Lakshmi Vilas Bank to raise Rs 500 cr for growth momentum

Lakshmi Vilas Bank plans to raise Rs 500 crore to help maintain momentum in growth. In last two years, the bank’s business has seen a compound annual growth rate (CAGR) of 26 per cent.

In its annual report for 2011-12, the management said the bank would try to consolidate transformation efforts and shift towards a high-growth trajectory this financial year.

For this, it would explore raising additional Tier-I or Tier-II capital, with the approval of shareholders and regulators.

Despite seeing various short-term challenges in the last five years, the bank recorded a CAGR of 23 per cent in business and a 44 per cent rise in profit.

Through the last two years, business growth stood at 26 per cent CAGR, while the rise in profit was 87 per cent.

To ensure the bank maintained this growth through the next five years, short-term challenges were being addressed, the annual report stated.

In 2011-12, the bank raised Tier-II subordinated debt of Rs 250 crore to improve its capital adequacy ratio, owing to a rise in business.

Considering the emerging trends, including adapting to Basel-III norms, the bank would consider the need and the timing to raise additional Tier-I capital, after securing the approval of the regulator and shareholders.

Currently, the bank’s capital adequacy ratio stands at 13.10 per cent (well above the stipulated nine per cent), with Tier-I capital at 8.86 per cent and Tier-II capital at 4.24 per cent.

As on March 31, the bank’s capital adequacy ratio was 13.10 per cent, above the regulatory norm of at least nine per cent. While Tier-I capital stood at Rs 855.15 crore, Tier-II capital was Rs 408.81 crore.