 percent to Rs 20,847 crore. The credit-to-deposit (CD) ratio is important because it helps in assessing a bank’s liquidity and indicates its financial health. A higher ratio indicates that the loans disbursed are more than the deposits.
If the ratio is too low, this indicates that the bank may not be earning as much as they should. Whereas if the ratio is too high, this indicates that the bank might not have enough liquidity to cover any unforeseen fund requirements. Therefore, this may cause an asset-liability mismatch which further underlines the significance of the credit-to-deposit ratio for a bank.
A brief history of Dhanlaxmi Bank
Dhanlaxmi Bank Ltd was incorporated in 1927 at Thrissur, Kerala. Since then, the bank has set up 541 touch points across India.
The Dhanlaxmi Bank stock
The Dhanlaxmi bank stock has given a return of 21 percent over the last one year. It underperformed Nifty Bank over the last five years, declining 35.5 percent compared to a 64.12 percent rise in the index. The stock has been among the worst performers in the banking sector in 2023 so far, falling over 24 percent.
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