Lakshmi Vilas Bank posts Q2 net loss of Rs 1.32 bn on higher provisioning

Lakshmi Vilas Bank on Wednesday posted a net loss of Rs 1.32 billion during the quarter ended September 30, 2018, as compared to a net profit of Rs 105 million during the same quarter of last year, owing to higher provisioning, among other reasons. The total income declined by 11.3 per cent during the period to Rs 8 billion during the quarter this year, as against Rs 9.02 billion during the corresponding quarter last year.    

The lack of capital to grow the advance book was another issue for the bank, which is currently looking at raising funds to the tune of around Rs 15-20 billion by diluting equity capital. The bank had earlier said that its programme was progressing according to plans and that it had received a number of expressions of interest for participating in the capital-raising programme from high-quality investors.  

Its investment advisor, JP Morgan, is sifting through these and has a preliminary short list.    

"The choice of investor(s), quantum of investment and the timing of the closure of the transaction is not known as yet," it informed the exchanges on Tuesday.

The gross non-performing assets (NPAs) have grown to Rs 29.65 billion, which is 12.31 per cent of the gross advances during the quarter, as against Rs 12.78 billion (5.5 per cent) during the same quarter of last year. The net NPA stood at Rs 15.60 billion during the quarter (6.88 per cent) as compared to Rs 9.93 billion (4.33 per cent) during the corresponding period last year. 

The provision coverage ratio stood at 55.39 per cent compared to 46.27 per cent as on September 30, 2017, while fresh slippages during September 2018 have been Rs 2.37 billion as against Rs 3.95 billion in the quarter ended June 30, 2018. The residual stress in book is estimated at around Rs 4 billion, said the bank. 

The bank continues to diversify its business and for the quarter ended September 30, 2018, the corporate book is at 39 per cent against 52 per cent as at the beginning of the year, said P Mukherjee, managing director and CEO of the bank. The MSME book now contributes to around 35 per cent of the business.