Lakshmi Vilas Bank to focus on capital-efficient lending

Show me the money: LVB hopes to raise working capital worth ₹1,000 crore by end the of March..

Show me the money: LVB hopes to raise working capital worth ₹1,000 crore by end the of March..   | Photo Credit: Bijoy Ghosh

Lender eyes jewellery, MSME loans; targets ₹6,250 crore additional business

Cash-strapped private sector lender Lakshmi Vilas Bank Ltd. (LVB) has begun focussing on increasing its loan book through assets that require zero or lesser capital allocation, to improve its profitability, said a top official

“We are fine-tuning some of our business verticals and have given additional powers to branches, regional managers and centralised executives who were earlier not in the loop,” said S. Sundar, MD and CEO, LVB. “The focus areas are jewel and MSME loans and deposits.”

“We have brought down our exposure to the corporate sector to a third of what it was earlier. We are interested in lending to medium and small scale industries and other commercial, rural retail sectors. Slowly, this book should grow over a period of time and the percentage of corporates should come down further,” he said. LVB’s immediate task is to increase total business, arrest fresh slippages, be aggressive on the recovery front, post profit and improve the bank’s image and market share, he said.

He said LVB had identified 175 branches for the purpose of increasing the jewellery loan business. In 12 months, the bank plans to lend ₹1,200 crore in this segment. In the case of MSME loans, it has identified 101 branches that can garner business of another ₹2,400 crore, he said.

Asserting that the bank can attract fresh deposits as it did not have any unviable branches, he said LVB was in the process of identifying 250 out of a total of 570 branches that had the potential to garner more business. “It is a rough idea, where we thought each branch can bring in at least ₹25 crore [more] business each. This would fetch us another ₹6,250 crore,” he said.

“Till recently, at the branch level, the sales persons were handling jewel and MSME loans and they reported to the corporate office. To give a sense of feeling that they also belong to this bank, we have made the sales persons report to the centralised executives, branch and regional heads. This has started yielding results,” he said.

Stating that the bank was on its way to recovery, he pointed out that in the third quarter, recovery was more than slippages by ₹10 crore and this would increase in the coming quarters. LVB was also hopeful of raising fresh working capital worth ₹1,000 crore from potential investors by March end.

For the third quarter, total business of the bank stood at ₹41,100 crore against ₹54,910 crore for the corresponding year-ago period. Total deposits declined to ₹23,565 crore from ₹30,787 crore and gross advances to ₹17,535 crore from ₹24,123 crore. Net interest margin improved to 1.97% from 1.65%. Net loss for the quarter was ₹334 crore (₹373 crore).

For the year ended March 31, 2019, total business dropped to ₹51,235 crore from ₹60,314 crore. Total deposits slid to ₹29,279 crore from ₹33,309 crore. Net loss was ₹89,410 crore (₹58,487 crore).

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Printable version | Jul 9, 2020 8:37:56 AM |

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