DBS India profit falls as LVB acquisition cost bites, trading income weakens

DBS Bank India’s net profit fell 87% year on year due to higher expenses related to the bank’s acquisition of Lakshmi (LVB) and also a fall in trading income.

Net profit fell to Rs 167 crore in the fiscal ended March 2022 from Rs 312 crore a year earlier mainly due to a 54% increase in operating expenses to Rs 2652 crore from Rs 1719 crore a year earlier. The bank put the “annual pre-tax” drag from the LVB acquisition at Rs 669 crore in fiscal ended up from Rs 341 crore as the majority of the impact was felt in fiscal 2022. DBS acquired of the ailing LVB on Reserve

‘s direction in November 2020.

DBS BankSingapore infused Rs 1,040 crore into DBS Bank India to increase the capital adequacy ratio to 16.29% from 15.13% in March 2021.

Other income also fell 13% to Rs 887 crore in March 2022 from Rs 1021 crore a year earlier trading income fell 52% to Rs 284 crore mainly with the reversal of interest rates.

Net advances grew 19% to Rs 43,898 crore from Rs 36,973 crore a year earlier. But net interest income (NII) fell 15% to Rs 2005 crore in March 2022 from Rs 2352 crore a year earlier.

Total deposits fell 5% to Rs 48,978 crore in March 2022 from Rs 51,501 crore a year earlier. But the ratio of current and savings account deposits improved to 33% in FY22 from 31% in the previous fiscal year.

Total income increased 18% to Rs 5202 crore from Rs 4395 crore a year earlier.

Surojit Shome, CEO DBS Bank India, said while corporate & SME businesses witnessed growth in lending, trade, cash as well as treasury products, retail growth was fuelled by savings accounts, mortgages and the wealth business.

“While the work toward recoveries on stressed advances have been underway, and reflected in improvement in NPA ratios in FY22 compared to FY21, the P&L of the erstwhile LVB franchise was still under transition as network efficiencies were being improved and the one-time pension liabilities were high. Significant strides have been made in integration of the expanded franchise in terms of products, process, technology, brand and most importantly, our people. The advantages of the expanded network across businesses segments, including products such as gold loans have started to gradually flow through, despite the repeated Covid waves,” Shome said.

The bank’s net NPA ratio improved to 1.61% in FY22 from 2.83% last year with a 87% provision coverage ratio.