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DBS India grows profitability despite impact from amalgamation of Lakshmi Vilas Bank

DBS India grows profitability despite impact from amalgamation of Lakshmi Vilas Bank 1

DBS Bank India Limited (DBIL), the wholly-owned subsidiary of DBS Bank, announced its financial results for the fiscal ending 31 March 2021.  As of 27 November 2020, Lakshmi Vilas Bank (LVB) was amalgamated with DBS Bank India Limited (DBIL), and as per the Scheme of Amalgamation, the results include LVB’s performance since that date. 

Performance highlights:

  • Net revenues for DBIL grew by 85% to INR 2,673 Cr (includes INR 134 Cr from LVB) in FY2021 from INR 1,444 Cr in FY2020. 
  • Profit before tax (PBT) rose to INR 679 Cr from INR 170 Cr, in FY 2020. This is despite absorbing LVB’s pre-tax losses of INR 341 Cr from November 2020 to March 2021. Net profit rose to INR 312 Cr from INR 111 Cr in FY2020.
  • Total deposits increased by 44% to INR 51,501 Cr (includes INR 18,823 Cr from LVB). Savings account balances grew by ~207%, and current account balances grew by ~98% Y-o-Y, including the growth on account of the amalgamation. Overall CASA ratio improved to 31% from 19%.
  • Net advances grew to INR 36,973 Cr (includes INR 10,685 Cr 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 for the bank on a combined basis, stands 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 INR 2,500 Cr into DBIL to support the amalgamation.
  • The bank adopted the concessional tax regime, resulting in an additional charge of INR 184 Cr on account of one-time adjustments. 

After the amalgamation, the bank’s primary focus has been on welcoming the employees and customers of LVB into the DBS family, unifying the LVB and DBS workforces and re-building the LVB business. The integration of operating platforms and branches is currently underway. The steady growth in LVB current & savings account balances as well as in the gold loans portfolio in 2021 is an early indicator of the success of the current strategy.

Speaking about the bank’s performance, Surojit Shome, Managing Director and CEO – DBS Bank India Limited, 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.” 

In June 2021, DBS was named byForbes in its list ofthe World’s Best Banks for the second consecutive year. Based on a global survey of 40,000 banking customers, DBS was ranked first out of 30 domestic and international banks present in India. Earlier in the year, Asiamoney recognised DBS Bank India as the Best International Bank in India. The bank was also lauded for being one of India’s Best Employers in BFSI by the Great Place to Work Institute.  The bank has a network of over 600 branches across 19 states in India, with about 5,500 employees.

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