Lakshmi Vilas Bank eyes QIP in February-March

Private lender Lakshmi Vilas Bank was looking at a qualified institutional placement (QIP) in February-March to improve its capital adequacy ratio and raise capital to fund growth, Executive Director V Prakash said today.

“Currently, the capital adequacy ratio (CAR) is around 13.5 per cent. We are looking at a QIP, the exact timing of which still has to be debated at board level. We are expecting it around February-March. We still need to decide how much we will dilute, although we have the board’s approval for a 40 per cent dilution,” Prakash said.

Prakash said the equity dilution should happen in two tranches. “The two tranches may not be equal, I can’t share more on the amounts involved,” he said.

At 1434 IST, shares of the bank were trading at Rs 115.70 on the National Stock Exchange, 1.3 per cent down from close on Monday.

The bank is aiming to boost its CAR to 15-16 per cent, from 13.5 per cent as on September 30.

“The aim is to improve our overall ratios while maintaining growth. We hope to achieve our targets for 2010-11 — a net profit of Rs 120 crore and an operating profit of about Rs 280 crore,” he said. In 2009-10, the bank had reported a net profit of Rs 3,066 lakh and an operating profit of Rs 170 crore.

Business growth
Prakash said the focus was to increase the size and business of the bank.

For 2010-11, the bank is aiming a 30 per cent year-on-year rise in business to Rs 20,000 crore, while credit and deposit are expected to grow 35 per cent to Rs 8,500 crore and Rs 10,500 crore, respectively.

As on December 31, business stood at Rs 17,000 crore. Deposits and credit accounted for Rs 9,950 crore and Rs 7,100 crore, respectively. The current and savings account (Casa) deposits, currently around 20 per cent, are also seen rising to 25 per cent by year-end.

“I can’t say we are on course, but we are getting closer to the targets. In the December quarter, there was some stress on banking sector liquidity, so it has slowed down, but hopefully we should get there,” he said.

Prakash does not expect any further rise in deposit or lending rates. The bank raised its base rate by 50 basis points to 9.25 per cent, with effect from January 1.