Lakshmi Vilas Bank loss narrows in Q4

Recoveries higher than fresh slippages

Private sector lender Lakshmi Vilas Bank’s (LVB) standalone net loss for the fourth quarter ended March 2019 has narrowed down to ₹264.43 crore from the ₹622.25 crore reported for the year-earlier period.

“This quarter, the losses could have been even lower, if we had not made additional contingent provision of ₹150 crore towards loans to SMEs,” said P. Mukherjee, MD and CEO, LVB.

“This was made to take care of [any] eventuality, even though, it was not required,” he said.

LVB recovered ₹213 crore, which was higher than slippages of ₹7 crore, he said, adding this trend would continue throughout FY20 and that the bank might bring down its gross non-performing assets by at least ₹1,000 crore and net NPAs by ₹400 crore

Dues from 600 accounts

“This quarter, we recovered dues from 600 accounts, of which the largest debt was ₹20 crore. Last quarter, fresh slippages related to corporate sector. But this quarter, the stress was from MSME and allied sectors. The bank, however, will continue to diversify its business into retail and MSME segments,” he said. Net interest income rose to ₹140.19 crore from ₹120.47 crore. Net interest margin rose to 1.73% from 1.34% last year.Operating expenses contracted to ₹218.86 crore (₹228 crore), and provisions to ₹478.77 crore from ₹921.41 crore.GNPAs rose to 15.3% from 9.98%, and in value terms, it accounted for ₹3,358.99 crore.

Net NPAs increased to 7.49% from 5.66%, representing ₹1,506.29 crore.

The provision coverage ratio stood at 62.8% by end of March 2019.

LVB’s total business declined to ₹51,235 crore from ₹60,314 crore year-on-year. “This is because, we reduced our bulk deposits substantially and depended on retail deposits. Capital shortage was the biggest challenge we faced this year. Until, we get fresh capital infusion, we have to grow our books. The merger process (with Indiabulls Housing) is on and we might raise some capital for the time being,” he said.

The bank’s capital adequacy ratio dropped to 7.72% from 9.81% last year.

He also said the bank might close down some ATM’s and loss-making branches.

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