Brickwork sees stable performance from Lakshmi Vilas Bank

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Brickwork sees stable performance from Lakshmi Vilas Bank

Brickwork Ratings (BWR) has reaffirmed ‘BWR A’ rating for Lakshmi Vilas Bank’s Lower Tier II (subordinated) bonds issue of Rs 100 Crore

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Lakshmi Vilas BSE | NSE 31/05/12 Are Mutual Funds betting on Lakshmi Vilas?

Brickwork Ratings (BWR) has reaffirmed 'BWR A' rating for Lakshmi Vilas Bank 's Lower Tier II (subordinated) bonds issue of Rs 100 Crore

The rating "BWR A" stands for an instrument that is considered to have ADEQUATE degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. Brickwork Ratings has relied upon the audited financials statement and information and clarifications provided by the issuer as well as those available in the public domain.

Lakshmi Vilas Bank Ltd. was incorporated on 3 November 1926 and is headquartered in Karur, Tamil Nadu. The bank provides a wide array of services and products for retail and commercial banking. It also distributes mutual fund products and insurance products. It has a distribution tie up with LIC and Bajaj Allianz General Insurance.

The bank attained a total business of Rs 19,243 cr as on 31st March 2011 (as compared to Rs 15,352 cr during the previous year) registering an increase of 25% over the last year. Deposits have grown from Rs 9,075 cr in FY 10 to Rs 11,150 cr during FY11 registering a growth of 23% and gross advances have grown from Rs 6,277 cr in FY10 to Rs 8,094 cr during FY 11 a growth of 28%. Gross NPAs decreased substantially from 5.12% in FY 10 to 1.93% in FY 11. The net NPAs have shown a similar trend and have decreased from 4.10% in FY10 to 0.90% in FY 11. The improvement was mainly due to strong recovery efforts and tightening of credit process and monitoring. For the quarter ended June 2011, the bank's gross NPAs were 2.09% and net NPAs were 0.98%. The bank's provisioning levels increased substantially to 77.17% in FY11 as compared to 49.67% in FY10.

The bank's net interest margins have increased to 3.75% in March 2011 as compared to a NIM of 2.98% the previous year. However, the bank has seen very low levels of CASA deposits. CASA levels stood at 18.8% of total deposits as of March 2011. The bank's net profit has increased substantially by 229% to Rs 101 cr in FY 11 as against Rs 31 cr in FY 10.

The bank reported net profit of Rs 24.58 cr in Q1FY12 as compared to Rs 23.38 in Q1FY11. Net interest margins for Q1FY12 decreased to 3.21% as compared to 3.66% in Q1FY11.

As on March 2011, the bank has reported a total capital adequacy ratio and Tier I capital adequacy ratio of 13.19% and 10.78% respectively. The Capital Adequacy Ratio for quarter ended June 2011 was however lower at 12.06%.

Brickwork Ratings expects the performance of the bank to be "Stable" over the next one year.

Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.

The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment