Lakshmi Vilas Bank Q3 loss narrows to Rs 334 crore; provisions fall

New Delhi: Private sector lender Lakshmi Vilas Bank, which is under the RBI's prompt corrective action (PCA), on Friday said its net loss has narrowed to Rs 334.48 crore during the third quarter ended December 2019.

The bank had a net loss of Rs 373.49 crore in the corresponding quarter of 2018-19. Sequentially also, the losses were down from Rs 357.16 crore in the second quarter ended September 2019.

Its total income fell sharply to Rs 585.77 crore during the December 2019 quarter as compared with Rs 762.48 crore a year ago, as the lender has also been directed to restrict lending to corporates.

"The Reserve Bank of lndia (RBI) has initiated prompt corrective action vide letter dated September 27, 2019. Certain actions have been prescribed, such as bringing in additional capital, restricting further lending to corporates, reducing NPAs and improving the provision coverage ratio to 70 per cent.

"The bank is obliged to carry out the actions prescribed by the RBI," Lakshmi Vilas Bank said in a regulatory filing.

The bank has come under the PCA due to high level of bad loans, lack of sufficient capital to manage risks, and negative return on assets for two consecutive years.

The return on assets (RoAs) in the third quarter of 2019-20 worsened to (-) Rs 4.40 as compared with (-) Rs 3.90 in year-ago quarter.

On the asset quality front, the bank suffered a beating with the gross non-performing assets (NPAs) surging to 23.27 per cent of the gross advances at the end of December 2019 from 13.95 per cent in the corresponding period of 2018-19.

In absolute terms, gross NPAs rose to Rs 4,081.06 crore from Rs 3,364.27 crore.

Net NPAs were 9.81 per cent (Rs 1,463.93 crore) as against 7.64 per cent (Rs 1,716.22 crore).

The bank said it made provisioning for NPAs, including of diminution value of all restructured accounts, of Rs 290.04 crore for the December 2019 quarter, compared with Rs 313.76 crore a year ago.

The overall provisions and contingencies were of Rs 314.62 crore as against Rs 413 crore.

With regard to the ongoing case in the Delhi High Court against Religare group companies for extending loans up to Rs 794 crore in 2017-18, Lakshmi Vilas Bank said that "the bank holds a contingent provision of Rs 200 crore as on December 31, 2019, on this score".

"Further to this, the bank has submitted replies to the clarifications sought by Sebi. EOW (Economic Offence Wing), Delhi, has registered FIR against Directors of Board, LVB, RHC Holding and Directors on the Board of RHC Holding and the investigation is in progress.

"The bank has sent a detailed letter to EOW explaining its stand on the issue and assured to extend full co-operation in the investigation," it said.

The provision coverage ratio as on December 31, 2019, stood at 68.70 per cent.

Shares of LVB on Friday closed 4.77 per cent down at Rs 18.95 on the BSE.