Credit Analysis & Research (CARE) reaffirmed 'BBB' ratings to Dhanlaxmi Bank's Lower Tier II Bonds of Rs 2.67 billion.

CARE reaffirmed 'BBB-' ratings to the bank's Upper Tier II Bonds of Rs 275 million.

CARE has withdrawn the rating assigned to the Certificate of Deposit programme and Lower Tier I Bonds aggregating to Rs 100 million of the bank with immediate effect, due to extinguishment of the said instruments as the bank has fully repaid the amounts under the said issue and there is no amount outstanding under the issues as on date.

The ratings factor in capital infusion leading to improvement in capital adequacy, improving  but moderate profitability characterized by high cost to income ratio, deteriorating asset quality and moderate funding and liquidity profile with high reliance on bulk deposits and low CASA proportion. The bank's capitalization level, profitability, resources profile and asset quality is the key rating sensitivities.

The rating of Upper Tier II Bonds of Dhanlaxmi Bank (DBL) also takes into account its sensitiveness to bank's capital adequacy ratio and profitability during the tenure of the instrument. The rating factors in additional risk arising due to existence of lock-in clause in this instrument. 

Shares of the company declined Rs 0.55, or 1.43%, to settle at Rs 38. The total volume of shares traded was 61,894 at the BSE (Monday).