The Hindu Business Line : Lakshmi Vilas Bank hopes to cut NPAs by half

LAKSHMI Vilas Bank hopes to scale down its net non-performing assets from 4.09 per cent to below 2 per cent by the end of the current fiscal, said Mr R.M. Nayak, Chairman and Chief Executive Officer.

He told newspersons here today that repayments of some big-ticket loans are expected this year. "We will also bring down the accretion to the new NPAs this year, which will keep it below 2 per cent," he said.

For 2005-06, the bank has targeted deposits of Rs 4,200 crore and advances of Rs 2,800 crore, Mr Nayak said. Its capital reserve at the end of March 31, 2005, was Rs 230 crore and it already has Rs 275 crore capital reserve in the first quarter this fiscal.

Reacting to reports of a possible takeover, Mr Nayak said the bank had a comfortable capital reserve and would soon reach the Rs 300-crore limit prescribed by the Reserve Bank of India.

Regarding consolidation among small private banks, Mr Nayak said that as long as banks focussed on their niche areas, there was place for everyone. "Our niche areas are retail banking, small and medium enterprises, and traders," he said.

The bank also plans to step up its use of technology and extend e-banking activities such as core banking, ATM, telebanking and anytime-anywhere banking. "This will give us a lot of advantage as it will help cut costs. To begin with, we will invest around Rs 10-12 crore for the technology," he said.

The bank will increase fee-based income through tie-ups for the sale of mutual funds and insurance.

For 2004-05, the bank reported net profit of Rs 3.34 crore. This was due to a provision of around Rs 60 crore for depreciation of securities. Total income for the year was Rs 336.52 crore (Rs 372.81 crore), primarily due to fall in treasury income. Net interest income was Rs 106.67 crore (83.44 crore). Capital adequacy ratio was 11.5 per cent (13.79 per cent). Deposits grew to Rs 3,500 crore (Rs 3,200 crore), while advances rose to Rs 2,300 crore (Rs 2,000 crore).

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