Lakshmi Vilas Bank to focus on consistent growth

For Lakshmi Vilas Bank, “the focus is now on profitable, consistent growth,” said Managing Director and Chief Executive, Mr P.R. Somasundaram.

The bank has registered a 280 per cent jump in its net profit to Rs 25.69 crore for the quarter ended December 2010 against Rs 6.77 crore during the corresponding period of the 2009-10 fiscal.

Sounding quite proud about this achievement, this former executive of Standard Chartered Bank, who joined LVB in August 2010, said “this is the third successive quarter of growth, reflecting qualitative improvement in our fundamentals. Moving forward, we will ensure ‘consistency' to be our hallmark.”

Asked to share the secret of this achievement, he said “focused reduction in the NPA levels helped strengthen fundamentals. We have been quite aggressive on the recovery front, we even outsourced recovery, sold a few non-performing assets, though the same have not been brought into our books as yet. The net NPA has fallen from 4.17 per cent (Q3 of 2009-10 fiscal) to 2.04 per cent, but this is without considering the Rs 70 crore recovery. If this is accounted, our net NPA level would stand reduced to 1.21 per cent. We are intent on getting the basic things right,” he added.

“We have had some bad experiences last year. So we want to ensure that there is no deterioration in the growth path. We have exited from a lot of difficult accounts. Our net advances have grown only by 11.6 per cent. We want to be cautious on lending. Liquidity, however, has not been extraordinary,” he said.

The bank's operating profit increased by 49.7 per cent to Rs 58.48 crore (Rs 39.07 crore) and the total income by 10.8 per cent to Rs 287.58 crore.

The bank achieved a 14 per cent (year-on-year) growth in deposits to Rs 9,954 crore (Rs 8,772 crore). CASA grew by 57 per cent to Rs 1,980 crore (Rs 1,262 crore).

The total business of the bank grew 13 per cent to Rs 16,859 crore (Rs 14,960 crore).

Asked to explain his growth strategy for the bank, Mr Somasundaram said “we are in the process of drawing up a 3-year strategic plan. It would be an organic business growth plan; no M&A initiatives.”The LVB MD said that no external agency was involved in drawing up this plan.

“I am the external person,” he said, before adding “we should be able to submit the plan for the Board's approval within the next 9 to 12 weeks. The proposal for the coming fiscal would be well within this plan.”

On tie-ups and new lines of business, he simply said “it is a little early to comment. We are looking at technology-driven solutions. Introduction of Inter Bank Mobile Payment Service in association with NPCI has elevated us among the first ten banks in the country to offer such a service.”

LVB would have a network of 250 ATMs by end-March, from 197 at present, he said.

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