Lakshmi Vilas Bank plans to raise ~10 billion

Lakshmi Vilas Bank (LVB) plans to raise another ~10 billion in equity capital, to support its growth.

It is looking at various investors, including private equity entities, said P Mukherjee, managing director and chief executive. He said investors had shown interest but gave no names.

Chennai-based LVB’s total business was about ~603 billion at the end of 2017-18. It had raised ~7.8 billion through an equity rights issue in the March quarter.

The capital adequacy ratio was 9.81 per cent at endMarch, from 10.38 per cent a year before.

Investors have shown interest in new-generation and mid-size private banks. Canada-based Fairfax, for instance, will take a 51 per cent stake in Kerala-based Catholic Syrian Bank for around ~12 billion.

“In the past couple of quarters, we were able to clean up our books and control slippage (of loan dues into nonperforming assets), which have got the eyes of investors,” said Mukherjee. The loan watchlist was around ~25 billion at the start of 2017-18; this has been brought down to ~12 billion. It reported a loss of ~6.2 billion for the final quarter of FY18, attributing this to a multifold jump in provisioning for bad loans.

Mukherjee said the major pressure on the loan book was of syndicate loans. The bank was addressing this by selling some of these and through recovery.

“Today, we are able to identify assets a lot more faster and it makes significant difference for the book,” he said.

LVB has also switched focus to medium and small enterprises for lending, beside individuals — it says stability is more and risk is less.

At end-March 2018, around half of all loans was to bigger corporates. The year’s target is to reduce this to 45-47 per cent. The other focus would be on fee-based income. As for non-performing assets, the aim for 2018-19 is to recover ~13 billion through cash recovery and asset sale, against ~7-8 billion last year.