Laxmi Villas Bank acquisition hits DBS' profit in FY22

3 Aug 2022 , 08:11 AM

DBS Bank India’s net profit decreased by 87% year over year as a result of lower trading income and greater costs associated with the bank’s acquisition of Lakshmi Vilas Bank (LVB).

In the fiscal year that ended in March 2022, net profit decreased to Rs167 crore from Rs312 crore, primarily as a result of a 54% increase in operating expenses, which went from Rs1719 crore to Rs2652 crore. The bank estimated that the “annual pre-tax” drag from the LVB purchase would increase from Rs341 crore to Rs669 crore in fiscal 2022 because that will be when it will be felt the most. DBS purchased the struggling LVB in November 2020.

In order to raise the capital adequacy ratio of DBS Bank India from 15.13% in March 2021 to 16.29%, DBS Bank Singapore invested Rs1,040 crore in the bank.

Trading income decreased by 52% to Rs284 crore, primarily due to the change in interest rates, and other income decreased by 13% to Rs887 crore in March 2022 from Rs1021 crore a year earlier.

Net advances increased by 19% from Rs36,973 crore to Rs43,898 crore. However, from Rs2352 crore in March 2021 to Rs2005 crore in March 2022, net interest income (NII) decreased by 15%.

From Rs51,501 crore in March 2021 to Rs48,978 crore in March 2022, total deposits decreased by 5%. However, the ratio of deposits into current and savings accounts increased from 31 to 33% in FY22.

From Rs4395 crore a year ago, total income grew 18% to Rs5202 crore.

While corporate and SME businesses saw growth in lending, trade, cash, and treasury products, retail growth was fueled by savings accounts, mortgages, and the wealth business, according to Surojit Shome, CEO of DBS Bank India.

With an 87% provision coverage ratio in FY22, the bank’s net NPA ratio increased from 2.83% the previous year to 1.61%.