Corporate Presentation Mar16 Revised as on 26/10/2016 1 - - PowerPoint PPT Presentation

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Corporate Presentation – Mar’16

Revised as on 26/10/2016

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Disclaimer

This presentation has been prepared by The Lakshmi Vilas Bank Limited (the “Bank”) solely for information purposes without regard to any specific objectives, financial situations or informational needs of any particular person. This presentation should not be construed as legal, tax, investment or other advice. This presentation may not be copied, distributed or disseminated, directly or indirectly, in any manner. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation. Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the Bank. The distribution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in possession of this presentation should inform themselves about and observe any such restrictions. Furthermore, by reviewing this presentation, you agree to be bound by the trailing restrictions regarding the information disclosed in these materials. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Bank or its directors and officers with respect to the results of operations and financial condition of the Bank. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those specified in such forward-looking statements as a result of various factors and assumptions. The risks and uncertainties relating to these statements include, but are not limited to, (i) fluctuations in earnings, (ii) the Bank’s ability to manage growth, (iii) competition, (iv) (v) government policies and regulations, and (vi) political, economic, legal and social conditions in India. The Bank does not undertake any obligation to revise or update any forward-looking statement that may be made from time to time by or on behalf of the Bank. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward- looking statements. The information contained in this presentation is only current as of its date and has not been independently verified. The Bank may alter, modify or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or changes. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this

• presentation. None of the Bank or any of its affiliates, advisers or representatives accept any liability whatsoever for any loss howsoever arising from any information presented or

contained in this presentation. Please note that the past performance of the Bank is not, and should not be considered as, indicative of future results. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Such information and opinions are in all events not current after the date of this presentation. This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Bank by any person in any jurisdiction, including in India or the United States, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any investment decision or any contract or commitment therefore. This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an advertisement or an offer document under the Companies Act, 2013, as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India.

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Table of Contents

Bank overview

1

Strong brand legacy developed over 90 years of existence

2

Well diversified management team backed by rich financial services experience

3

Strategic emphasis on enhancing CASA growth

4

Focus on fee-based products to drive other income

5

Modification in IT architecture towards automation and enhanced customer experience

6

Customer segmented asset strategy to provide fillip to growth

7

Strengthening existing asset monitoring and lending policy for improved asset quality

8

Financials

9

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BANK OVERVIEW

4 4

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Lakshmi Vilas Bank: A private sector Bank in its transformational Journey

Overview  Founded over 8 decades ago in 1926 under leadership of Shri V. S.

• N. Ramalinga Chettiar, LVB has a strong presence in Southern India

 Network of 460 Branches, 7 extension counters and 910 ATM’s March 16  Business Size of Rs.452,499 Mn with an excellent CAGR of 17 % in the last 5 years  Predominantly a Retail / SME focused Bank – ~ 57% of total business is from these segments  Deposits and Advances of the bank grew at a CAGR of 16% and 18% respectively over the last 5 years  During FY16, the bank registered a Operating profit of Rs.4,071 Mn and PAT of Rs.1,802 Mn.  Operating Profit and PAT growing at a CAGR of 15% and 16% respectively over the last 5 years.  Over 2.71 million Customer accounts Our Vision To be a sound and dynamic banking entity providing financial services of excellence with pan-India presence Our Mission To develop a range of quality financial services and products to create value for customers, shareholders and the society; to motivate people to achieve excellence in performance leading to sustained profitable growth and build a vibrant organization.  With continuous investments in technology, all of our services are

• ffered on a robust technologically advanced platform.

 We take special pride in the fact that we are able to offer personalized services drawing inspiration from our rich heritage, even as we have moved over to the latest in technology  We benchmark our operating standards continuously with the best practices in the banking industry, so as to ensure that our customers always receive services with high level of satisfaction.  We recognize that we are truly in the business of bringing prosperity to all our stakeholders, Demonstrate high corporate governance standards that protects and balances stakeholder interests in the journey of moving towards short and long term business goals and seek continuously to live up to the motto ‘life smiles where LVB serves’. Our Vision and Mission

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Gradual evolution from an old generation private sector bank to a new-age professionally run financial platform

Transition from a South India focused corporate lender to a national focus modern bank with diversified focus on retail, SME, Corporate and fee-based products

1926 Incorporate in Karur 1958 Granted banking license from RBI Becomes Scheduled Commercial Bank 1961-74 Branch expansion through acquisition1 Expanded beyond TN to neighbouring states and Metros 1976 Attained the status of Authorized Forex Dealer 2000 Lists on NSE 1997 Opened 200th branch in Tirupathy Opened 1st ATM in Andheri 2006 Implemented Core Banking Solution 2008 Launched Internet Banking 2011 Awarded Best Bank among small Banks for “Electronic Payment Systems” from IDRBT2 2016 460 Branches 916 ATMs Launched mobile app Launched multi function E-lounge 2015 Launched CROWN, boutique banking for HNI customers 2014 Moved HQ to Chennai to change the image from a South-based bank to a new-age professionally run institution

Focus on South India Focus on Tamil Nadu Focus on product diversification Transition to a new age financial platform

1 – Acquired 9 banks namely Thirukattupalli Bank, Salem Gugai Sri Krishna Bank, Sri Nadiambal Bank, Kattuputhur Bank, Trichy Vysya Bank, Kannivadi Bank, Salem National Bank, Salem Sri Ramasamy Bank, and Karur Mercantile Bank; 2 – Institute for Development and Research in Banking Technology

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Sustained improvement in financial metrics with strong focus on qualitative growth (1/2)

Yield on Advances and Cost of Deposits

13.6% 13.0% 13.2% 12.8% 12.2% 8.6% 9.0% 8.7% 8.6% 8.2% FY12 FY13 FY14 FY15 FY16 Yield on Advances Cost of Deposit

Stable NIMs and strong growth in NII

3,712 3,920 4,860 5,266 6,453 2.9% 2.6% 2.9% 2.7% 2.8% FY12 FY13 FY14 FY15 FY16 NII (INR Mn) NIM

Consistent Fee Income Profile

669 798 980 1,194 1,471 0.5% 0.5% 0.5% 0.5% 0.6% FY12 FY13 FY14 FY15 FY16 Fee Income (INR Mn) Fee Inc / Avg Assets

Stable Operating Expense Ratios Improving Asset Quality Profitability on Track to Recovery

55.5% 57.4% 56.1% 53.6% 57.1% 2.0% 2.0% 2.0% 2.0% 2.0% FY12 FY13 FY14 FY15 FY16 Cost to Income Ratio Opex / Avg Assets 3.0% 3.9% 4.2% 2.8% 2.0% 1.7% 2.4% 3.4% 1.9% 1.2% 0.4% 0.5% 1.2% 0.7% 0.7% FY12 FY13 FY14 FY15 FY16 GNPA NPA Provision / Avg Assets 13% 10% 6.2% 10.8% 11.7% 0.7% 0.5% 0.3% 0.6% 0.7% FY12 FY13 FY14 FY15 FY16 RoE RoA

Source: Company Annual Reports

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Sustained improvement in financial metrics with strong focus on qualitative growth (2/2)

Healthy Growth in Business Deposits Mix Advances Mix Aggressive Investment in Branch Network Improvement in Employee Productivity Sustained branch productivity with aggressive expansion

Source: Company Annual Reports Business defined as summation of Net Advances and Deposits

141 156 186 220 254 102 117 129 164 196 FY12 FY13 FY14 FY15 FY16 Deposits (INR Bn) Advances (INR Bn) 4 year CAGR 15.9% 17.8%

5.1% 9.8% 85.1% 6.4% 10.9% 82.6%

Demand Deposits Savings Deposits Term Deposits

FY12 FY16

28.2% 15.5% 13.3% 43.0% 29.4% 18.5% 12.5% 39.6%

FY12 FY16

MSME & Mid Commerical Agri/Rural Retail Corporate 290 291 361 400 460 3,054 3,149 3,292 3,459 3,565 FY12 FY13 FY14 FY15 FY16 Branches Employees 80 87 96 111 126 FY12 FY13 FY14 FY15 FY16 Business/Employee (Mn)

838 939 872 958 980 FY12 FY13 FY14 FY15 FY16 Business/Branch (Mn)

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LVB 2.0 | Strong brand legacy to usher in a new era of growth

FY16

Number of Branches

FY20E

Total Assets (INR Bn) Net Interest Margins (%) Cost/Income Ratio Gross NPA Return on Assets Return on Equity

460 287 2.8% 57.1% 2.0% 0.7% 11.7% 1,000 650 3.3% 48.7% 1.6% 1.2% 18.3%

LVB 2.0

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Building blocks for strategic plan

Team Customer Segmentation

 Focus to augment skills and capabilities  Strategic additions to fill gaps  Strengthening HR practices

Sustainable Growth CASA Credit

 Granular customer segmentation for focused strategies  Retail : Initial focus on mortgages and vehicles;

• ther products in phased

manner  MSME: Regional focus  Strengthen credit and risk functions  Separation of client acquisition from credit appraisal  Centralization of wholesale credit  Target 10 year CAGR of 20-25%  Initial focus on deepening presence in focus geographies  Building brand for phased expansions in contiguous markets for wider presence  Focus on increasing CASA share through branch specific initiatives  Strong early progress

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Key Investment Highlights

 Gradual evolution from an old generation private sector bank to a new-age professionally run financial platform  Conscious synergies derived from provision of augmented financial services to the technologically advanced

youth Strong brand legacy developed over 90 years of existence

 Experienced management team with diversified experience encompassing various branches of financial

services

 Defined verticals for core competency across the organization; with change in hiring culture towards a

professionally run bank Well diversified management team backed by rich financial services experience

 Targeted efforts across geographies to boost low cost CASA deposits  Recent branch expansion and promotions expected to show colour and result in sustained CASA growth

Strategic emphasis on enhancing CASA growth

 Defined targets for Third Party Products to provide fillip to fee-based income from 11% in 2016 to 25% in 2026  Focus on ensuring magnified presence across channels through innovative products and strategic associations

Focus on fee-based products to drive other income

 Customer segmentation to fulfill differentiated customer requirements for effective financial product delivery  Division of lending functions for streamlined operations and lower Turnaround Time

Customer segmented asset strategy to provide fillip to growth

 Centralization of the loan monitoring process across lending products for strengthened asset quality  Formation of a specialized Recovery Group at the Corporate Office for all product classes; with revamping of

lending policy Strengthening existing asset monitoring and lending policy for improved asset quality

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STRONG BRAND LEGACY DEVELOPED OVER 90 YEARS OF EXISTENCE

12 12

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Gradual evolution from an old generation private sector bank to a new-age professionally run financial platform…

Transition from a South India focused corporate lender to a national focus modern bank with diversified focus on retail, SME, Corporate and fee-based products

1926 Incorporate in Karur 1958 Granted banking license from RBI Becomes Scheduled Commercial Bank 1961-74 Branch expansion through acquisition1 Expanded beyond TN to neighbouring states and Metros 1976 Attained the status of Authorized Forex Dealer 2000 Lists on NSE 1997 Opened 200th branch in Tirupathy Opened 1st ATM in Andheri 2006 Implemented Core Banking Solution 2008 Launched Internet Banking 2011 Awarded Best Bank among small Banks for “Electronic Payment Systems” from IDRBT2 2016 460 Branches 916 ATMs Launched mobile app Launched multi-function E-lounge 2015 Launched CROWN, boutique banking for HNI customers 2014 Moved HQ to Chennai to change the image from a South-based bank to a new-age professionally run institution

Focus on South India Focus on Tamil Nadu Focus on product diversification Transition to a new age financial platform

1 – Acquired 9 banks namely Thirukattupalli Bank, Salem Gugai Sri Krishna Bank, Sri Nadiambal Bank, Kattuputhur Bank, Trichy Vysya Bank, Kannivadi Bank, Salem National Bank, Salem Sri Ramasamy Bank, and Karur Mercantile Bank; 2 – Institute for Development and Research in Banking Technology

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…with deep concentration in South India with significant growth potential

Facts as of March 2016; 1 – Mobile banking transactions from app launch on January 28, 2016 to March 31, 2016 2 – Share of the State’s outstanding credit from Scheduled commercial banks as of March 2015

460

Branches

916

ATMs

2.7Mn

Customers

3,565

Employees

15

States

INR 443mn

Mobile Banking Transactions1

INR 29bn

Internet Banking Transactions

11

Regional Offices

1.5mn

Saving Accounts

70,000

Current Accounts

Andhra Pradesh & Telangana (13.4% of LVB’s advances)

PSU Banks’ Market Share2: 75.4% LVB Market Share2: 0.4%

Tamil Nadu (45.8% of LVB’s advances)

PSU Banks’ Market Share2: 67.6% LVB Market Share2: 1.2%

Karnataka (15.4% of LVB’s advances)

PSU Banks’ Market Share2: 64.1% LVB Market Share2: 0.5%

Branch Count 257 7 4 2 12 19 77 47 12 4 2 2 4 4 3 4

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Robust growth across business parameters driven by product and geographic expansion…

0.5 2.3 20 91 141 186 254 0.3 1.4 12 63 103 130 198 1 4 31 154 244 316 452 1980 1990 2000 2010 2012 2014 2016 Deposits Advances

INR Bn

~85% ~80%

Reduced dependence on Tamil Nadu with declining share in total business

~75% ~65% 50% 49%

144 168 Branches 205 271 290 361 460

Note: Business implies summation of Deposits and Advances

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…backed by a well diversified healthy portfolio moving towards increased retail lending…

Continuous growth across product segments

16,270 19,773 26,395 26,950 34,354 41,706 24,160 24,126 30,656 11,392 13,003 14,180 51,652 73,878 85,252 130,424 165,134 198,189 Mar-14 Mar-15 Mar-16 Retail SME/MSME Rural Mid-Commercial Wholesale

Retail

Loans to individuals, HUF, trusts, clubs – irrespective of loan amount

SME/MSME

Based on investment in Plant and Machinery, irrespective of loan amount

Rural

Based on activity (being classified as Agriculture Direct or Indirect), irrespective of loan amount

Mid-Commercial

Loans to sole proprietorship and partnership firms (other than MSME, Rural), irrespective of loan amount

Wholesale

All loans not falling in the above 4 categories, irrespective of amount

2 year segment CAGR

27% 24% 13% 12% 29%

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Implementation of multi function E-lounge , a state-of-the-art branch allowing automated banking functions such as passbook printing, T+1 cheque clearing etc. Customer segmentation to fulfil need-based requirements of high-value groups such as HNIs and NRIs Product bundling to capture larger share of the customer wallet and impose artificial exit barriers Integrated mobile app encompassing banking functions, instant payee additions, utility payments, mobile recharges, and wallet advantages Intuitive and consistent banking interface across channels and devices for seamless integration Banking on-the-go supported by a secure transaction interface and two-factor authentication Focussed efforts on improving banking convenience and enhancing customer experience

…and heightened focus on bespoke products for the youth to build esteemed long-term relationships

52% saving bank customers aged 40 or below

100% = 1,390,389

5% 21% 26% 48% <20 years 20-30 30-40 40+

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WELL DIVERSIFIED MANAGEMENT TEAM BACKED BY RICH FINANCIAL SERVICES EXPERIENCE

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Experienced management team with diversified experience encompassing various branches of financial services (1/2)

 Experience: 33 years  Responsibility: Overall growth and

direction of the firm

 Past: SBI, Axis Bank  Qualification: Bachelors in Chemistry

Parthasarathi Mukherjee Managing Director and CEO

 Experience: 32 years  Responsibility: Overall growth  Past: IDBI Bank  Qualification: Bachelors in Science, Chartered

Accountant, Diploma in Management & Financial Services, Certified Associate of Indian Institute of Bankers

 Experience: 33 years  Responsibility: Recovery, Legal, Credit, CMD, Treasury,

Wholesale Banking, Product Development & Strategy Management, Corporates & Wealth Management

 Past: Canara Bank  Qualification: Bachelors in Engineering, CAIIB

Meenakshi Sundaram R.M President, Wholesale Banking N.S. Venkatesh Executive Director

 Experience: 32 years  Responsibility: Operations, Retail Business, HR, IT, NRI Business,

and HNI

 Past: SBI  Qualification: Bachelors in Science, Masters in Science, CAIIB  Achievements: Launched SBI's Corporate Banking Services in

UAE; completed Leadership Development Training organized by Euromoney

Akkidas Jacob Vidya Sagar President, Retail Banking

Experience across multiple dimensions of financials services and banking enables innovative approach to design and delivery of financial products

 Experience: 35 years  Responsibility: Head the accounts

department and the finance function

 Past: Canara Bank  Qualification: Bachelors in Commerce,

Chartered Accountant

• M. Palaniappan

President and CFO

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Experienced management team with diversified experience encompassing various branches of financial services (2/2)



Experience: 35 years



Responsibility: Audit and Inspection, Risk Management and Vigilance



Past: SBI



Qualification: B. Sc., LLB, M.A., CAIIB Ashok Kumar Pareek SVP, Audit and Inspection, CRO, and CIV



Experience: 37 years



Responsibility: Recovery Department



Qualification: Bachelors in Science, Masters in Science Nedumaran B. SVP, HR and Admin KEY RECENT HIRE Madhusudhana Rao V. SVP & Chief Customer Service Officer KEY RECENT HIRE



Experience: 38 years



Responsibility: Banking and Customer Service



Past: SBI



Qualification: Bachelors in Science, Masters in Science, CAIIB, DIB, DBM, DFS



Experience: 35 years



Responsibility: Credit Department



Qualification: Bachelors in Commerce, JAIIB Kumarappan R.M. SVP, Stressed Assets, Wholesale Banking Kamalasekaran R. SVP, Credit, Wholesale Banking Group



Experience: 19 years



Responsibility: Cross Selling (TPP) and Business Development



Past: RBS, ABN Amro



Qualification: Bachelors in Science Peeush Jain SVP, TPP and Transformation, Retail Banking



Experience: 24 years



Responsibility: Integrated Treasury Operations



Past: Bank One (Mauritius), ING Vysya Bank



Qualification: B. Com., Masters in Commerce, CAIIB



Achievements: Awarded 'Best Executive' of the Organization in 2011-2012 Gurumurthy R.K. SVP, Treasury Padmanabhan Premkumar SVP, Branch Banking (Retail), Operations and IT



Experience: 30 years



Responsibility: Operations and IT



Past: SBI, Punj Lloyd Group



Qualification: Bachelors in Science, Masters in Science, MBA



Experience: 15 years



Responsibility: Retail Credit, Alternate Channels, Marketing and CSR, Financial Inclusion



Past: HDFC, Centurion Bank



Qualification: Bachelors in Science, CA Shankar A. SVP, SME and Rural Banking, and Retail Lending



Experience: 23 years



Responsibility: Human Resource Development and Administration



Past: SPI Global, ADP, TUV



Qualification: B.E., MHRM, Diploma in HR



Achievements: Certified Executive Coach, Certified PPA & TEIQ Practitioner

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Middle level hiring to strengthen upper tier and pave the path to become a professionally managed financial institution



Experience: 28 years



Responsibility: Liabilities and Product Development



Past: RBS



Qualification: Bachelors in Science



Achievements: Executive Program in Leadership & Management from IIM, Calcutta

Neena Anand VP, Liabilities, Retail Banking



Experience: 34 years



Responsibility: HRD Department



Past: Canara Bank



Qualification: Bachelors in Science, JAIIB » Experience: 15 years » Responsibility: Services Department » Past: HDFC Life Insurance » Qualification: BBA, MBA, Diploma in Mechanical Engineering

Ramesh S. VP, Services



Experience: 33 years



Responsibility: Regional Office, Coimbatore



Past: Axis Bank



Qualification: Bachelors in Commerce, JAIIB

Sundaram V. VP, IR & Terminal Benefits, HR Palaniappan M. VP and Regional Head

» Experience: 32 years » Responsibility: Regional Office, Bangalore » Past: Axis Bank » Qualification: Bachelors in Commerce » Achievements: Certified and Authorized Trainer on Memory Filing Systems and Soft Skills

Yogish K. VP and Regional Head

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Planned extensive hiring at the top for professionally conducted operations

Grade Designation / Posting Portfolio Reporting to SVP Head – Relationship Management Wholesale Banking President Wholesale VP NRI and HNI Banking Liabilities and Product Development Head – Liabilities and Product Development VP Head – Consumer Lending Retail Banking President Retail VP Head – Operational Risk Risk Department Chief Risk Officer VP Head – Current Account Liabilities and Product Development Head – Liabilities and Product Development VP Operational Risk Risk Department Chief Risk Officer AVP Head – MSME Rural and Commercial Banking Retail Credit SVP – Retail AVP Credit Department Credit Department SVP – Credit AVP Liability and Product Development Liabilities and Product Development Head – Liabilities and Product Development

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Defined verticals for core competency across the organization

MD & CEO Board CCSO1 Head, Wholesale Banking CFO

• Co. Secy.

Head Strategy Head, HR Head Retail Banking DDO2 Head Product & Process Quality Head, BAU3 ED (3)

Existing Position Replacement of Existing Position New Position Created

1 - CCSO – Chief Customer Service Officer; 2 - DDO – Digital Design Officer; 3 - BAU – Business Analytics Unit

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Organization Structure of CASA and Liabilities Department

Head, Liabilities and Product Development National Sales Head Product Manager, CASA Savings Account Current Account Regional Sales Manager, CASA Sales ASMs1, Team Leaders, Sales Executives CROWN Sales Head CROWN Relationship Managers LBR2/ Corporate Salary

Existing Position Replacement of Existing Position New Position Created

1 – ASM – Area Sales Manager; 2 – LBR – Large Business Relationship

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Change in hiring culture to move towards a professionally run new-age bank

4.9% 4.2% 4.0% 3.5% 3.7% 2012 2013 2014 2015 2016 37 34 30 2016 pre hiring 2016 post hiring 2019E Moving from an emotionally driven to a loyally motivated and professional culture infused financial services organisation HR Operations Focus on end-to-end HR cycle HR Development Focus on performance management, skill, and competencies HR Management Focus on identification of employee needs, benchmarking it against industry and taking corrective action “Verticalization" of organizational departments Training in association with Employee compensation Survey by

HR Function

Change in culture to maintain low attrition rate… …while reducing average age of the employee

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STRATEGIC EMPHASIS ON ENHANCING CASA GROWTH

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Targeted efforts across geographies to boost low cost CASA deposits

Data as of FY16 unless mentioned otherwise; CASA is daily average CASA balance for the year 1 – CAGR for 4 years from FY16 to FY20

23% 9% 28% 33% 32% 32% 17% 26% Branch Count Average CASA Rural Urban Semi-Urban Metro 21% 2% 19% 6% 60% 92% Branch Count Average CASA <2 years 2-5 years 5+ years 21,814 26,424 32,212 149,000 21% 22% [VALUE]1 FY14 FY15 FY16 FY20 CASA YoY Growth 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% 5% 10% 15% 20% 25% 30% 35%

Branch Percentile CASA Percentile

INR Mn

40% of new branches by vintage contribute to 8% CASA currently, signifying huge potential Rural branches contribute to 9% CASA implying huge scope of rural penetration Robust growth in CASA with strategic efforts beginning to show results Emphasis on reducing average CASA concentration across branches

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Recent branch expansion and promotions expected to show colour and result in sustained CASA growth

73 78 73 92 96 14.9% 14.5% 14.2% 16.7% 17.4% 2012 2013 2014 2015 2016

Competitive Interest Rates Launched Crown | NRI Banking Product CASA strategy of high interest rates of 5% and 6% when the market offered 4% Capitalized on broad base to acquire HNI accounts and build client base to cross sell Mobile Banking Launched in 2016; capitalize on cross sell opportunities to existing and new customers Flexi Current Account Debit Card for Entities Flexible current account with add-on services like cash pick-up, cash management, and door step banking etc. One of the first banks to offer debit cards for partnerships and private entities Robust Sales Force Doubling feet on street; along with providing training to offer trade and foreign exchange services. Offline Marketing Digital Marketing Promotion in print, outdoor media, FM, television, and mobile van campaigns Official Facebook page created to have a presence on the social networking platform and to channelize customer interaction Staff Motivation Online tests for product education for staff; coupled with incentives to market CASA products SAVING ACCOUNTS CURRENT ACCOUNTS ADVERTISING AND PROMOTION

CA, 6% SA, 11% TD, 18% Other Retail, 65%

FY16

Backed by a healthy share of low cost Retail deposits Growing CASA Ratio and CASA per branch (INR Mn)

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Scaled marketing initiatives focussed on broad product portfolio and increased brand recollection

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Developed core competencies to provide strong impetus to increase CASA and lower cost of funds (1/2)

Transitioning branches to become sales

• utlets with CASA targets;

Multi function E-lounge and service oriented ATMs Seamless integration of alternate channels for consistent and increased customer experience Technological architecture upgrade to support larger multi-channel base and maintain customer experience Implementation of a rewards/loyalty program Focus on Financial Inclusion keeping in mind unregistered retail and SME sector

Implemented Under Implementation Strategic Focus in Future

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Developed core competencies to provide strong impetus to increase CASA and lower cost of funds (2/2)

Implementation of CRM and analytical customer data mining to increase reach and implement push sales model Cross-sell offerings and product bundling with increased focus on Third Party Products Leverage on superior geographic connect with continuing investment in in feet on street to improve brand recall Customer segmentation with incentivised specialist lending products (Eg. Crown lounges for HNI and NRI) Affiliations with Government Schemes, Commercial and Institutional segment for larger transaction base

Implemented Under Implementation Strategic Focus in Future

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FOCUS ON FEE BASED PRODUCTS ACROSS CHANNELS TO DRIVE OTHER INCOME

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Defined targets for Third Party Products to provide fillip to fee-based income from 11% in 2016 to 25% in 2026 (1/2)

Data for FY16 unless mentioned otherwise

Creating exit barriers by providing need-based, bespoke, and high quality bundled and augmented products

Insurance Mutual Funds

Tie ups with insurance behemoths for life, general, and health insurance Investing opportunities customised for small amounts; developing advisory app with manual intervention for sale of mutual fund products

Credit Cards

Launched as a secured risk free card with plans to gradually transition to own credit card product

New Pension Scheme Money Transfer

Augmented offering focused on corporate salary accounts for management of scheme accounts Strengthened portal for seamless customer interface and channelization of potential CASA opportunities with augmented footfalls

Forex Travel Cards

High growth high margin exchange rate driven product, irrespective of amounts remitted

Capture larger share of customer wallet through development of a one-stop shop for financial products and services

6,052

Policies sold

40,000

Average case size

70%+

Persistency

8,217

Transactions

5mn

Cards targeted for FY17

powered by

1,900

Cards issued from Nov-15 to Mar-16

powered by

197

New policies sold

13

Mutual Fund affiliations

188mn

Transacted

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Defined targets for Third Party Products to provide fillip to fee-based income from 11% in 2016 to 25% in 2026 (2/2)

LIC Products 78% General Insurance 18% Mutual Fund 2% Forex 1% Health Insurance 1% NPS 0.1% LIC Products 52% General Insurance 37% Mutual Fund 6% Forex 5% NPS 0.1%

11% 25% 2016 2026E

100% = INR 23Mn 100% = INR 62Mn

Fee-based income – FY16 Fee-based income – FY15 Other Income as % of Total Income planned to grow to 25% in 2026

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Focus on ensuring magnified presence across channels through innovative products and strategic associations

Strong focus on developing ground level visibility across traditional, internet, and mobile channels; backed by data and strategic affiliations

Develop own mobile wallet capabilities integrated with own app to facilitate payments across channels Strategic affiliations with other payment apps to facilitate transactional flow Increasing ATM presence across cities with basic banking facilities of cheque deposit and service requests; and capture off-us ATM walk-in portfolio Multi Function E-Lounge | Automated branch for advanced banking facilities such as cheque deposit with T+1 clearing and passbook printing Engineering of a Business Intelligence Unit for customer segmentation and decision making inputs for geographic expansion Establish own loyalty program to provide the benefits of strategic tie-ups to customers on PoS, E-commerce, Mobile and Net-Banking channels

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www.lvbank.com 36 48% 45% 43% 52% 55% 57% FY13-14 FY14-15 FY15-16 On-Us Off-Us 3,943 4,067 3,988 3,143 3,282 3,216 FY13-14 FY14-15 FY15-16 On-Us Off-Us

Increasing ATM usage by other bank customer presents an untapped segment of walk-in customers for push sales

54% 50% 49% 46% 50% 51% FY13-14 FY14-15 FY15-16 On-Us Off-Us

INR

With Increasing portion of amount transacted Increase contribution of off-us ATM transactions With marginal increase in off-us ticket size while keeping own size consistent

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MODIFICATION IN IT ARCHITECTURE TOWARDS AUTOMATION AND ENHANCED CUSTOMER EXPERIENCE

37 37

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Architectural initiatives to streamline the transaction lifecycle, from sourcing to processing to servicing

CRM Tool Automated Loan Origination Enhanced Banking Platform

Under implementation Implemented Order in process for the tool; expected to launch by Mar-17 Key Features:  Salesforce Automation and Leads Management  Campaign Management and Customer Segmentation to ensure mass reachout  Analyse leads and take informed decisions, such as automated responses to FAQs, automated escalation, and fixing service levels based on segmentation Results:  Improve cross-selling and up-selling capability  Drive CASA to targeted levels  Improve account balances and income due to better partner sales management and reduced churn of customers Fully automated loan origination system to ensure uniform processing through standardized enforcement of credit terms and conditions; integration with credit rating modules, and automatic reporting Tabs to feet on street for instant notifications to Corporate office for commencement of processing Spreadsheet based upload, followed by automatic application of defined business rules and eligibility norms Results  Reduced time for data entry  Low error rate  Higher TAT  Improvement in employee productivity  Standardized borrower evaluation  Improved document handling Supreme 2 factor authentication banking channels across internet and mobile App to have user friendly convenient

• ptions such as Favourites, Quickpay
• ptions, utility payments, and quick

telecom recharges etc. App has been launched across iOS, Android, and Windows platforms with a consistent interface across all Digital penetration supported by customer education, marketing and expansion in branch network Customer Satisfied Customer LEADS CUSTOMERS

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Multifunction mobile app with intuitive functioning for a state-of-the-art customer interface (1/2)

Login with PIN or Internet Banking ID Information not specific to an account is available without login

Login Page Landing Page Fund Transfer Page

Smart memorization of previous payment choices exercised – Leading to one-step payment One step instant payee addition

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Multifunction mobile app with intuitive functioning for a state-of-the-art customer interface (2/2)

Intuitive one touch drop-and-go options for multiple utilities for enhanced customer experience

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Implementation of innovative large-scale technological reforms for long-term sustainability

Upgrade Core Banking Suite

Modification of the hardware and network setup to the latest highly scalable technologies and subsequent upgrade to the core banking and net banking platform

Develop Business Intelligence Unit

Customer segmentation based on analytics and insight to provide bespoke financials products and services based on differentiated financial needs and requirements

Enhance Digital Banking and Omnichannel presence

Build strong presence across banking mediums of

• nline and mobile, for a seamless and uniform

customer interface and enhance banking convenience Multi Function E-Lounge | Automated service oriented banking lounge for banking services such as passbook printing, cheque deposit with T+1 clearing, cash deposit, and ATM facilities

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Certified as a frontrunner in technology implementation in the financial services industry

Best bank for managing IT infrastructure among small banks IDBRT (2014-15) Excellence In Unified Communications for Business Benefits Dataquest (2014-15) NACH Business Technology Award in Small Banks Category NPCI (2013-14) “CIO 100” in the Networking Pioneer Awards IDG (2012-13)

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CUSTOMER SEGMENTED ASSET STRATEGY TO PROVIDE FILLIP TO GROWTH

43 43

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Customer segmentation to fulfill differentiated customer requirements for effective financial product delivery

Customer Characteristics Customer Count (#) Gross Advances (INR Mn)

Retail MSME/Rural/Agri Wholesale Individuals, HUF, and trusts; with special focus on NRIs and HNIs Trading, business and small manufacturing entities as designated by RBI All business entities

38,233 156,134 630

100% = 26,395 100% = 86,542 100% = 85,252 Well diversified retail advances book with a strong focus on profitable gold loans, business credit and home loans Conversion of existing Recap centres to specialized MSME centres for faster loan processing and reduced Turn Around Time Emphasis on being a multiple banking partner and channelizing high-rated relationships towards cross-sell opportunities

Data as on Mar-16

Loan Against Property 20% Deposit Loan 16% Bills Discounted 14% Jewel Loan 12% Housing Loan 11% Term Loan 11% Others 16% Jewel Loan 24% Business Credit 25% Cash Credit 17% Term Loan 11% Bills Discounted 7% Loan Against Property 5% Others 11% Term Loan 46% Business Credit 25% Deposit Loan 13% Bills Discounted 11% Loan Against Property 2% Others 3%

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Customer segmentation to fulfil differentiated customer requirements for effective financial product delivery (2/2)

Data as on Mar-16

Well diversified retail advances book with a strong focus on profitable gold loans, business credit and home loans

Customer Characteristics Gross Advances (INR Bn) Customer Count (#) Retail MSME/Rural/Agri Wholesale

38,233 156,134 630

16 20 26 Mar-14 Mar-15 Mar-16 63 71 87 Mar-14 Mar-15 Mar-16 52 74 85 Mar-14 Mar-15 Mar-16

Individuals, HUF, and trusts; with special focus on NRIs and HNIs Trading, business and small manufacturing entities as designated by RBI All business entities

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Well-defined asset strategy to draw synergies from integrated functioning | Retail

Redefining branches as sales outlets and revamping sales force Internally restructuring branches to function as sales hubs with defined CASA targets with specific focus on HNI and NRI customers Focus on opening new branches and increasing rural presence Freeing bandwidth at the branch level by moving the credit appraisal function to the RO/CO level Doubling feet on street to employ a push sales strategy and capitalise on cross-selling opportunities Product expansion with focus on innovation Product reengineering by launching bundled products such as LAP, Business Loan, Automobile Loan, Commercial Vehicle loans in affiliation with Ashok Leyland, 2 Wheeler Loan, Loan against time deposits, and loan against securities; and capitalizing them to increasing overall yield and growth in NIM Focus on value added services such as focussed banking products for family, government employees; and loyalty programs Focus on moving up the value chain by offering competitive and neighbourhood oriented products Relationship Management Group Formation of a specialised core relationship management team to channelize the strong and loyal regional customer connect, and pave the way to becoming a one-stop shop for fulfilment of financial needs The main focus of such a team would be to grow inclusively as a competitive and neighbourhood-oriented bank

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Well-defined asset strategy to draw synergies from integrated functioning | MSME

1 – MUDRA - Micro Units Development and Refinance Agency Bank ; 2 – PMMY - Pradhan Mantri Mudra Yojana; 3 – PMJDY - Pradhan Mantri Jan Dhan Yojna; 4 – CGTMSE - Credit Guarantee Fund Trust For Micro And Small Enterprises

Specialized MSME centres Conversion of existing Recap centres to specialized MSME centres for faster loan processing and reduced TAT Such centres shall be monitored by the Corporate Office as to quality and timelines, ensuring strict adherence to the stipulations of the Credit and Lending Policies of the Bank Relationship Management Group Formation of a specialised core relationship management team to channelize the strong and loyal regional customer connect, and pave the way to becoming a one-stop shop for fulfilment of financial needs The main focus of such a team would be to grow inclusively as a competitive and neighbourhood-oriented bank Competitiveness | Matching price to market Rationalizing pricing across the product portfolio and improving lending to Micro Enterprises such as MUDRA1 loans under PMMY2, overdrafts to PMJDY3 beneficiaries, loans eligible for coverage under CGTMSE4, etc. Customer Deliverance Loan automation under implementation to provide cutting edge in customer deliverance. Product based sales focus from corporate office.

SLIDE 48

www.lvbank.com 48 51,605 73,873 85,252 512 509 630 FY14 FY15 FY16 Gross Advances (INR Mn) Customer Count (#)

 Emphasis on being a multiple banking partner for high

quality entities and building a good quality corporate book

 Going forward, focus on loan syndication and becoming a

co-lender to reputed corporates and minimizing restructured portfolio

 Channelize high-rated corporate relationships towards

retail products and cross-sell opportunities

Focused asset strategy | Wholesale

6.8% 8.0% 5.8% FY14 FY15 FY16 Restructured Assets as % of Gross Advances 17% 28% 36% 10 20 30 Corporate Count (#) Funded Exposure Percentile

with low concentration of funded exposure Steady growth in corporate lending Wholesale strategy Fall in advances restructured

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Diversified industry exposure with strong focus on working capital lending

Well distributed industry exposure of advances book… …with robust growth experienced in lending for working capital

100% = 198,189Mn INR Mn

Services, 35% Agriculture, 15% Infrastructure, 7% Textiles, 5% Metals, 5% Food Processing, 1% Chemicals, 1% Housing and Education Loan, 3% Deposit Loan, 9% Others, 19%

38,511 39,270 40,041 44,316 55,796 54,302 59,282 63,471 72,072 91,866 94,954 97,203 99,915 109,333 111,326 116,456 118,235 126,117 130,377 134,224 137,243 144,232 165,128 165,629 175,738 181,706 198,189 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Term Loan Working Capital Loan

Data as on Mar-16

SLIDE 50

10 20 30 40 50 60 70 80 90

Mar'15 Mar'16

< Rs.20m Rs.20m to Rs.50m Rs.50m to Rs.100m Rs.100m to Rs.500m Above Rs.500m NA

Breakdown of Advances by ticket size Internal Rating model

67.9, 40.9% 78.6, 39.6% 38.2, 23% 50, 25.2% 28.4, 17.1% 25.4, 12.8% 12.7, 7.7% 19.8, 10% 10.1, 13.1% 13.1, 6.6% 8.6, 5.2% 11.3, 5.7%

• Rs. in Mn
• Rs. in Bn

Advances by Rating model and ticket size

50

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STRENGTHENING EXISTING ASSET MONITORING AND LENDING POLICY FOR IMPROVED ASSET QUALITY

51 51

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Significant enhancement in asset quality as a result of cognizant modification in lending decisions

Falling GNPA…

4.2% 4.0% 3.7% 3.4% 2.8% 2.7% 1.9% 1.8% 2.0% Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

…and reducing NPA

3.4% 3.2% 2.8% 2.4% 1.9% 1.7% 1.0% 0.8% 1.2% Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

Lowering restructured assets as % to gross advances… …with rising provision coverage ratio

6.8% 7.7% 8.4% 8.9% 8.0% 7.9% 7.5% 7.7% 5.8% Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 53% 54% 58% 61% 61% 63% 71% 76% 69% Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

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Focused efforts on reducing Gross Non Performing Assets

Reducing GNPA exposure over the years

3,852 3,116 2,257 385 515 778 1,099 792 732 129 124 145 5,465 4,546 3,912 Mar-14 Mar-15 Mar-16 Wholesale Retail MSME Rural

With ~60% GNPA from the corporate segment in FY16

Wholesale 57% Retail 20% MSME 19% Rural 4%

100% = INR 3,912Mn

Mar-16

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Top 5 Borrowers 74% 6-10 24% Others 2%

Diversification of portfolio risk with emphasis on reducing individual and high-risk industry concentration…

Restructured standard assets comprise 4.5% of gross advances Restructured NPAs comprise 1.2% of gross advances

Top 5 Borrowers 48% 6-10 25% 11-15 16% 16-20 8% Others 3% 100% = INR 8,997Mn 100% = INR 2,419Mn 10 of 630 corporate borrowers contribute to 73% of the restructured standard assets of INR 8,997Mn 10 of 630 corporate borrowers contribute to 98% of the restructured NPAs of INR 2,419Mn

Low concentration of restructured assets by industry With focus on reducing GNPA exposure to high risk sectors

100% = INR 11,417Mn 100% = INR 3,913Mn Iron 24% Infrastructure 15% Metals and Minerals 9% Power 7% Engineering 7% Food Processing 5% Other 33% Metals 16% Food Processing 13% Mining, Quarrying 13% Chemicals, dyes, paints etc. 8% Textiles 3% Other 47%

Data as of Mar-16 unless mentioned otherwise

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…resulting in gradual improvement in asset quality with conscious de-risking of wholesale portfolio

2,600 3,852 3,116 2,257 4,335 1,294 1,600 190 946 769 434 478 818 380 1,296 Gross NPA FY13 Slippages Upgradations Write -offs Recovery/ ARC Sale Gross NPA FY14 Slippages Upgradations Write -offs Recovery/ ARC Sale Gross NPA FY15 Slippages Upgradations Write -offs Recovery/ ARC Sale Gross NPA FY16

Reduced slippages with increased recoveries and reduced write-offs signifying results of improvement in asset lending policies

INR Mn

SLIDE 56

4,546 3,913 11,335 7,484 2,222 2,736

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000

Mar'15 Mar'16 GNPA Restructured Security Receipts

10.9 7.1

Rs.18,103m Rs.14,133m

The Overall portfolio at risk may be impacted by other standard stressed accounts aggregating to about Rs.6,620m.

GNPA + Restructured + SR has declined to 7.1% as on Mar’16 from 10.9% as on Mar’15

56

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Note: If the Proposed sensitivity plays out, the impact is expected to be staggered over a mid term – say 5 years.

• Rs. in Mn

Proposed sensitivities to GNPA, restructured and specific standard accounts as at Mar16

57

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Revamping Lending Policy to demarcate operations between various business setups

BRANCH SETUP CONVERSION OF RECAPS TO MSME CENTRES

 Formation of a separate Retail Lending Group  To be led by a newly hired Head of Consumer Lending  Centralization of handling Wholesale credit to the Corporate Office  Branches to get credit for leads provided to the SME Centres for loans  Existing Recaps to be rechristened as “MSME Centres”  MSME Centres to cater to SME, Agri & Retail lending  Exclusion of lending decision from branches  Branches will have authority to sanction only LADs, JDLs, and LAS, and government sponsored schemes

EXCLUSIVE LENDING GROUP WHOLESALE CREDIT

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FINANCIALS

59 59

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Balance Sheet

(INR Mn) FY11 FY12 FY13 FY14 FY15 FY16 Shareholders Funds 8,924 9,584 10,143 10,536 15,561 17,636 Share Capital 975 975 975 976 1,792 1,795 Reserves and Surplus 7,949 8,608 9,168 9,560 13,770 15,841 Deposits 111,495 141,141 156,190 185,729 219,642 254,310 Current Deposits 8,354 7,221 7,385 9,125 15,099 16,365 Saving Deposits 12,621 13,827 15,241 17,297 21,525 27,791 Term Deposits 90,521 120,093 133,564 159,306 183,018 210,154 Borrowings 7,251 5,800 4,800 4,581 4,581 7,230 Other Liabilities & Provisions 5,341 5,104 5,534 5,685 7,270 8,146 Total 133,012 161,629 176,667 206,531 247,054 287,322 Cash and Bank 10,266 8,467 8,719 13,117 13,187 13,686 Investments 35,189 43,951 43,245 56,887 60,512 65,454 Advances 80,944 101,887 117,028 128,892 163,520 196,437 Secured by tangible assets 66,633 88,383 107,128 121,083 155,222 188,786 Secured by Government 2,282 630 441 200 599

• Unsecured

12,029 12,874 9,459 7,609 7,700 7,651 Fixed Assets 1,791 1,892 1,898 2,005 2,434 3,670 Others 4,822 5,431 5,776 5,630 7,401 8,074 Total 133,012 161,629 176,667 206,531 247,054 287,322

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Balance Sheet | Breakdown of Investments

(INR Mn) FY11 FY12 FY13 FY14 FY15 FY16 Government Securities 29,696 35,535 38,013 47,741 51,564 58,494 Other approved securities 66 49

• Shares

139 219 271 388 411 798 Debentures and Bonds 1,797 1,631 1,331 2,654 3,741 3,552 Subsidiaries and JVs

• Other

3,491 6,516 3,629 6,104 4,795 2,609 Total 35,189 43,951 43,245 56,887 60,512 65,454 Investments in India 35,189 43,951 43,245 56,887 60,512 65,454 Investments outside India

• Total

35,189 43,951 43,245 56,887 60,512 65,454

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Income Statement

(INR Mn) FY11 FY12 FY13 FY14 FY15 FY16 Interest earned 10,648 15,193 17,605 19,840 22,145 25,683 Interest expended 6,998 11,480 13,685 14,979 16,879 19,230 Net Interest Income 3,650 3,712 3,920 4,860 5,266 6,453 Other income 1,370 1,579 1,971 2,036 2,840 3,045 Operating Income 5,020 5,291 5,891 6,896 8,106 9,498 Employee Expenses 1,163 1,412 1,576 1,879 2,384 2,754 Other Operating Expenses 1,119 1,525 1,803 1,927 2,146 2,674 Provisions & Contingencies 1,497 1,094 1,134 2,686 1,802 1,769 Exceptional items

• 107
• Total Expenses

3,779 4,031 4,513 6,492 6,225 7,196 Tax 230 190 462

• 193

559 500 Net Profit 1,011 1,070 916 597 1,322 1,802

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Income Statement | Breakdown of Other Income

(INR Mn) FY11 FY12 FY13 FY14 FY15 FY16 Commission, Exchange and Brokerage 718 669 798 836 1,194 1,471 Profit on sale of Investments 84 44 252 205 503 534 Profit on sale of land, Buildings & Other Assets 1

• 1
• 3
• 1

Profit on Exchange Transactions 110 123 107 143 174 166 Income earned by way of Dividends from Companies in India 6 1 4 4 10 30 Miscellaneous Income 451 743 811 846 963 845 Total 1,370 1,579 1,971 2,036 2,840 3,045

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Key Financial Metrics

(%) FY12 FY13 FY14 FY15 FY16 CASA 14.9% 14.5% 14.2% 16.7% 17.4% Yield on Advances 13.6% 13.0% 13.2% 12.8% 12.2% Cost of Deposits 8.6% 9.0% 8.7% 8.6% 8.2% NIM 2.9% 2.6% 2.9% 2.7% 2.8% Yield on Investments 8.1% 8.0% 7.9% 8.1% 8.0% Credit Deposit Ratio 73.2% 76.1% 70.2% 75.2% 77.9% Provision Coverage Ratio 61.3% 54.5% 53.2% 60.8% 68.6% Investment to Deposit Ratio 31.1% 27.7% 30.6% 27.6% 25.7% Cost/Income Ratio 55.5% 57.4% 55.2% 53.6% 57.1% Tier-1 Ratio 8.9% 9.2% 7.9% 9.3% 8.7% Tier-2 Ratio 4.2% 3.2% 3.0% 2.0% 2.0% Capital Adequacy 13.1% 12.3% 10.9% 11.3% 10.7% GNPA 3.0% 3.9% 4.2% 2.8% 2.0% NNPA 1.7% 2.4% 3.4% 1.9% 1.2% ROA 0.7% 0.5% 0.3% 0.6% 0.7% ROE 13% 10% 6.2% 10.8% 11.7%

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CONTACT US

65 65

The Lakshmi Vilas Bank Ltd. Corporate Office LVB House, 4/1, Sardar Patel Road, Guindy, Chennai - 600032 Tamil Nadu, India Toll Free : 1800-425-2233 Email info@lvbank.in