Lakshmi Vilas Bank posts net loss in Q2 as bad loans spike

Lakshmi Vilas Bank(LVB) reported net loss of Rs 132.31 crore in the second quarter ended September 30, on account of mounting bad loans. The private sector lender had registered a net profit of Rs 10.50 crore in the September quarter of 2017-18. Sequentially, the net loss widened from Rs 123.87 crore.

Total income fell to Rs 800.50 crore as against Rs 902.76 crore in the year-ago period, the bank said in a regulatory filing. The gross non-performing assets (NPAs) or bad loans hit 12.31 percent of gross loans by the end of September 2018 from 5.50 percent by the same period of 2017.

Net NPAs also rose to 6.88 percent of net advances from 4.33 percent. In absolute terms, gross NPAs stood at Rs 2,964.89 crore by the end of second quarter this fiscal as compared to Rs 1,277.66 crore in the year-ago period. Net NPAs were at Rs 1,560.08 crore as compared to Rs 993.23 crore.

Thus, provisions for bad loans and contingencies were to be raised to Rs 204.87 crore for the reported quarter as against Rs 187.38 crore set aside for September quarter of 2017-18.

The return on assets (annualised) in the second quarter slipped to (-) 1.34 percent from 0.12 percent in the year- ago period.

The bank has managed to reduce its bulk deposits by Rs 1,800 crore resulting in reduction in interest paid on deposits by Rs 22 crore as compared to June quarter 2018, the lender said.

"This has resulted in net interest income (NII) improving to Rs 150.95 crore in second quarter as compared to Rs 130.20 crore in the first quarter," it said.

The bank said there were fresh slippage of Rs 237.49 crore during the second quarter.

"Residual stress in book is estimated to be around Rs 400 crore only," it said.

Additionally, the bank said it has reduced its exposure in infra/NBFC/real estate sectors by Rs 1,800 crore which is a step for reduction of almost 35 percent of estimated exposure in these sectors during 2017-18.