While many of its public-sector peers are jostling with high NPAs and lower profits, Chennai-based private lender Lakshmi Vilas Bank has posted a stellar first-quarter earnings results with net profit jumping over 50 per cent to ₹60.68 crore for the quarter ended June on robust interest income, higher treasury and forex gains. The bank has improved the returns on assets and equity. Net NPAs have seen a marginal uptick although provisioning is down.

Speaking to Bloomberg TV India , Lakshmi Vilas Bank CFO Palaniappan Manickam says the bank is likely to curb NPAs in the coming quarter as it does not expect lumpy defaults. The bank is also planning a sale of 4.25 crore shares in 5-6 months by way of QIP or private placement to bolster its capital base needed to sustain high growth. Excerpts:

Can you take us through the highlights of the first-quarter results?

The robust performance in Q1 was mainly supported by an increase in the net interest income, which grew by 22 per cent in Q1. And this was well supported by the increase in other incomes, which increased by 13 per cent, especially aided by trading profit and forex gains. Apart from that, the provision requirement was less because this time our slippages were all for smaller accounts.

There is no bigger chunky NPA account; only smaller accounts slipped into the NPA category. That is why the provisioning cost was quite less. The tax burden was a little more because of the mark-to-market valuation. There was no depreciation and hence we had to provide more for the tax. The post-tax profit growth is still higher.

By and large, the quarterly results were very good. Our return on assets has increased to 0.84 per cent and the return on equity has touched 15 per cent. So, all parameters have gone up. There has been a marginal increase in the net NPAs, by about ₹29 crore. It is a very small amount. Most likely, it will be taken care of in the next two quarters.

With regard to the asset quality, will you be able to get it at a better position in the coming quarters? How much are you looking to raise with your capital infusion, and what is the timeline?

As far as the asset quality is concerned, we are indeed confident that in this financial year we will be able to maintain this line. This kind of a small slippage may be there. But otherwise, we do not find any sharp slippage in the coming quarters.

We have already taken an authorisation from the annual general meeting to issue 4.25 crore shares. We are yet to decide whether we will go ahead at one go or spread it over two stages. But most likely, within the next 5-6 months, we will be raising the capital either by way of qualified institutional placement or private placement.

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