Lakshmi Vilas Bank posts net loss of Rs 132 cr in Q2 as bad loans spike

Lakshmi Vilas Bank (LVB) Wednesday reported net loss of Rs 132.31 crore in the second quarter ended September 30, on account of mounting bad loans.

The private sector lender had registered a net profit of Rs 10.50 crore in the September quarter of 2017-18. Sequentially, the net loss widened from Rs 123.87 crore.

Total income fell to Rs 800.50 crore as against Rs 902.76 crore in the year-ago period, the bank said in a regulatory filing.

The gross non-performing assets (NPAs) or bad loans hit 12.31 per cent of gross loans by the end of September 2018 from 5.50 per cent by the same period of 2017.

Net NPAs also rose to 6.88 per cent of net advances from 4.33 per cent.

In absolute terms, gross NPAs stood at Rs 2,964.89 crore by the end of second quarter this fiscal as compared to Rs 1,277.66 crore in the year-ago period. Net NPAs were at Rs 1,560.08 crore as compared to Rs 993.23 crore.

Thus, provisions for bad loans and contingencies were to be raised to Rs 204.87 crore for the reported quarter as against Rs 187.38 crore set aside for September quarter of 2017-18.

The return on assets (annualised) in the second quarter slipped to (-) 1.34 per cent from 0.12 per cent in the year- ago period.

The bank has managed to reduce its bulk deposits by Rs 1,800 crore resulting in reduction in interest paid on deposits by Rs 22 crore as compared to June quarter 2018, the lender said.

"This has resulted in net interest income (NII) improving to Rs 150.95 crore in second quarter as compared to Rs 130.20 crore in the first quarter," it said.

The bank said there were fresh slippage of Rs 237.49 crore during the second quarter.

"Residual stress in book is estimated to be around Rs 400 crore only," it said.

Additionally, the bank said it has reduced its exposure in infra/NBFC/real estate sectors by Rs 1,800 crore which is a step for reduction of almost 35 per cent of estimated exposure in these sectors during 2017-18.

Further, LVB said in the matter of suit filed against the bank by Religare Finvest for adjustment of their deposits to the dues of RHC Holdings and Ranchem, it is being defended appropriately by the bank and the matter still remains sub-judice.

"In the process of adjustment of the above mentioned deposits, there was an observation by statutory auditor for 2017-18 of a resultant shortfall in the maintenance of CRR for a short period.

"As the shortfall was notional, the matter was referred to RBI and the RBI vide their letter on September 21, 2018 has advised that the matter has been examined and it has decided not to impose penal interest in the matter," the bank said.

Briefing reporters on the financial performance of the bank, its managing director and CEO Parthasarathi Mukherjee said the bank had reported net loss on account of "higher provisioning".

"We are now in the midst of capital raising. Once we raise the capital we will be back to normal (business). 2019-20 will be good year for us," Mukherjee said.

To a query, he said the bank was looking at raising