Lakshmi Vilas Bank (LVB) on Friday registered a net profit of Rs 92.86 crore for March quarter 2019-20, after having posted losses in the past 10 quarters on rising bad loans. The bank had a net loss of Rs 264.43 crore in January-March 2018-19. For December quarter of the last financial year, it posted a net loss of Rs 334.48 crore, LVB said in a regulatory filing.
The private sector lender, struggling to shore up capital to improve its financial position, also saw a decline in income during March quarter at Rs 629.76 crore compared with Rs 739.73 crore in the year-ago same period as it has been witnessing deposit erosion since last September.
Bank's gross non-performing assets (NPAs) were at 25.39 percent of the gross advances as on March 31, 2020 as against 15.30 percent by the year-ago same period, the filing said. At the end of December 2019, the bad loan proportion was 23.27 percent.
In absolute terms, gross NPAs or bad loans of the lender stood at Rs 4,233.31 crore by the end of March 2020 as against Rs 3,358.99 crore by the year-ago same period.
Net NPAs also deteriorated to 10.04 percent (Rs 1,387.86 crore) from 7.49 percent (Rs 1,506.29 crore).
However, despite rising proportion of NPAs, bank's provisions for bad loans and contingencies were reduced to Rs 303.47 crore for March quarter 2020 from Rs 478.77 crore parked aside for the year-ago period, as per the bank filing.
For the full year 2019-20, LVB posted a net loss of Rs 836.04 crore which was only marginally lower from a loss of Rs 894.09 crore in 2018-19.
Total income during the year also fell to Rs 2,558.03 crore from Rs 3,090.21 crore a year ago.
The bank has been incurring losses for the past 10 quarters and the Reserve Bank of India initiated a Prompt Corrective Action (PCA) in September 2019, the bank's auditor said in a note attached by LVB in the regulatory filing.
Under the PCA, the bank has been asked to bring in additional capital, restrict further lending to corporates, reduce NPA and improve its provision coverage ratio to 70 percent.
"There has been a steady decline in the bank's deposit base since September 2019 and increase in the NPA ratios. The bank's Tier 1 capital ratio has turned negative, at (-)0.88 percent, as compared to the minimum requirement of 8.875 percent," the bank's auditor said.
This requires the bank to take effective steps to augment its capital base in 2020-21, said the auditor, adding "We were informed that the Bank routinely evaluates capital raising options".
In June this year, the bank announced that it received a preliminary proposal from the Aion Capital-backed non-banking lender Clix Capital for a merger that will augment LVB's capital base by around Rs 1,900 crore.
The roping-in of the new investor has come as a surprise after the Reserve Bank in October 2019 declined to give a go-ahead to its proposed amalgamation with Indiabulls Housing Finance.
The bank's deposits fell to Rs 21,443.19 crore as at March-end this year from Rs 29,279.44 crore by the end of March 2019.
Advances were also down at Rs 13,827.89 crore from Rs 20,103.26 crore.
The provision coverage ratio as at March-end 2020 stood at 71.25 percent, LVB said. It was at 62.08 percent as on March 31 last year.
On COVID-19 related moratorium to the needy customers, the bank said it is required to make additional provision of 10 percent over two quarters beginning with March quarter 2020, in respect of borrowers whose accounts, though classified as standard as on March 31, 2020, would have become non-performing but for these benefits/relaxations.
Accordingly, the bank has made the provision amounting to Rs 10.01 crore for the loan outstanding amount of Rs 200.17 crore during the quarter under review.
On divergence for 2018-19 related to asset classification and provisioning for NPAs, as reported by the bank and that assessed by the RBI, there was a gap of Rs 56.99 crore in gross NPAs.
The resultant divergence in provisioning for 2018-19 stood at Rs 111.90 crore and hence the adjusted net loss for fiscal ended March 2019 widened to Rs 1,006 crore from Rs 894.90 crore reported by it earlier.
LVB stock closed at Rs 22.35 on BSE, down 2.19 percent from the previous close.
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