Gross non-performing assets (NPAs) jumped to 25.40 per cent of the gross advances as on June 30, 2020, from 17.30 per cent in the earlier quarter. In absolute terms, gross NPAs rose to Rs 4,142.37 crore from Rs 3,556.57 crore.
Lakshmi Vilas Bank (LVB) on Thursday reported narrowing of its net loss to Rs 112.28 crore for the first quarter of the current fiscal, even as there was a substantial spike in bad loans. The bank had posted a net loss of Rs 237.25 crore in the same period of the previous financial year. However, when compared sequentially, LVB had posted a net profit of Rs 92.86 crore in the March quarter of 2019-20. Total income during the April-June quarter of this fiscal fell to Rs 538.84 crore from Rs 677.17 crore in the corresponding period of 2019-20, the bank said in a regulatory filing. Interest income fell to Rs 442.50 crore from Rs 623.94 crore.
The Chennai-headquartered lender witnessed a deterioration in asset quality. Gross non-performing assets (NPAs) jumped to 25.40 per cent of the gross advances as on June 30, 2020, from 17.30 per cent in the earlier quarter. In absolute terms, gross NPAs rose to Rs 4,142.37 crore from Rs 3,556.57 crore.
Net NPAs too inched up to 9.64 per cent (Rs 1,298.17 crore) from 8.30 per cent (Rs 1,539.41 crore). The bank’s provisions and contingencies for the quarter, however, came down to Rs 112.37 crore from Rs 211.70 crore in Q1 FY20.
Of this, the provisions for NPAs and diminution value of all restructured accounts stood at Rs 72.64 crore, as against Rs 154.62 crore a year ago. The aggregate provisions held towards COVID-19 were Rs 20.26 crore, the bank said.
In a note, the bank’s chartered accountants P Chandrasekar LLP said the lender has been incurring losses for the past 10 quarters and had Rs 836.04 crore of loss during 2019-20.
The RBI has initiated prompt corrective action (PCA) which prescribes the bank to bring in additional capital, restrict further lending to corporates, reduce NPAs and improve provision coverage ratio to 70 per cent, the chartered accountants said.
Provision coverage ratio as on June 30, 2020 stood at 72.58 per cent, LVB said. The bank has been under RBI’s PCA framework since late September 2019.
“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 I capital has turned negative, at 0.88 per cent and 1.83 per cent as at March 31, 2020 and June 30, 2020 respectively, as compared to the minimum requirement of 8.875 per cent.
This requires the bank to take effective steps to augment its capital base in the year 2020-21. We are informed that the bank routinely evaluates capital raising options,” the chartered accountants added. “Bank’s total business mix as on June 30, 2020 stood at Rs 37,471 crore as against Rs 49,536 crore by year ago same period… CASA (current account savings account) increased to 28.44 per cent of total deposit as against 27.12 per cent a year ago,” LVB said in a release.
On the capital raising measures, LVB said, “Despite logistical challenges arising due to COVID-19 situation, we have made significant progress with Clix Group for the proposed amalgamation of Clix Capital Service Pvt Ltd and Clix Finance India Pvt Ltd into the bank.”
“However, there may be slight delay in the mutual due diligence and preparation of documents for regulatory requirements due to COVID situation and travel restrictions. Hence, both the parties mutually agreed to extend the exclusivity period till 15th September 2020.
“Bank will continue to share information on the developments for funds raising in public domain as and when they materialise,” it added.
Clix Group is expected to infuse Rs 1,900 crore capital into the bank, as per an announcement made by the two parties in June.
On profitability, the bank said it continues to enforce cost reduction measures. Further, it focusses on capital free loans like gold loans and government guaranteed loans to optimise profitability without straining capital funds, it added. Stock of LVB closed at Rs 20.70 apiece on BSE, up 2.48 per cent.