US-base fund eyes stake in LVB

Shares of Lakshmi Vilas Bank (LVB) hit 10% upper circuit at Rs 19.80 after media reports suggested that the US fund house Tilden Park Capital Management has sounded out to Reserve Bank of India(RBI) for buying a sizeable stake in the only private-sector lender facing operational curbs from the banking regulator.

LVB was placed under prompt corrective action (PCA) by the RBI in September 2019. The following month, the RBI declined its proposal to merge with Indiabulls Housing Finance.

The lender is scouting for investors to shore up capital. The stock has added 33% in four sessions from its recent closing low of Rs 14.80 recorded on 5 February 2020.

The bank will declare its third-quarter earnings on 14 February 2020. LVB reported a net loss of Rs 357.18 crore in Q2 September 2019 as compared to a net loss of Rs 132.31 crore in Q2 September 2018.

Total income declined 16.9% to Rs 665.33 crore in Q2 September 2019 over Q2 September 2018.

The bank’s gross non-performing assets (NPAs) stood at Rs 4091.05 crore as on 30 September 2019 as against Rs 3556.58 crore as on 30 June 2019 and Rs 2964.89 crore as on 30 September 2018.

The ratio of gross NPAs to gross advances stood at 21.25% as on 30 September 2019 as against 17.30% as on 30 June 2019 and 12.31% as on 30 September 2018.

The ratio of net NPAs to net advances stood at 10.47% as on 30 September 2019 as against 8.30% as on 30 June 2019 and 6.88% as on 30 September 2018.

The bank’s provisions and contingencies soared 54.6% to Rs 316.81 crore in Q2 September 2019 from Rs 204.87 crore Q2 September 2018.

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