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DBS Bank India Ltd is focused on growing its consumer and MSME (micro, small and medium enterprises) portfolio by leveraging the branch footprint of Lakshmi Vilas Bank (LVB), which merged with DBS last November. During the fiscal year 2020-21 (FY21), the wholly owned subsidiary of the Singapore lender reported a surge in net profit to 312 crore compared with 111 crore a year ago. In his first interview post the merger, DBS India head Surojit Shome said the bank is looking to revive the revenue from LVB which currently stands at only 7-8% of DBS’s Indian operations.

What is the progress made on the integration with LVB?

Our first task was to stabilize the deposit base. And I’m happy to say that during this period, since January 1, we’ve been able to able to actually grow our deposit base and assure customers of the safety. On the lending side, LVB had a large gold loan portfolio. So we managed to reopen that product within about 10 days of the amalgamation. The third, of course, is to assess the business lines and revive the financial momentum of the LVB part of our network. As our financials show, while we had a sharp increase in net income through the year, not a lot of that came from the LVB branch. In fact, only about seven 7-8% of our entire revenue came from LVB. So fourth, our objective is to divide the business lines and get revenue momentum in the LVB branches. And then three key other agendas we’ve been focused on: one, getting the network upgraded but also starting to take control of the network in terms of regulatory branding. We are anticipated to take us about a year. But with the second wave of covid, it’s been a bit more challenging. And finally, (getting) the two banks or LVB onto the same (digital) platform as DBS.

What will be your areas of growth in terms of credit?

We have not been doing much lending business from the LVB book, as we started only post February-March because it had stopped before the merger. Because LVB had negative capital. So their ability to write new loans was substantially impacted. The only product they were doing because of low capital charge was gold loans. LVB’s strengths were consumer businesses and SME. Their problems were in the large corporate business, (and) a substantial part of that portfolio is badly impaired. We already do mid-cap and large corporate business in DBS, so we merged that business unit with our business units.

DBS India’s gross NPA stood at 12.8% and net NPA at 1.8% as of March 2021. How do you expect to recover these bad loans?

Through the amalgamation process we have adequately provided. So from a risk to the balance sheet, and the profit & loss, it is substantially addressed. We do think that some of these loans may be recoverable. But there are other loans which we don’t think have intrinsic value. So it’s not that there will be a massive amount of recovery from the loans which are either fully provided for or substantially provided for.

DBS had infused 2,500 crore into the bank. Would you be looking at infusing more capital?

We continue to be comfortable with capital. Our objective is that the business is profitable enough to be self- sufficient. But for now, we think that given we are in a turnaround story, there will be requirements of capital and that’s factored into our plan over the next, say, several quarters; we have projected what capital might be required and that capital—as has been stated even by DBS group—that capital will be available.

DBS now has nearly 600 branches. Are you looking at branch rationalization?

Our primary objective would be to locate those branches in places where they can become profitable—not so much to say how many branches are rationalizable.

What is the progress made on the re-branding exercise?

The exercise is not yet complete, because there are two parts to it. The first is what I would call the regulatory branding, which means that all of our branches and ATMs today, clearly say that is part of DBS. And then our objective is to brand or migrate the brand depending on where the branches are to a hybrid branding because in many cases, the affinity to LVB exists in the core market. So we want to take advantage of that. And our objective is to try and finish that in tandem with our technology, unification because especially those branches, which are currently LVB branches, where if you were to brand it as DBS, I need to be able to provide all the services akin to those offered in a DBS branch.

There were reports that employees of LVB who fall under the IBA wage agreement have not been given the revised wages. After the merger, will you be a part of the IBA wage pact?

Before the merger, as the management and the board of LVB exited they took away the mandate for negotiation from the Indian Banks Association (IBA). So when IBA negotiations ended and they signed the 11th bipartite, LVB was not represented. So our objective is to pick that up and provide a necessary framework for our staff, which is what we are in the process of doing. And we will expect to complete that by the end of this calendar year.

How do you intend to go about staff rotation within the bank?

We need to unify staff across not just branches but also functions. So that's what we've been doing over the last six, seven months. We have been working with the entire staff of LVB to go through assessment process for them, figure out what their interests are. We've identified job gaps, whether it is in the same area where the staff was or new areas, they will they will be going through their transfer process starting maybe early August, and that entire assessment process has been done and actions have been taken including promotions.

How do you intend to tackle the unions? That is something which is very foreign to you, as a bank.

It's not foreign to us, because, you know, unions are not just in India, we have unions in other markets as well. Yes, our operations in India did not have a unionised component. So yes, you're right to that extent, but unions have been there for other banks, including other international banks. So we expect that we will go through that process and ended up with mutually a constructive relationship.

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