Investor Presentation Q1FY20-June 2019 Strictly confidential - - PowerPoint PPT Presentation

Strictly confidential

Q1FY20-June 2019

Investor Presentation

This presentation has been prepared by The Lakshmi Vilas Bank Limited (the “Bank”) solely for information purposes without regard to any specific

• bjectives, financial situations or informational needs of any particular person. This presentation should not be construed as legal, tax, investment or
• ther advice. This presentation is 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

• r inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the Bank. 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) government policies and regulations, and (v) 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

• f this presentation are cautioned not to place undue reliance on these forward-looking statements. The information contained in this presentation is
• nly 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, directors, officers, agents 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. 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, 2018, as amended, or any other applicable law in India.

Disclaimer

2

3

Business Highlights

2

Merger with Indiabulls - Update

6

Financials of FY 2019

4

Strategy

3

Lakshmi Vilas Bank - Overview

1

Table of Contents

4

Lakshmi Vilas Bank- Overview

1

Lakshmi Vilas Bank- Overview

5

Overview Deposit and Advances Evolution Shareholding (as of 30th June 2019)

 One of the oldest banks in the history of banking in India; instituted in 1926  Mainly caters to the South of India with 50 % concentration of business in Tamil Nadu & Puduchery  Wide coverage and distribution network with presence in 18 states and 1 Union Territory across India  Consistent growing bank book since FY13 ( Loan book 1.9x of FY19 wrt.. FY14)  Highly experienced management team with an average of 22-29 years of experience  Focus on CASA; Retail and MSME the cash cows of future; Corporate Adv. continues to be 35% of book  Bank recently announced the amalgamation with Indiabulls Housing Finance, subject to RBI and other regulatory and statutory approvals

Promoter & Promoter group 7.1% Instn Holdings 19.9% Others 73.0%

569 branches 4,845 employees 19 states

• incl. UT

1,047 ATMs Over 20 lakh customers 22.5 lakh accounts

18,573 21,964 25,431 30,553 33,309 29,279 28,980 FY14 FY15 FY16 FY17 FY18 FY19 Jun-19

Deposits (INR cr)

12,888 16,352 19,644 23,729 25,768 21,956 20,556 FY14 FY15 FY16 FY17 FY18 FY19 Jun-19

Advances (INR cr)

Offering Diverse Range of Products and Services

6

Insurance Loans Deposits Mutual Fund Distribution Internet Banking Retail Banking Group Corporates Banking group Agri, Commercial & Development Banking group Strategic Business Units

 Caters to individuals, HUFs, trusts and clubs  As Q1FY20, 10. % of Bank’s loans and advances to retail banking customers  Retail Asset Centers in Chennai & Bengaluru servicing local mrkts  Caters to MSMEs, emerging businesses with revenues up to INR 75 crore annually, and agricultural and allied rural services businesses  As of 30th June 2019, 55% of Bank’s loans and advances to MSME /Rural//Commercial banking customers  Caters to business with revenues above INR 75 crore annually  As of 30st June 2019, 35% of Bank’s loans and advances to Corporate banking customers Retail Banking Group Agri, Commercial & Development Banking group Corporates Banking group

Guided by Experienced Board of Directors

7 7

Shri G Sudhakara Gupta Non-Independent and Non-Executive Director

• With Bank since 2017
• Former Director at XS Real Properties Private Limited

Shri B K Manjunath Non-Executive Chairman and Independent Director

• With Bank since 2017
• Practicing Chartered Accountant

Dr Y N Lakshminarayana Murthy Independent and non – executive Director

• With Bank since 2016
• Ph.D. holder in Soil Science and Agricultural Chemistry

Smt Anuradha Pradeep Non-Independent and Non-Executive Director

• With Bank Since 2017
• Independent Legal practitioner by profession practicing in the High

Court of Karnataka

• Smt. Supriya Prakash Sen

Independent and Non-Executive director

• Joined Bank in Q1 FY2020
• BFSI expert & Director in ASEAN Financial Net work in Singapore

Shri H S Upendra Kamath Independent and non-executive Director

• With Bank since 2018
• Former Director at Canara Bank, Chairman and Managing Director

at Vijaya Bank, Former MD and CEO at Tamilnad Mercantile Bank Shri N Saiprasad Non-Independent and Non-Executive Director

• With Bank; rejoined in 2019
• Managing Partner in M/s Venkateswara Exports, Karur

Shri Rajnish Kumar RBI nominee Director

• General Manager at RBI

Shri Suvendu Pati RBI nominee Director

• General Manager at RBI

Shri Parthasarathi Mukherjee Managing Director and Chief Executive Officer

• With Bank since 2016
• Former Group Executive at Axis Bank

Awards

8 NATIONAL PAYMENTS CORPORATION OF INDIA Felicitates LAKSHMI VILAS BANK for FASTEST CTS IMPLEMENTATION in CHENNAI NATIONAL PAYMENTS EXCELLENCE AWARDS 2014 – Winner (Scheduled Banks – Small Bank Category) for Excellent Performance in National Automated Clearing House - 3rd December 2014 CIO100 SPECIAL AWARDS 2015 - Winner - CLOUD CONQUEROR HONOREE 2015 -IDG award for Cloud Implementation DQLIVE BUSINESS EXCELLENCE AWARDS 2015 for EXCELLENCE IN THE IMPLEMENTATION & USE OF TECHNOLOGY FOR BUSINESS BENEFITS IDRBT BANKING TECHNOLOGY EXCELLENCE AWARDS 2014-15 - BEST BANK AWARD (AMONG SMALL BANKS) for MANAGING IT INFRASTRUCTURE AMONG SMALL BANKS MEDAL OF HONOUR for SUCCESSFUL DIGITAL ODYSSEY 2017 BEST CIO CLUB IT AWARD 2017 FINALIST BSE – CIO KLUB OF THE YEAR 2017 for Banking Category IDC INSIGHTS AWARDS 2018 for EXCELLENCE IN OMNI EXPERIENCE

9

Business Highlights

2

Strong South India Focused Franchise with Pan India Reach

10

Branch Count (569)

North includes Madhya Pradesh, Uttar Pradesh, Uttarakhand, Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Chandigarh and Delhi; East includes Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Bihar, Chhattisgarh, Jharkhand, Odisha, Sikkim, West Bengal and Andaman & Nicobar Islands; West includes Goa, Gujarat and Maharashtra; South includes Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Puducherry and Telangana

295 9 1 2 13 24 52 60 13 4 2 2 4 5 4 5 69 1 4

South 87% West 6% North 4% East 3% Metro 29% Rural 19% Semi Urban 30% Urban 22%

Branch distribution (March, 2019) Distribution Mix

11% 8% 28% 9% 44% 569 branches < 1 yr 1-2 yrs 2-5 yrs > 10 yrs 5-10 yrs

Coverage Mar ’14 Jun’19 Mar’14 vs Mar’19 Change States 16 19 3 Districts 108 147 39 Branches 362 569 207 Total staff 3,292 4,845 1553

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

Architectural Initiatives to Streamline the Transaction Lifecycle, from Sourcing to Processing to Servicing

11 11

CRM Tool Automated loan origination Enhanced banking platform 100% completion achieved on CRM Implementation 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  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

• f 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  Reduced time for data entry  Low error rate  Lower TAT  Improvement in employee productivity  Standardized borrower evaluation  Improved document handling App with convenient options such as Favourites, Quickpay, utility payments, and quick recharges etc. App launched across iOS, Android, and Windows platforms Digital penetration supported by customer education, marketing and expansion in branch network Supreme 2 factor authentication banking channels across internet and mobile

Servicing Sourcing Processing

 Better customer satisfaction  More cross sell opportunities

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

Digital Transformation New Digital platform for Hosting Internet Banking

12

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

Get information on your upcoming payments Get a consolidated look of your account Keep tab on your bills and pay instantly through your

• account. Its that easy!!!!

Track your recent activities and your spends Get instant notification on

• ffers and transactions,

Track the status of your service requests and Track all your payments Find your total Net worth and plan your targets accordingly Keep track of all your account in one place. Your current and savings account, Term Deposit account, Recurring deposit account, Loan and Finance and Credit

• card. All the facilities at
• ne place!!

Digital Transformation Multifunction Mobile App with Intuitive Functioning

13

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

Bill payments Recharge

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

Corporate 35% Rural 18% MSME 20% Retail 10% Commercial 17%

Segmental overview of advances

14

Corporate loans - Advances growth

11,242 7,480 7,132 Q1FY19 Q4FY19 Q1FY20

MSME loans - Advances growth

4,490 4,741 4,083 Q1FY19 Q4FY19 Q2FY20

Retail loans - Advances growth

2,542 2,260 2,133 Q1FY19 Q4FY19 Q1FY20 4,343 3,990 3,731 Q1FY19 Q4FY19 Q1FY20

Rural loans - Advances growth

3,511 3,485 3,478 Q1FY19 Q4FY19 Q1FY20

Commercial loans - Advances growth

Average ticket size (INR lakhs)

3954 3596 3208 1.71 1.52 1.43 29.52 35.14 32.86 4.87 4.86 4.64 70.84 76.33 75.24

INR lakhs INR lakhs INR lakhs INR lakhs INR lakhs INR cr INR cr INR cr INR cr INR cr Data provided is on Gross basis

Digital Transformation Bank aims to be a front runner in digital offerings

15

Transaction Value in Digital Channels (INR cr) Share of digital and non-digital volume of transactions Mobile Transactions (INR cr)

109 359 423 500.46

2,271 1,920 5,184 5748.87 50 918 2,524 6292.88

30 55 116 155.09 6,317 14,006 21,683 34398.62 2016 2017 2018 2019 POS ATM Mobile Ecom Internet 3.9 5.3 5.1 6.5 1.0 1.2 2.3 3.5 8,777 17,258 29,930 47,096 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2016 2017 2018 2019 Non digital volume (cr) Digital volume (cr) Digital value (INRcr)

• RTGS & NEFT transactions1 (INR cr)

646 844 1,095 1,350 1,526 1,741 2,039 2,112 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 65,523 45,218 56,012 53,972 56,635 45,268 Q1 FY19 Q2 FY18 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Source: Company information, RBI Note: 1 Denotes total transaction value for outward and inward NEFT transactions and consumer inward and outward spends on RTGS Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

Capital Position

16

0.1% 9.0% 16.6% 74.4%

BPLR Base Rate Fixed Rate MCLR

[INR 20,566 Cr] Q1FY20

 Capital Ratios have been impacted by increased provisioning for the non performing book  Rebalancing RWA’s has been taken up by bank and capital raising continues  Bank anticipates to better its rating of book qoq  Bank has undertaken repricing of its book in the last 2 quarters; yields of book has move

up.

 74% of the Book is linked to its MCLR with majority to its 1 year rate  *Bank raised a pref. transaction for Tier I capital of INR 188.2 Crores in July, 2019. With the

same, the Tier I capital shall stand at 5.56%

1027 766 398 377 1425 1143 17957 17166 5.72% 4.46% 2.00% 2.00% 7.72% 6.46% 1% 4% 7% 10% 300 Q4FY19 Q1FY20 Tier-I Capital Tier-II Capital Total Capital Total Risk Weighted Assets Tier I CRAR (%) Tier II CRAR(%) CRAR(%)

Capital Position ( Basel III) | RWA | Tier 1 & II Ratios Distribution of Book Across Pricing Mechanism Capital Conservation Bank has Demonstrated Ability to Raise Capital

Date Amount (INR cr) Type FY2014 78.4 Tier II FY2015 406 Rights Issue FY2016 140 Tier II FY2017 167.5 QIP FY2018 780.6 Rights Issue FY2018 69.7 Tier II FY2019 459.6 QIP Placement FY2020* 188.2

• Pref. Allotment to IHFL

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality *Resolution undertaken; process underway

*5.56%

On Track to Build a “Retail & SME Focused” Bank Build a strong CASA franchise

17

Steady Deposit Base Consistent growth in CASA deposits

% of total deposits

INRcr

4,573 4,925 5,093 5,171 5,265 5,552 5,617 1,909 2,090 1,870 1,719 1,771 1,963 2,241 6,482 7,015 6,964 6,890 7,036 7,515 7,859 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Savings Current 21.1% 21.1% 25.7% 21.4% 22.2% 1,520,600 1,769,965 1,808,358 17,33,791 89,647 1,09,765 1,70,108 1,72,249 FY17 FY18 FY19 Q1FY20 Savings Current

Increasing Number of CASA accounts

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

22,567 23,898 21,651 21,048 5,844 7,015 7,515 7,859 2,142 2,396 113 74 30,553 33,309 29,279 28,981 FY17 FY18 FY19 Q1FY20 Bank term CASA Retail term

Stagnated Cost of Deposits

7.30% 6.75% 6.75% 6.74% FY17 FY18 FY19 Q1FY20 22.8% 27.1%

On Track to Build a “Retail & SME Focused” Bank Building a Strong CASA franchise (cont’d.)

18  High interest rates of 5% and 6% to drive CASA growth in select categories  Capitalize existing customers to acquire HNI accounts and build client base to cross sell

Savings account

 Add-on services on current accounts like cash pickup, cash management and door step banking  Enlarging sales force with adequate training to offer trade and foreign exchange services

Current account

 Print, OOH, FM, television and mobile van campaigns  Online tests for product education for staff; coupled with incentives to market CASA products

Promotions

CASA proportion in branches aged <5 years

2018 261 branches 2019 [186 branches] 2017 213 branches

Product differentiation and aggressive marketing New branches showing positive results on CASA accumulation

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality CASA 32.0% Term 68.0% CASA 26.7% Term 73.3% CASA 18.7% Term 81.3%

Strategy for increasing CASA

 Potential to increase CASA as vintage branches turn profitable  Focus on Business Correspondent model to increase CASA  Shift on measuring CASA on a CDAB (Cumulative Daily Average Balance) basis than on a period end basis  CDAB of CASA saw an increase of 546 bps YoY and 371 bps QoQ  Focus on onboarding customers through Digital channels with Insta opening

• ptionality

 Branches to be redefined as sales outlets with defined CASA targets with a specific focus on HNI & NRI customers  Product innovation and extension of existing products  Expansion of “Crown” franchise to include NRE, NRO accounts  Attractive interest rates for savings & flexi current account facilities  Aggressive advertising on both digital & offline platforms

Interest Income

19

Net Interest Income and Non Interest Income (INR Cr) Diversified loans and Advances… Yield on Advances, Cost of Funds and Net Interest Margin …Across Sectors

Corporate 35% Rural 18% MSME 20% Retail 10% Commercial 17%

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

INR [20,556] for Q1FY20 INR [20,556] cr Q1FY20 783 791 130 151 139 140 560 124 503 347 61 71 61 57 250 53 FY17 FY18 Q1'19 Q2'19 Q3'19 Q4'19 FY19 Jun-19 Net Interest Income Non-Interest Income 8.26% 8.85% 9.17% 9.09% 9.09% 8.99% 5.82% 6.02% 5.87% 5.87% 5.86% 5.73% 1.34% 1.48% 1.74% 1.65% 1.73% 1.65% Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Yield on Advances Cost of Funds Net Interest Margin Infrastructure 38% Textiles 27% Basic Metal and Metal Products 20% All Engineering 8% Other industries 7%

Income Trend Diverse Revenue Base

20 147 134 122 116 23.2 2016 2017 2018 2019 Jun-19 Fee income

% of total income

15.5% 10.4% 10.7%

Insurance Tie ups with insurance behemoths for life, general, and health insurance MFs and PMS Investing opportunities customized for small amounts; developing advisory app with manual intervention for sale of mutual fund products Debit cards Multiple debit cards to suit customer’s needs Forex travel cards High growth high margin exchange rate driven product, irrespective of amounts remitted Others Money transfer and pension schemes

Product Overview Partners

13

Mutual Fund affiliations 14.3%

Multiple avenues to boost fee income Fee income evolution (INR Cr) Other Income Breakdown (INR Cr)

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

23 6.0 0.1 4.5 0.6 19.0

Commission Profit on Investments Profit on sale of Asset Exchange Profit Bad Debts Recovery Others 13.1%

Prudent Management of Asset Quality Adopting Clean-up of Corporate Loan Book…

21

Overview Close tracking of watch list through FY18 & 19 comes to an end Increased provisioning to augment rising NPAs Corporate NPAs already identified in the book

2,500 2,250 1,725 1,560 400 200 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 H1FY19 Q3FY19 Q4FY19 Q1FY20

 Announced watch list of INR2,500cr in March 2017  Accelerated NPA recognition in 4Q18 under new RBI guidelines  Watch list reduced from INR2,500cr as of March 2017 to nil as of March,

• 2019. *Additional INR 310.84 crores slipped on account of 2 corporate

accounts (incremental)  The residual stress in corporate book is now contained; additional slippage shall be overcome by net recovery  MSME and Rural Book has incremental stress reported; shall stagnate hereafter

386 636 286 1,608 % of total gross NPAs INRcr 633 572 403 573 871 967 1,982 2,068 2,420 2,366 2,413 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 H1FY19 Q3FY19 Q4FY19 Q1FY20 INRcr 67.7% 73.5% 69.7% 71.9% 68.1% 65.2% 63.0% 170 165 217 305 1169 1335 1579 1,785 212 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 H1FY19 Q3FY19 Q4FY19 Q1FY20 2.67% INRcr 1.76% 5.66% 4.27% 9.98% 5.66% 13.95% 7.64% Gross NPA % 12.31% 6.88% 5.50% 4.33% 3.78% 2.84% Gross slippages of total book (INRcr) Net NPA % Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality 59.5% 46.7% 55.1% 55.9% 55.4% 46.7% 51.3% Provision coverage ratio (%) 207 70.4% 15.30% 7.49% 62.08% 17.3% 8.3% 63.08% 310* 67.9%

Prudent Management of Asset Quality … has led to a better quality loan mix

22

 Bank continues to focus on capital preservation  Most of the slippages arose from the lower rated book; higher run off’s of higher rated paper attributed to lessening of weightage in high rated buckets

28.9% 29.4% 43.0% 32.0% 28.1% 29.6% 28.2% 30.4% 28.4% 32.0% 4.8% 6.1% 7.1% 7.0% 8.6% 17.3% 13.6% 14.8% 32.6% 31.3% 19.5% 22.6% 4.7% 0.0% 0.0%

FY16 FY17 FY18 FY19 Jun-19

LVB 1/2/3 LVB 4/5 LVB 6/7/8/9 Need not be rated Unrated 17.8% 42.9% 55.6% 40.1% 36.4% 14.3% 13.4% 17.7% 17.4% 16.2% 27.5% 21.8% 14.8% 28.8% 28.5% 40.4% 21.9% 11.9% 13.7% 18.9%

FY16 FY17 FY18 FY19 Jun-19

A & above BBB < BBB Unrated

Distribution by Internal ratings Distribution by external ratings

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

Overview of NPAs (FY19)

23

NPA movement QoQ (INRcr) NPA overview Industry Classification of GNPA on Q1 FY20

INRcr Jun-19 Mar-19 Dec-18 Sep-18 Mar-18 Dec-17 Gross NPA 3557 3,359 3,364 2,965 2,694 1427 Net NPA 1539 1,506 1,716 1,560 1,458 1060 Gross NPA % 17.30% 15.30% 13.95% 12.30% 10.00% 5.60% Net NPA % 8.30% 7.49% 7.60% 6.90% 5.70% 4.20% Provision Coverage Ratio % 63.08% 62.08% 55.9% 55.4% 55.1% 46.7%

Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Gross NPA 1427.01 2694.21 2804.72 2964.89 3364.28 3358.99 3556.58 Net NPA 1060.46 1457.89 1478.09 1560.08 1716.22 1506.29 1539.41 500 1000 1500 2000 2500

1% 1% 2% 1% 5% 11% 17% Gems and Jwellery Other Industries All Engineering Bevarages Textiles Basic Metal and Metal Products Infrastructure

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

3,359 3,359 3,364 3,364 3,557 311 113 1

Opening GNPA Gross Slippage Recoveries/ upgradation Tech write off Closing GNPA / Opening GNPA

MSME Commercial

SMA – Segmental breakdown Continuous Improvement on account of stringent monitoring

24

Rural Retail Total portfolio

34% 57% 30% 41% 57% 43% 21% 56% 59% 35% 23% 22% 14% 0% 8% 887 905 224 446 843 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 2200 2300 2400 2500 2600 2700 2800 2900 3000 3100 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 SMA2 SMA1 SMA0 Total

Corporate

70% 63% 24% 19% 17% 12% 13% 25% 53% 35% 18% 25% 50% 28% 48% 1,208 1,486 735 104 563 50 300 550 800 1,050 1,300 1,550 1,800 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 SMA2 SMA1 SMA0 Total 57% 79% 35% 60% 37% 21% 10% 36% 20% 27% 22% 11% 29% 20% 36% 277 274 182 28 113 10 110 210 310 410 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 SMA2 SMA1 SMA0 Total 51% 58% 24% 0% 29% 22% 20% 25% 28% 26% 22% 51% 100% 42% 250 257 136 5 93 50 100 150 200 250 300 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 SMA2 SMA1 SMA0 Total *CC/OD interest debited on 31.01.19 has not been considered for SMA0 SMA0 data for Q3FY18 is not reported. Bank has reported SMA0 post Feb 2018 circular of RBI SMA nos. for Q1FY20 are unaudited and may vary subject to the same

Bank

37% 36% 47% 45% 46% 23% 27% 22% 0% 20% 40% 37% 31% 55% 34% 338 321 372 11 323 10 110 210 310 410 510 610 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 SMA2 SMA1 SMA0 Total 53% 59% 31% 37% 41% 24% 17% 30% 55% 32% 23% 24% 39% 8% 27% 2,958 3,245 1,649 595 1,935 10 110 210 310 410 510 610 710 810 910 1,010 1,110 1,210 1,310 1,410 1,510 1,610 1,710 1,810 1,910 2,010 2,110 2,210 2,310 2,410 2,510 2,610 2,710 2,810 2,910 3,010 3,110 3,210 3,310 3,410 3,510 3,610 3,710 3,810 3,910 4,010 4,110 4,210 4,310 4,410 4,510 4,610 4,710 4,810 4,910 5,010 5,110 5,210 5,310 5,410 5,510 5,610 5,710 5,810 5,910 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 SMA2 SMA1 SMA0 Total

Credit Risk Management Framework Bank has enhanced its way of assessing business

25

 Industry exposures tracked and dynamically set up  Achieve granularity of exposures  Cap exposures to below-BBB rated exposures  Generate 2/3rd of corporate advances incrementally from A and above

borrowers

 Tighten rating standards and target higher RAROC on exposures  Preparing for ECL under Ind AS regime  Limiting exposures largely to A and above rated borrowers  Setting credit risk policy  Complete review and bringing in IMaCS Rating System  Use of external inputs from rating agencies, credit information bureaus  Focus on increasing MSME exposures  Retail Asset rollout through dedicated Credit teams  Improvement in sanction and disbursement TAT  Tighter management of portfolio/market risk/ ALM  Tight management of capital  Engaging with external providers of information on borrower universe

and taking up special informational reports

 Build work flow based sanction processes drawing external inputs  Transitioning into credit operations through special branches  Mandating cleaning of historic data and separate credit operations and

monitoring

 Standardizing documentation and improving customer experience

Ongoing steps to manage credit risk Steps taken to manage credit risk

Pan India reach Digital Transformation Capital Position Deposits Income Trends Asset Quality

Strong asset liability management framework ( as on 30th June, 2019_Provisional)

26

 Established ALM framework 

ALM policy



Stress Testing Policy



Counterparty Risk Management Policy



Market Risk Management Policy



Reporting



ALCO

 Managing ALM using system driven environment  Review and Monitoring of Funding Plans on an ongoing basis  Creation of Balance Sheet Management Group to manage CFU  Bank maintains surplus SLR for liquidity purposes  Integral part of ALM is building up Retail Term deposits  ALM group runs MCLR computation  Hedging policy for Balance Sheet Management in place  Derivatives capabilities being built in upgraded Treasury system  Counterparty Limits managed out of ALM 100 676 732 377 582 585 1607 4440 11769 977 7134 158 351 178 140 285 771 777 1014 1744 1658 323 1038 7643 1179 2251 84 157 143 78 108 788 1096 2314 2591 481 1638

2,000 4,000 6,000 8,000 10,000 12,000 14,000

1 Day 2-7 Days 8-14 Days 15-30 Days 31 days & upto 2 months More than 2 months & upto 3 months 3-6 Months 6 Months-1 Year 1-3 Years 3-5 Years Over 5 Years

INRcr Deposits Borrowings Advances Investments

Audited statement

27

Strategy

3

Strategic Initiatives for Business Structuring

28

• Separate retail lending group established
• Focus on profitable gold loans, business credit and home loans
• Project TRANSME: Transformation of the MSME business model
• Relationship management team: One-stop shop for all financial needs of customers
• Focus on high-rated clients
• Conscious de-focusing on the wholesale business segment

Loan Book: Retail & MSME Focus

• Branch expansion; Potential to increase CASA with new branches turning profitable
• Branches being redefined as sales outlets with defined CASA targets
• Specific focus on HNI & NRI customers
• Product innovation and extension of existing products
• Attractive interest rates for savings account & flexi current account facilities to drive CASA growth
• Aggressive advertising on both digital & offline platforms

Liability: Increasing CASA

• Transaction Banking vertical launched to boost fee income
• Focus on trade finance ( TReDS enabled for MSME), bill discounting, guarantees, LCs, cash management, government banking
• Tie-up with third parties for insurance, mutual funds, credit cards, money transfer, forex travel cards

Fee Income

• Initiatives across the transaction lifecycle - CRM tool, automated loan origination
• Multifunction mobile app with intuitive functioning for a state-of-the-art customer interface
• Implementation of large-scale technological reforms
• Upgraded core banking suite, develop business intelligence unit, enhance digital banking & omni-channel presence, multi function e-

lounge, Oracle Financial product suite

Technology

• Overhaul of risk management framework to enhance credit risk management systems & processes
• Separate Recovery Vertical & empanelment of recovery agencies to reduce TAT of recovery
• Demarcate operations between business setups & improve asset quality in the future
• Conduct of high value credit portfolio under constant monitoring guided by technology

Asset Quality: Revamped Risk Management Framework

1 2 3 4 5

Transformation Work Streams : Strategy for Next 3 Years

29 People Transformation  Organization design, recruitment, training and performance management  Relationship Management structure Branding & Communication  Active brand endorsement  Extensive analyst coverage  Proactive communication with customers Technology Transformation  Applications and Hardware implementation  OFSAA Launch  Core Banking upgrade and Digital Banking full suite launch Service Delivery, Processes, Policies and Manuals  Design and documentation of operating principles Risk, Compliance, Finance and Treasury & Capital Markets  Implementation of support and control functions  Robust early warning signal system implementation Regulatory & Business restructuring  Provisioning  NCLT Case(s) exits  Capital Raise  Business unit individual assessment Business Transformation  Omni-channel strategy | market capture  Full scale relationship management implementation  Less focus on Treasury Income  Drive to enhance cross-sell

30

Financials

4

31

Key Performance Highlights - FY 2019

2

32

Key Performance Highlights – Q1 FY 20

• As of 30th June 2019 Gross Loan book stands at INR 20556 cr
• (-)21.32 % Y-o-Y growth in loan book; (-) 6.37% Q-o-Q growth in loan book
• MRC book : 8.52 % Y-o-Y reduction ; and Corporate Book reduced by 36.56 % Y-o-Y

Loan book

• Total net interest income at INR 123.57 cr; down 5.09 % Y-o-Y.
• Operating loss at INR 25.55 cr;
• Net Loss( Before Tax Provision) at INR 237.25 cr; up 53.29 % Y-o-Y.

Profitability

• Tier 1 CRAR at 4.46 %
• Tier 2 CRAR at 2.00 %

Capital position

• Provision coverage ratio at 63.08 %
• Gross NPA at 17.30 % vs Gross NPA at 15.30 % in Q4’19
• Net NPA at 8.30 % vs Net NPA at 7.49 % in Q4’19

Asset Quality

• As of 30th June 2019, total deposit stands at INR 28980 Cr
• CASA ratio at 27.12 %

Deposits Operational

• Total customer base around 2.19 million
• 569 branches :– of which

162 in Metros, 125 in Urban, 173 in Semi Urban and 109 in rural Centers in 18 states and 1 union territory

Key Performance Highlights – Q1 FY20

33

Net Interest Income Total Income Operating Profit Net Profit Other Income INR 123.57 cr INR 53.22cr INR 176.79 cr INR (25.55) cr INR (237.25 ) cr

Y-o-Y Growth

(5.09)% (12.06) % (7.30) % (478.13)% (91.53) % (11.86)% (7.41)% (10.57) % (20.62) % 10.28%

Q-o-Q Growth

Key Performance Highlights – Balance Sheet

34

Loans & Advances Deposits CASA Borrowings Investments + Cash Balances INR 20,556 cr INR 10,889 cr INR 28,980 cr INR 7,859 cr INR 826 cr

Y-o-Y Growth Q-o-Q Growth

(21.32) % (4.83) % (10.76)% 12.85 % (72.35)% (6.37) % (7.98)% (1.02) % 4.58 % (10.32)%

Key Performance Highlights – Key Ratios

35

Net interest Margin Net NPA Tier 1 CRAR CASA Ratio Gross NPA 1.65% 17.30% 8.30% 4.46% INR 7,859 cr (27.12%)

Y-o-Y Growth Q-o-Q Growth

12.85% 4.58 %

17 bps 8 bps 200 bps 657 bps 81 bps 234 bps 126 bps 318 bps

Income Statement

36

INRcr FY17 FY18 FY19 Q1 FY20 Y-o-Y Change Q4’19 Q-o-Q Change Interest earned 2,847 3,042 2840 623.95 (-)14.17% 682 (-)8.55% Interest expended 2,064 2,251 2280 500.38 (-)16.15% 542 (-)7.69% Net interest income 783 791 560 123.57 (-)5.09% 140 (-)11.86% Other income 503 347 250 53.22 (-)12.06% 57 (-)7.41% Total income 1,285 1,137 810 176.79 (-)7.30% 197 (-)10.57% Total Operating expenses 651 782 822 202.34 9.99% 219 (-)7.54% Employees cost 335 392 401 102.73 5.70% 111 (-)7.80% Other operating expenses 317 390 421 99.62 14.80% 107 (-)7.28% PPOP 634 355 (12) (25.55) (-)478.13% (21) 20.62% Provisions and Contingencies 254 1,306 1276 211.70 31.06% 479 (-)55.78% Profit before tax 380 (951) (1288) (237.25) 53.30% (500) (-)52.55% Tax expenses 124 (366) (394)

• (236)

Net income 256 (585) (894) (237.25) 91.54% (264) (-)10.28% Earnings Per Share Basic 14.07 (28.29) (34.66) (7.42) (10.02) Diluted 13.95 (28.11) (34.59) (7.41) (10.00)

Balance Sheet

37

INRcr FY17 FY18 FY19 Q1 FY20 Y-o-Y Change Capital 191 256 320 320 24.94% Reserves & Surplus 1,945 2,072 1573 1,336 (-)30.77% Deposits 30,553 33,309 29,279 28,980 (-)10.76% Borrowings 1,773 4,013 921 826 (-)72.35% Other Liabilities &. Provisions 782 779 953 976 28.25% Total liabilities and equity 35,245 40,429 33,046 32,438 Cash & balances with RBI 1,455 1,698 1654 1,558 (-)8.82% Balances with banks, money at call & short notice 169 317 515 649 123.71% Investments 8,652 10,768 8,430 9,331 (-)4.13% Advances 23,729 25,768 20,103 18,539 (-)25.25% Fixed Assets 359 402 470 509 17.68% Other Assets 881 1,476 1874 1,851 28.31% Total assets 35,245 40,429 33,046 32,438

38

Merger with Indiabulls

5

Transaction Details

39

Transaction overview Swap ratio Employees Proposed Management and shareholding structure Shareholder value creation

 Lakshmi Vilas Bank announced on 5th April 2019 and 3rd May 2019 the amalgamation of Indiabulls Housing Finance (IBH) & Indiabulls Commercial Credit Limited (ICCL), a 100% subsidiary of IHFL into and with Lakshmi Vilas Bank Limited (LVB) subject to approvals including from RBI and other regulatory and statutory authorities  Share swap ratio: 7,143 equity shares of face value of Rs. 10 each held in LVB for every 1,000 equity shares of face value of Rs. 2 held in IBH has been agreed upon by the respective Board of Directors  All the staff and employees of LVB on the Effective Date(1) shall become the staff and employees of amalgamated entity, without any break or interruption in services and on same terms and conditions on which they are engaged by LVB as on the Effective Date  Mr. Sameer Gehlaut to be proposed as Vice Chairman of the amalgamated entity  Mr. Parthasarathi Mukherjee and Mr. Gagan Banga to be proposed as Joint Managing Director of amalgamated entity  Mr. Ajit Mittal to be proposed as Executive Director  Mr. K.R. Pradeep to be proposed as non-independent, non-executive Director  Existing LVB shareholders to hold c.[7.5%] of the combined entity  Proposed swap ratio indicates a substantial premium on market price as on the date of announcement for shareholders of LVB

Status update

 Approval from CCI for the proposed amalgamation received on June 20, 2019  LVB and IBH have submitted an application to RBI seeking an approval of the proposed scheme of merger

Combined Entity to be Amongst the Top 10 Private Banks by Size and Profitability

40

As on December 31, 2018 Amalgamated Entity

Net Worth (Rs. Crs) 19,472 Loan Book (Rs. Crs) 1,23,393 Operating Profit (Rs. Crs) 4,630 Net Profit (Rs. Crs) 2,455 Capital Adequacy Ratio 20.6% Tier 1 ratio 14.4% Return on Assets (Annualized) 2.0% Return on Equity (Annualized) 19.2% Gross NPA 3.5% Net NPA 2.0% Strong Capital and Financial Position

• Well Capitalized combined entity with CAR at over 20%, well in excess of regulatory

requirement of 10.875%

• Healthy Credit Profile with Net NPAs down to c.2.0%
• Improvement in ROAs/ROEs from -2%/-41% to 2%/19% due to better profitability of IBH
• Negates need for additional capitalization in the next three years

Opportunity for growth and diversification

• Ability to diversify loan book from largely wholesale to retail
• Opportunity to cross-sell banking products given large retail customer base, as well as

geographical spread of IBH

• Cost efficiency through adoption of IBH’s technology

Improved market perception and access to key shareholders of IBH

• Successful track record of capital raising
• Healthy Credit profile with long term rating of AAA from all leading rating agencies in

India, including CRISIL

• Strong Liability profile backed by business relationships with 622 institutions which

includes 21 PSU banks, 26 Private and Foreign Banks and 575 Mutual Funds, Provident Funds, Pension Funds, Insurance Companies and Corporates

(1) As on 31 December 2018 (2) All financial metrics based on pro-forma analysis as on 31 December 2019

Appendix

Movement in Gross NPAs

42

640 1278 2694 1022 1894 (172) (212)) (478) (0)

Opening GNPA Gross Slippage Recov./upgrad./wo Tech write off Closing GNPA / Opening GNPA Gross Slippage Recov./upgrad./wo Tech write off Closing GNPA / Opening GNPA

March 2017 September 2017 March 2018 2694 2965 780 3359 633 (300)

Opening GNPA Gross Slippage Recov./upgrad./wo Tech write off Closing GNPA / Opening GNPA Gross Slippage Recov./upgrad./wo Tech write off Closing GNPA / Opening GNPA

(362) 86 March 2019 September 2018 March 2019

Movement of GNPA (INRcr)

3,359

• 3,557

311 113

Opening GNPA Gross Slippage Recov./upgrad./wo Tech write off Closing GNPA / Opening GNPA

June 2019

Overview of Restructured Standard Assets

43

965 76 40 39 2017 2018 2019 Jun-19 Restructure Standardd-FB

Restructured assets (INR in Crore)

Sectoral GNPA classification across industry

44

Leather and Leather products Chemicals and Chemical Products (Dyes, Paints, etc.) Vehicles, Vehicle Parts and Transport Equipments Paper and Paper Products Mining and Quarrying Cement and Cement Products Rubber, Plastic and their Products Wood and Wood Products Food Processing Glass & Glassware Other Industries Gems and Jwellery Beverages (excluding Tea & Coffee) and Tobacco All Engineering Textiles Basic Metal and Metal Products Infrastructure 0.00 100.00 200.00 300.00 400.00 500.00 600.00 700.00 Q1FY20 Q4FY19

Sectoral GNPA classification across Non-industry

45

Advances against Fixed Deposits (incl. FCNR(B), etc.) Computer Software Consumer Durables Vehicle /Auto Loans Professional Services NBFCs Tourism, Hotel and Restaurants Housing Loans (incl. priority sector Housing) Educational Loans Commercial Real Estate Other Retail Loans Transport Operators Retail Trade Other Services Agriculture and Allied Activities Wholesale Trade (other than Food Procurement) Other Non-food Credit, if any, please specify 100 200 300 400 500 600 700 800 900 1000 Q1FY20 Q4FY19

Thank You