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Lakshmi Vilas Bank (LVB), which recently received a non-binding letter of intent (LoI) from AION Capital-backed Clix Capital Services and Clix Finance India for a proposed capital infusion, said that due diligence process from both sides has already began and both parties will send a formal proposal to the Central bank after all due process are completed.
“Both parties have already started the due diligence process. Once this is over, we will decide on other aspects like evaluation, swap ratio, issue price and once all these are agreeable to both parties, we will formally go to the RBI for its approval,” S Sundar, Interim MD & CEO of LVB, told BusinessLine over the phone.
The capital-starved LVB, which has been under the RBI’s prompt corrective action (PCA) framework since September 2019, has been looking for suitors to stay afloat and come out of PCA norms. Its earlier proposal to merge with Indiabulls Housing Finance has been rejected by the central bank.
“Once the due diligence is over we will try to speed up the remaining process,” Sundar said adding, “if the due diligence and other terms are agreeable to both parties and if RBI gives permission, it will also increase the confidence of people and even other investors will be interested.”
Q4 results
Meanwhile, LVB swung into black, posting a net profit of ₹92.86 crore in the quarter ended March 2020 after posting losses for several quarters. The bank posted a net loss of ₹264.43 crore during the same quarter last year.
Interest income on a year-on-year (YoY) basis dropped by 33 per cent to ₹455.01 crore (₹682.25 crore) during the fourth quarter, while other income witnessed a three-fold jump to ₹174.74 crore (₹57.47 crore).
“Other income consists mostly of treasury profits. Since interest rates have come down, we have made some treasury gains which contributed substantially for the other income,” Sundar said.
However, the asset quality of the bank continued to worsen. GNPA as a percentage of total assets for the March quarter stood at 25.39 per cent spiking from 15.30 per cent during the year ago quarter. NNPA ratio for the latest quarter stood at 10.04 per cent (7.49 per cent).
“Fresh addition to NPA during Q4 is ₹314 crore, of which one large account alone accounted for about ₹160 crore,” Sundar said, adding, “but for this one large account, our recovery of ₹162 crore would have been higher than the slippages.”
Total deposits of the bank for the full year ended March 2020 stood at ₹21,443 crore (₹29,279 crore), while total advances for the period stood at ₹13,828 crore (₹20,103 crore).
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