DBS Bank India grows profitability despite LVB merger impact

LVB was amalgamated into DBIL in November 2020.

DBS Bank India (DBIL), the wholly-owned subsidiary of DBS Bank of Singapore, which has taken over the troubled Lakshmi Vilas Bank (LVB), on Thursday said it could grow profitability despite the impact from the amalgamation of LVB.

Post-amalgamation, DBIL has been focusing on unifying the LVB and DBS workforces and re-building the LVB business. While the integration of operating platforms and branches has been underway, the steady growth in LVB current and savings account balances as well as in the gold loans portfolio in 2021 was an early indicator of the success of the current strategy, it said. LVB was amalgamated into DBIL in November 2020.

Surojit Shome, MD & CEO, DBIL, said, “We have made considerable progress with the integration of Lakshmi Vilas Bank (LVB) since the amalgamation in November 2020 even with the dislocations due to the second wave of the pandemic. While, as expected, there has been an immediate impact on our financial results due to the high net NPAs and operating losses at LVB, we are confident of realising the long- term prospects of the combined franchise. In the erstwhile LVB operations, we have already been able revitalise the gold loans business and grow deposits. Our immediate priority is to integrate the operating systems and processes so that we can deliver best-in-class solutions to a wider customer franchise.”

DBIL, releasing its FY21 results which included the LVB’s performance since amalgamation, said its net revenues grew by 85% to Rs 2,673 crore (includes Rs 134 crore from LVB) from Rs 1,444 crore in FY20. Its profit before tax (PBT) rose to Rs 679 crore from Rs 170 crore, despite absorbing LVB’s pre-tax losses of Rs 341 crore from November 2020 to March 2021. DBIL’s net profit rose to Rs 312 crore from Rs 111 crore.

Total deposits of DBIL increased by 44% to Rs 51,501 crore (includes Rs 18,823 crore from LVB). Savings account balances grew by 207%, and current account balances grew by 98% y-o-y, including growth on account of the amalgamation. Overall, CASA ratio improved to 31% from 19%, said DBIL. Net advances of the bank grew to Rs 36,973 crore (includes Rs 10,685 crore from LVB).

Gross NPA remained moderate at 1.83% for DBIL excluding the LVB portfolio. While gross NPA deteriorated to 12.93% after the amalgamation of LVB, the net NPA, on a combined basis, stood at 2.83%, given 84% provision coverage. Capital adequacy ratio stood at 15.13%, with CET1 at 12.34%. During the year, DBS Bank infused Rs 2,500 crore into DBIL to support the amalgamation. The bank adopted the concessional tax regime, resulting in an additional charge of Rs 184 crore, on account of one-time adjustment.