CORPORATE PRESENTATION - Lakshmi Vilas Bank Corporate Presentation_Nov 2… · Tie up with...

CORPORATE PRESENTATION NOVEMBER 2016

2

Disclaimer

This presentation has been prepared by The Lakshmi Vilas Bank Limited (the “Bank”) solely for information purposes without regard to any specific objectives, financial situations or

informational needs of any particular person. This presentation should not be construed as legal, tax, investment or other advice. This presentation is may not be copied, distributed

or disseminated, directly or indirectly, in any manner. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is

inconsistent with, this presentation. Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or

on behalf of the Bank. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current

expectations of the Bank or its directors and officers with respect to the results of operations and financial condition of the Bank. These statements can be recognized by the use of

words such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and

involve risks and uncertainties, and actual results may differ from those specified in such forward-looking statements as a result of various factors and assumptions. The risks and

uncertainties relating to these statements include, but are not limited to, (i) fluctuations in earnings, (ii) the Bank’s ability to manage growth, (iii) competition, (iv) government policies

and regulations, and (v) political, economic, legal and social conditions in India. The Bank does not undertake any obligation to revise or update any forward-looking statement that

may be made from time to time by or on behalf of the Bank. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance

on these forward-looking statements. The information contained in this presentation is only current as of its date and has not been independently verified. The Bank may alter, modify

or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or changes. No representation, warranty, guarantee or

undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates,

projections and opinions contained in this presentation. None of the Bank or any of its affiliates, advisers or representatives accept any liability whatsoever for any loss howsoever

arising from any information presented or contained in this presentation. Please note that the past performance of the Bank is not, and should not be considered as, indicative of

future results. This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any offer or invitation or inducement to sell or issue, or any

solicitation of any offer to purchase or subscribe for, any securities of the Bank by any person in any jurisdiction, including in India or the United States, nor shall it or any part of it or

the fact of its distribution form the basis of, or be relied on in connection with, any investment decision or any contract or commitment therefore. This presentation is not a

prospectus, a statement in lieu of a prospectus, an offering circular, an advertisement or an offer document under the Companies Act, 2013, as amended, the Securities and Exchange

Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India.

3

Table of Contents

Company History

Performance and investment highlights

Strategic Initiatives

Appendix

4

LEGACY DEVELOPED OVER 90 YEARS OF EXISTENCE

5

Gradual evolution from an old generation private sector bank to a new-age professionally run banking institution

Transition from a South India focused corporate lender to a bank with nationwide focus and diversified portfolio

1926 Incorporation

1958 Granted banking license

from RBI Becomes Scheduled Commercial

Bank

1974 Opening of a branch in

Karnataka, the first branch outside

Tamil Nadu

1988 Initial public offering

2009 Launched 4 Savings Bank

products - Lakshmi Savings Gold, Lakshmi

Savings Star Gold, Lakshmi Savings Youth

Power & Lakshmi Savings Balance Free Account

2010 Tie up with International

VISA Debit Card

2011 Launched digital

initiatives - SMS alert, Mobile Banking services

1976 License to deal in foreign

exchange

2002 Initiated Bancassurance

tie ups

2013 Obtained RBI approval

for opening 71 branches

2016 Mr Parthasarathi

Mukherjee joins as CEO from Axis Bank

6

Concentrated in Southern India with significant growth potential

460 Branches

926 ATMs

2.8Mn Customers

3,929 Employees

16 States

Rs 202 Bn Total Advances

257

8

4

2

12

19 29

47

12

4

2

2

4

3

3

4

48

Branch Count

7

Building blocks for strategic plan

Team

Customer Segmentation

Focus to augment skills and capabilities

Strategic additions to fill gaps

Strengthening HR practices

Sustainable Growth

CASA

Credit

Granular customer segmentation for focused strategies

Retail : Initial focus on mortgages and vehicles; other products in phased manner

MSME: Regional focus

Continue to strengthen credit and risk functions

Centralization of wholesale credit

Initial focus on deepening presence in focus geographies

Building brand for phased expansions in contiguous markets for wider presence

Focus on increasing CASA share through branch specific initiatives

8

PERFORMANCE AND INVESTMENT HIGHLIGHTS

9

Sustained improvement in financial metrics with strong focus on qualitative growth (1/2)

Yield on Advances and Cost of Deposits

13.2% 12.8% 12.2% 11.5%

8.7% 8.6% 8.2% 7.6%

FY14 FY15 FY16 H1FY17

Yield on Advances Cost of Deposit

Stable NIMs and strong growth in NII

4,860 5,266

6,453

3,642

2.9% 2.7% 2.8% 2.8%


NII (INR Mn) NIM

Stable Operating Expense Ratios

Improving Asset Quality Strong improvement in profitability

55.2% 54.6% 57.1% 51.4%

2.1% 2.1% 2.1% 2.0%


Cost to Income Ratio Opex / Avg Assets

4.2%

2.8%

2.0%

2.7%

3.4%

1.8%

1.2%

1.9% 1.3%

1.1% 0.9%

1.1%


GNPA NPA Provision / Avg Assets

6.2%

10.8% 11.7%

15.2%

0.3%

0.6% 0.7% 0.9%


RoE RoA

Source: Company Annual Reports Note: NIM for H1FY17 is arrived at taking average of Q1 and Q2 FY17 NIMs

10

Sustained improvement in financial metrics with strong focus on qualitative growth (2/2)

Business defined as summation of Net Advances and Deposits

186

220

254 267

129

164

196 201


Deposits (INR Bn) Net Advances (INR Bn)

6% 11%

83%

FY14 H1FY17

10%

20%

17% 8%

45%

FY14 H1FY17

361 400

460 460

3,292 3,459 3,565 3,929


Branches Employees

82

95

110 104


Business/Employee (Mn)

876 962 984

1,073


Business/Branch (Mn)

5% 9%

86%

12%

21%

18% 9%

40%

Source: Company Annual Reports

Healthy Growth in Business Deposits Mix Advances Mix

Aggressive Investment in Branch Network Employee Productivity Sustained branch productivity with

aggressive expansion

Demand Deposits Savings Deposits Term DepositsRetail Banking SME/MSME Banking

Rural Banking Mid-Commercial Banking

Wholesale Banking

11

Robust growth across business parameters driven by product and geographic expansion

185,729 219,642 254,310 266,801

128,892 163,520

196,437 200,692 314,621

383,162

450,747 467,493

2014 2015 2016 H1FY17

Deposits Net Advances

320 347 397 397

41 53

63 63 361 400

460 460

2014 2015 2016 H1FY17

Branches in Southern States Branches in Other States

145,068 173,682

201,309 214,587

40,661 45,960

53,001 52,214 185,729

219,642

254,310 266,801

2014 2015 2016 H1FY17

Deposits from Southern India Deposits from other states

99,118 122,939

152,379 153,311

31,259

42,190

45,810 49,222 130,377

165,128

198,189 202,533

2014 2015 2016 H1FY17

Advances to Southern India Advances to other states

Advances and deposits (INR Mn) Geographical distribution of branches

Geographical distribution of deposits (INR Mn) Geographical distribution of advances (INR Mn)

Note: Southern states implies Karnataka, Tamil Nadu, Kerala, Andhra Pradesh and Telangana

12

Diversified Loan Book

Total Advances break-up Industry wise (As of Sep 2016)

12.3%

10.0%

4.6% 3.6%

3.4% 3.4% 2.9% 2.8% 2.4% 2.4% 2.2% 2.2% 2.0% 1.8% 1.7% 1.5% 1.3% 1.2% 1.0%

22.6%

14.6%

Me

tal a

nd

Me

tal

Pro

du

cts

Text

iles

Ro

ads,

Po

rts

Co

nst

ruct

ion

Oth

erIn

fras

tru

ctu

re

Elec

tric

ity,

Hyd

roEl

ectr

ic, C

o

Tran

spo

rtA

gen

cie

s

Foo

d P

roce

ssin

g

Be

vera

ges

All

Engi

nee

rin

g

Dis

trib

So

lar,

Win

dEn

ergy

Ch

em

ical

an

dC

he

mic

al P

rod

uct

s

Min

ing

and

Qu

arry

ing

Tech

an

dV

oca

tio

nal

…

Ce

me

nt

and

Ce

me

nt

Pro

du

cts

Ru

bb

er, P

last

ican

d t

he

ir P

rod

uct

s

Ho

tels

-Mo

tels

-R

eso

rts

Gem

s an

dJe

wel

lery

Wo

od

an

d W

oo

dP

rod

uct

s

Pap

er a

nd

Pap

er

Pro

du

cts

Oth

er R

eta

il Tr

ade

Oth

ers

Exposure to the borrowers (based on fund based exposure-As of Sep 2016)

6.8% 13.0% 23.0%

Top 10 borrowers

Top 20 borrowers

Top 50 borrowers

13

Well diversified portfolio moving towards increased retail lending

16,270 19,773 26,395 20,659

26,950 34,354

41,706 40,198

24,160

24,126

30,656 35,563

11,392

13,003

14,180 15,609 51,605

73,873

85,252 90,504

130,377

165,128

198,189 202,533

Mar-14 Mar-15 Mar-16 Sep-16

Retail SME/MSME Rural Mid-Commercial Wholesale

Retail Loans to individuals, HUF, trusts, clubs – irrespective of loan amount

SME/MSME Based on investment in Plant and Machinery, irrespective of loan amount

Rural Based on activity (being classified as Agriculture Direct or Indirect), irrespective of loan amount

Mid-Commercial Loans to sole proprietorship and partnership firms (other than MSME, Rural), irrespective of loan amount

Wholesale All loans not falling in the above 4 categories, irrespective of amount

Continuous growth across product segments

14

Awards

Best bank for managing IT infrastructure among small banks

IDBRT (2014-15)

Excellence In Unified Communications for Business

Benefits Dataquest (2014-15)

NACH Business Technology Award in Small Banks Category

NPCI (2013-14)

“CIO 100” in the Networking Pioneer Awards

15

STRATEGIC EMPHASIS ON ENHANCING CASA GROWTH

16

Recent branch expansion and promotions expected to show colour and result in sustained CASA growth

Competitive Interest Rates Launched Crown | NRI Banking Product

CASA strategy of high interest rates of 5% and 6% which is higher than the prevailing market rates

Capitalized on broad base to acquire HNI accounts and build client base to cross sell

Mobile Banking

Launched in 2016; capitalize on cross sell opportunities to existing and new customers

Flexi Current Account

Flexible current account with add-on services like cash pick-up, cash management, and door step banking etc.

Marketing

Increase in offline and online advertising efforts

Continued focus on staff training

Online tests for product education for staff; coupled with incentives to market CASA products

SAVING ACCOUNTS

CURRENT ACCOUNTS

ADVERTISING AND PROMOTION

26,409 36,618

44,155 46,193

14%

17% 17% 17%

FY14 FY15 FY16 H1FY17CASA CASA Ratio

Robust growth in CASA with strategic efforts (INR Mn)

17

Defined targets for Third Party Products to provide fillip to fee-based income

Product Product Partners

Insurance Life insurance companies, General insurance companies, Health insurance companies

Mutual Funds and portfolio management services Sundaram asset management, UTI, Reliance asset management and such other affiliations

Credit Cards SBI Cards and Payment Services Private Limited

Money transfer Weizmann Forex

Forex travel cards

LIC Products 78%

General Insurance

18%

Mutual Fund 2%

Forex 1%

Health Insurance

1%

NPS 0.1%

LIC Products 52% General

Insurance 37%

Mutual Fund 6%

Forex 5%

NPS 0.1%

100% = INR 27Mn 100% = INR 62Mn 100% = INR 35Mn

LIC Products 71%

General Insurance

20%

Mutual Fund 1%

Forex 1%

NPS 0.0%

Fee-based income – FY14 Fee-based income – FY16 Fee-based income – H1FY17

18

Significant enhancement in asset quality as a result of cognizant modification in lending decisions…

4.2%

2.8%

2.0%

2.7%


3.4%

1.9%

1.2%

1.9%


1.3%

1.1%

0.9%

1.1%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%


53%

61%

69%

60%


Falling GNPA… …and reducing NPA

Lowering provisions as % of average assets… …with rising provision coverage ratio

19

…resulting in gradual improvement in asset quality 5

,46

5

4,5

46

3,9

13

5,4

61

2,563

1,145

149

2,187 1,969

212

689

1,702

2,357

152

510

147

Gro

ss

NP

A F

Y1

4

Slip

pa

ge

s

Up

gra

da

tio

ns

Write

-off

s

Reco

very

/A

RC

Sa

le

Gro

ss

NP

A F

Y1

5

Slip

pa

ge

s

Up

gra

da

tio

ns

Write

-off

s

Reco

very

/A

RC

Sa

le

Gro

ss

NP

A F

Y1

6

Slip

pa

ge

s

Up

gra

da

tio

ns

Write

-off

s

Reco

very

/A

RC

Sa

le

Gro

ss

NP

A H

1F

Y1

7

Reduced slippages with increased recoveries and reduced write-offs signifying results of improvement in asset lending policies

INR Mn

20

Iron 26%

Infrastructure 17%

Metals and Minerals

9%

Power 7%

Communication 7%

Other 34%

Diversification of portfolio risk with emphasis on reducing individual and high-risk industry concentration

Top 5 Borrowers 51%

6-10 29%

11-15 14%

16-20 5%

Others 1%

Food Processing 21%

Wood and wood products

14%

Basic metal and metal products

11%

Mining and quarrying

8%

Chemicals and chemical products

5%

Other 41%

Restructured standard assets concentration

Low concentration of restructured assets

by industry

With focus on reducing GNPA exposure to high risk sectors

Data as of Sep-16 unless mentioned otherwise

21

Revamping Lending Policy to demarcate operations between various business setups

8

BRANCH SETUP

Exclusion of lending decision from branches

Branches will have authority to sanction only LADs, JDLs, and LAS, and government sponsored schemes

CONVERSION OF RECAPS TO MSME CENTRES

Existing Recaps to be rechristened as “MSME Centres”

MSME Centres to cater to SME, Agri & Retail lending

WHOLESALE CREDIT

Centralization of handling Wholesale credit to the Corporate Office

Branches to get credit for leads provided to the SME Centres for loans

EXCLUSIVE LENDING GROUP

Formation of a separate Retail Lending Group

To be led by a newly hired Head of Consumer Lending

22

APPENDIX

23

A. FINANCIALS

24

Balance Sheet

(INR Mn) FY14 FY15 FY16 H1FY17

Shareholders Funds 10,536 15,561 17,636 18,892

Share Capital 976 1,792 1,795 1,795

Reserves and Surplus 9,560 13,770 15,841 17,097

Deposits 185,729 219,642 254,310 266,801

Current Deposits 9,125 15,099 16,365 15,208

Saving Deposits 17,297 21,525 27,791 30,985

Term Deposits 159,306 183,018 210,154 220,608

Borrowings 4,581 4,581 7,230 6,682

Other Liabilities & Provisions 5,685 7,270 8,146 7,304

Total Liabilities and Shareholder Funds 206,531 247,054 287,322 299,679

Cash and Bank 13,117 13,187 13,686 15,756

Investments 56,887 60,512 65,454 72,262

Advances 128,892 163,520 196,437 200,692

Secured by Tangible Assets 121,083 155,222 188,786 194,769

Secured by Government 200 599 - -

Unsecured 7,609 7,700 7,651 5,923

Fixed Assets 2,005 2,434 3,670 3,726

Others 5,630 7,401 8,074 7,244

Total Assets 206,531 247,054 287,322 299,679

25

Income Statement

(INR Mn) FY14 FY15 FY16 H1FY17

Interest Earned 19,840 22,145 25,683 13,841

Interest Expended 14,979 16,879 19,230 10,198

Net Interest Income 4,860 5,266 6,453 3,643

Other income 2,036 2,840 3,045 2,211

Operating Income 6,896 8,106 9,498 5,854

Employee Expenses 1,879 2,384 2,754 1,581

Other Operating Expenses 1,927 2,146 2,674 1,430

Provisions & Contingencies 2,686 1,802 1,769 977

Exceptional Items - -107 - -

Total Expenses 6,492 6,225 7,196 3,988

Tax -193 559 500 610

Net Profit 597 1,322 1,802 1,255

26

(%) FY14 FY15 FY16 H1FY17

CASA 14.2% 16.7% 17.4% 17.3%

Yield on Advances 13.2% 12.8% 12.2% 11.5%

Cost of Deposits 8.7% 8.6% 8.2% 7.6%

Yield on Investments 8.0% 8.6% 8.3% 7.8%

Credit / Deposit Ratio 69.4% 75.2% 77.9% 75.9%

Provision Coverage Ratio 53.2% 60.8% 68.6% 59.9%

Cost/Income Ratio 55.2% 54.6% 57.1% 51.4%

Tier-1 Ratio 7.9% 9.3% 8.7% 8.2%

Tier-2 Ratio 3.0% 2.0% 2.0% 1.9%

Capital Adequacy 10.9% 11.3% 10.7% 10.1%

GNPA 4.2% 2.8% 2.0% 2.7%

NNPA 3.4% 1.9% 1.2% 1.9%

ROA 0.3% 0.6% 0.7% 0.9%

ROE 6.2% 10.8% 11.7% 15.2%

Key Financial Metrics

27

B. MANAGEMENT TEAM

28

Experienced management team with diversified experience encompassing various branches of financial services (1/2)

Parthasarathi Mukherjee Managing Director and CEO

N.S. Venkatesh Executive Director

Corporate Advances - Relationship Management, Credit Processing, Credit Monitoring & Stressed Accounts

Meenakshi Sundaram R.M President, Wholesale Banking

Retail Liabilities, MSME & Retail Credit, Third Party Products, Branch Banking

Akkidas Jacob Vidya Sagar President, Retail Banking

Complementing and strengthening the team with strategic lateral hires to support the strategic growth plans of the bank

Risk Management - Operation Risk, Credit Risk & Market Risk

R.V.S. Sridhar President and Chief Risk Officer

29

Experienced management team with diversified experience encompassing various branches of financial services (2/2)

Housing Loan portfolio, Commercial Loan and LAP

Govind Ravindran VP & Head-Consumer Lendng & Retail Banking

Credit Monitoring & Stressed Accounts Corporate Advances - Credit Processing

Kumarappan R.M. SVP, Stressed Assets, Wholesale Banking

Kamalasekaran R. SVP, Credit, Wholesale Banking Group

Integrated Treasury, operating from Mumbai

Gurumurthy R.K. SVP, Treasury

Padmanabhan Premkumar SVP, Branch Banking

Branch Banking MSME Crdit, Non Corporate Advances & Rural Banking

Shankar A. SVP, SME and Rural Banking, and Retail Lending

Nedumaran B. SVP, HR

Madhusudhana Rao V. SVP & Chief Customer Service Officer

Customer Grivence, Internal Ombudsman & New Technology Initiatives

Cross Selling (TPP), Business Development in Karnataka Region, New initiatives. Operating from Bangalore

Peeush Jain SVP, TPP and Transformation, Retail Banking

Human Resource Development

Complementing and strengthening the team with strategic lateral hires to support the strategic growth plans of the bank

30

CONTACT US

The Lakshmi Vilas Bank Ltd. Corporate Office LVB House, 4/1, Sardar Patel Road, Guindy, Chennai - 600032 Tamil Nadu, India Toll Free: 1800-425-2233 Email: [email protected]

mailto:[email protected]

CORPORATE PRESENTATION - Lakshmi Vilas Bank Corporate Presentation_Nov 2… · Tie up with...

Documents

Transcript of CORPORATE PRESENTATION - Lakshmi Vilas Bank Corporate Presentation_Nov 2… · Tie up with...