Quarterly numbers: Dhanlaxmi Bank under scanner

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/quarterly-numbers-dhanlaxmi-bank-under-scanner/articleshow/15469149.cms

What's brewing at Dhanlaxmi Bank? The auditors of the old private sector lender have resigned earlier this month following certain differences with the management while the banking regulator suspects that some of the shareholders of DLB are acting in concert. 

The auditors Walker Chandiok & Co - the local audit arm of the management and audit consultancy Grant Thornton - have put a question mark on some of the bank's performance numbers for the quarter ended June 2012. 

Dhanlaxmi CEO & managing director PG Jayakumarsaid that there was no "truth in the statement" and added that the bank had not received any communication from RBI on shareholding issues. 

But, it is believed that the auditors were not comfortable with the sudden spurt reported by the bank in its yield on advance for the June quarter. 

The bank's yield on advances - which simply put, is the ratio between total interest income on advances and average advance outstanding for the period - rose to 13.27% from 11.35% in the previous quarter. A two percentage point rise in yield on advances in a single quarter is very unusual for a bank unless there is a big surge in unsecured loans where interest charges are higher.

The bank's net interest margin-the difference between interest income and interest expenses upon interest earning assets-has increased from 1.53% to 2.50%. Such an improvement in margins is also rare in a quarter simply because it is difficult for a bank to replace high-cost liabilities with cheaper deposits within such a short span.