LKB turns corner, posts Rs 4.98 cr net in H1

Lord Krishna Bank (LKB) has posted a net profit of Rs 4.98 crore during the six month period (H1) ended September 30.

According to Mohan Puri, director of the bank, operating profit during the period was Rs 11. 8 crore and eyes an operating profit of Rs 26 crore and a net profit of Rs 20 crore in FY06.

Addressing a press conference here, Puri said that the net non-performing assets (NPA) of the bank has come down to 4.12 per cent. He also said that the bank has performed well on the recovery front with total recovery during the April-September period being Rs 14 crore.

The bank aims to bring down its NPA to 2 per cent by the end the current fiscal and reduce it further to zero by March 2007. During the last fiscal, LKB recovered Rs 45 crore. It registered a net loss of Rs 24.41 crore during the last financial year.

V K Gupta, deputy managing director of the bank, said that the average cost of fund of the bank has come down to 6 per cent from 10 per cent in the last fiscal.

Puri said that the merger issue between Federal Bank and LKB was aborted only because of the difference about valuation between the boards of the banks.

"We had agreed in principle after our meeting with Federal Bank top brass on October 5. But we differed on the valuation part and the move failed," he explained.

He also said that LKB would be able to issue its initial public offering by the next financial year. "We have started the initial process for IPO and it will be announced after the results of 2005 -06."

The bank has not yet decided on the exact size of the issue but it may be to the tune of Rs 300 crore.

LKB has 68 branches in Kerala with a capital base of Rs 99 crore and a net worth of Rs 164 crore. Net interest income as percentage of average working fund has increased from 1.71 per cent as on March 31, 2004, to 2.40 per cent in March 2005.

Puri said that the post of managing director which has remained vacant for a long time would be filled soon.

"We have submitted a panel of three names including V K Gupta to the Reserve Bank of India and awaiting approval. There will be a fultime managing director at the earliest," he added. He declined to disclose the other two names in the panel.

Gupta said that the bank would open two branches shortly in Mumbai and Kolkata and would seek licence for opening more branches.