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Lakshmi Vilas Bank plans to scale up its retail liability base and cautious loan growth which will continue to remain around 14-15 percent. The old private sector lender, which reported a deterioration in its asset quality in the second quarter, will look at pulling itself up in the next two years as it aims to raise Rs 800 crore this year.
Parthasarathi Mukherjee, MD and CEO of Lakshmi Vilas Bank, told Moneycontrol, "Ours is a vibrant bank and we have to transform it…Retail franchise is shaping well, we are growing well on the CASA. Lending is still slow but liabilities is growing."
Current and savings account or CASA deposits grew 32 percent from Rs 4,619 crore to Rs 6,118 crore. CASA as a percentage to deposits improved to 20.97 percent from 17.31 percent from a year ago.
CASA focus seems to be ingrained and over the previous three years every year on a daily average basis the bank’s CASA numbers were 13.89 percent, 14.12 percent and 14.24 percent.
However, the bank’s credit growth slowed to 14 percent for the bank and this year is likely to remain around 15 percent, Mukherjee said. At present, corporate comprises nearly half of its loan book, retail is about 9 percent, MSME (micro, small and medium enterprises) is about 24 percent and agriculture is about 18 percent.
“Growth is something we have to look at and bulk of it will come in MSME and retail. We will be careful how we grow because quality will be of utmost importance. Credit appraisal standards have been tightened considerably and that’s where risk monitoring comes in and frankly 50 percent of the proposals get turned down,” Mukherjee said.
Bank's net profit stood at Rs 49.07 crore during the March quarter of FY16.
However, with worsening economic situation the profit declined and NPAs increased.
Today, in Q2FY17, the 91-year-old private sector lender reported a 83 percent drop in net profit at Rs 11 crore in the quarter ended September 2017, down from Rs 65 crore a year ago largely on an income tax write-back even as provisions on non-performing assets (NPAs) rose.
In percentage terms, gross NPAs jumped to 5.5 percent of total loans, up from 2.7 percent last year. Net NPAs also spiked to 4.33 percent from 1.87 percent.
A watchlist of Rs 2300 crore at the end of Q1FY18 (June quarter), identified by the bank saw slippages during the quarter now stands reduced to Rs 1700 crore.
Mukherjee said he is looking at the positives. “The pain has been upfront and we have said that we do have a watchlist of difficult accounts. So, nothing new has happened. Our watchlist has come down to Rs 1,700 crore. Some of it could slip and over the next year, NPA percentage should drop…Opportunities are there but we are being careful and we are optimising on our capital front.”
The bank has announced it plans to raise up to Rs 800 crore by issuing shares on a rights basis to shareholders.
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