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Directors Report of Corporation Bank

Mar 31, 2015

Dear Members,

1. The Board of Directors have pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit and Loss Account of the Bank for the year ended 31st March, 2015.

2. Performance at a glance :

2.1 The total business reached alevel of Rs.3,44,412 crore as on 31st March, 2015, recording an absolute growth of Rs.13,933 crore over the business figure of Rs.3,30,479 crore as on 31.03.2014, at a growth rate of 4.22%.

2.2 The total deposits of the Bank increased to Rs.1,99,346 crore as on 31.03.2015 from Rs.1,93,393 crore as on 31st March, 2014 registering a growth of 3.08% y-o-y.

2.3 Share of CASA in total deposits stood at 19.72% as on 31.03.2015 as compared to 20.33% as on 31.03.2014. Savings Deposits grew at a rate of 7.38%. Average CASA growth during 2014-15 stood at 12.17%.

2.4 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The Bank''s credit figure reached a level of Rs.1,45,066 crore as on 31.03.2015 from Rs.1,37,086 crore as on 31st March, 2014, recording an absolute growth of Rs.7,980 crore at a growth rate of 5.82%. During the financial year, focused attention was given for accelerated lending under Priority sector and midsize corporate, for expansion of credit.

2.5 Credit-Deposit Ratio stood at 72.77% as on 31.03.2015 as compared to 70.88% as on 31.03.2014.

2.6 The Bank continued its focus on recovery of NPAs. During the financial year, the Bank effected a cash recovery and upgradation of NPAs of Rs.1,484.73 crore as compared to Rs.1,355.53 crore in the previous financial year.

2.7 The bank posted a Net Profit figure of Rs.584.26 crore as against Rs.561.72 crore in the previous year.

2.8 As on 31.03.2015, the Bank had 9,916 functional units spread across India comprising of 2,298 Branches, 2,933 ATMs and 4,685 Branchless banking units.

3. Income Analysis

3.1 Interest Income of the Bank recorded a growth of Rs.1,597.87 crore (8.90%) from Rs.17,958.57 crore in the year 2013-14 to Rs.19,556.44 crore, as against the Interest expenses which grew by 9.25% from Rs. 14,174.88 crore during the financial year 2013-14 to Rs.15,486.10 crore during the year 2014-15. The Net Interest Income recorded a growth of Rs.286.65 crore [7.58%] during the same period.

( Rs. in crore)

Particulars 2013-14 2014-15 Change in %

INCOME

Interest Income 17958.57 19556.44 8.90%

Non-Interest Income 1647.72 1482.47 -10.03%

Total Income 19606.29 21038.91 7.31%

EXPENDITURE

Interest Expenditure 14174.88 15486.10 9.25%

Operating Expenses 2392.01 2525.36 5.57%

Total Expenditure 16566.89 18011.46 8.72%

Operating Profit 3039.40 3027.45 0.39%

Provisions & Contingencies (Excl. Tax) 2797.71 2551.99 8.78%

Profit before Tax 241.69 475.46 96.72%

Provision for Tax -320.03 -108.80 -66.00%

Net Profit 561.72 584.26 4.01%

3.2 The total Income of the Bank [total of Interest Income and Non-Interest Income] improved to Rs. 21,038.91 crore during the financial year 2014-15 from Rs. 19,606.29 crore in the previous financial year recording a rise of Rs.1,432.62 crore [7.31%].

3.3 Non-Interest Income from Core Areas increased by Rs.57.71 crore [5.36%] from Rs.1,077.39 crore in the financial year 2013-14 to Rs.1,135.10 crore in the financial year 2014- 15. The Total Non-Interest Income has decreased from Rs.1,647.72 crore as on 31.03.2014 to Rs.1,482.47 crore as on 31.03.2015 by - 10.03%.

3.4 The Operating Expenses has shown an increase of 5.57% during the financial year 2014-15 and stood at Rs.2,525.36 crore as compared to Rs.2,392.01 crore in 2013-14.

3.5 Staff expenses decreased from Rs.1,190.24 crore during FY 2013-14 to Rs.1,182.22 crore during FY 2014-15.

4. Spread Analysis ( Rs. in crore)

Growth

Particulars 2013-14 2014-15 Absolute %

Average Working Funds 1,95,005.00 2,109,60.00 15,955.00 8.18%

Total Interest Income 17,958.57 19,556.44 1,597.87 8.90%

Total Interest Expended 14,174.88 15,486.10 1,311.22 9.25%

Interest Spread 3,783.69 4,070.34 286.65 7.58%

Particulars 2013-14 2014-15

Yield on Funds 9.21% 9.27%

Cost of Funds 7.27% 7.34%

Yield on Advances 11.29% 11.07%

Cost of Deposits 8.03% 7.97%

Net Interest Margin 2.10% 2.07%

5. Operating Profit

5.1 The Operating Profit decreased marginally and stood at Rs.3,027.45 crore as at the end of March 2015, as compared to Rs.3,039.40 crore as on 31.03.2014.

5.2 Operating Profit during March''15 Quarter stood at Rs.965.37 crore compared with Rs.636.55 crore during March''14 quarter with a growth of 51.66%.

5.3 NIM for the March''15 Quarter stood at 2.26% as against 1.91% during March''14 Quarter.

5.4 The Asset Utilisation Ratio [percentage of Operating Profit to Average Working Funds] stood at 1.44% for the financial year 2014-15 compared to 1.56% for the financial year 2013-14.

6. Provisions

6.1 The Provision for Bad and Doubtful Debts, Provision on Standard Assets, Taxation, Investment Depreciation and others aggregated to Rs. 2,443.19 crore in the financial year 2014-15 as compared to Rs. 2,477.68 crore in the financial year 2013-14.

7. Net Profit and Dividend

7.1 After considering the provisions, the Net Profit of the Bank has increased from Rs. 561.72 crore for the previous financial year to Rs. 584.26 crore for the year ended 31.03.2015.

Year Net Profit Growth % [Rs. in crore]

2012- 13 1434.67 (-)4.74%

2013- 14 561.72 (-) 60.85%

2014- 15 584.26 ( )4.01%

7.2 The Board of Directors has recommended a Dividend of 70% i.e. Rs.1.40 per share of Rs.2/- each, for the financial year 2014-15.

7.3 In terms of extant guidelines, the Bank will pay the Dividend Distribution Tax for the Financial Year 2014-15. Accordingly the total outflow on account of Dividend for the year 2014-15 will be Rs.139.12 crore including the Dividend Distribution Tax.

7.4 Out of the Net Profit a sum of Rs.146.66 crore was appropriated to Statutory & General Reserves, Rs.151.50 crore was transferred to Special Reserve, Rs.17.32 crore to Capital Reserve, Rs.115.92 crore to Investment Reserve. Also Rs.15 crore was appropriated towards Staff Welfare Fund.

8. Net Worth and CRAR

8.1 The Net Worth of the Bank improved to Rs.10,484 crore as on 31st March, 2015 from Rs.10,085 crore as on 31st March, 2014.

8.2 The Bank raised Basel III compliant additional Tier I Capital in the form of Non-convertible, Perpetual Bonds amounting to Rs.500 crore during February, 2015.

8.3 The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 11.80% (Basel II) as on 31st March, 2015 as against 12.21% as on 31st March, 2014 which is above the norm stipulated by Reserve Bank of India. The CRAR as per Basel III guidelines works out to 11.09% as on 31st March, 2015 as against 11.64% as on 31st March, 2014.

Basel III Basel II

March March March March 2014 2015 2014 2015

Tier I Capital 8.14% 8.05% 8.37% 8.28%

Tier II Capital 3.50% 3.04% 3.84% 3.52%

Total 11.64% 11.09% 12.21% 11.80%

8.4 The Return on Equity, Earnings Per Share and Book Value per Share for the Financial Year 2014-15 stood at 5.68%, Rs.6.97 and Rs.125.16 respectively, as against 5.72%, Rs.7.15 and Rs.120.39 respectively for the previous Financial year. During the year, face value of equity share of the Bank was reduced from Rs.10/- to Rs.2/- each with effect from 22.01.2015 and accordingly, the previous year figure has been restated.

9. Consolidated Accounts

9.1 As per RBI guidelines, the Bank has consolidated the financial accounts as at 31st March, 2015 with those of its wholly owned Subsidiary viz., Corp Bank Securities Ltd. As per the consolidated statement as on 31st March, 2015, the Net Worth of the Corp Bank group stood at Rs.10,514 crore. The consolidated Operating Profit and Net Profit for the financial year 2014-15 are Rs.3,019.11 crore and Rs.572.87 crore, respectively, compared to Rs.3,049.35 crore and Rs.568.48 crore, respectively, for the financial year 2013-14. The Bank has complied with the RBI guidelines and the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

10. Bank''s Service Outlets

10.1 The Bank''s total service outlets crossed 9,900 mark during the year ended 31st March, 2015 to reach 9,916 service outlets, comprising of 2,298 branches, 2,933 ATMs and 4,685 Branchless Banking Units across the country. Out of these 277 branches (including 42 branches opened in unbanked rural centres), 669 ATMs and 353 Branchless banking Units were opened during the year. The Bank is also having its representative offices at Hongkong and Dubai for catering to the existing and prospective NRI customers. Out of the total 2,298 branches, 576 branches are in Rural areas, 761 in Semi-urban centres, 489 in Urban areas and 472 in Metro centres. Similarly, of the total 2,933 ATMs, 560 are in rural areas, 902 in Semi-urban centres, 746 in urban areas and 725 are in metros.

10.2 To explore the potential and with a focused approach for business development in that region, a new Zonal Office was opened at Varanasi on 23.05.2014, with 22 districts carved out from Lucknow zone, for better administration, control and monitoring of the business and for undertaking branch expansion and improve customer service in the eastern part of the Uttar Pradesh.

With the above, the Bank now has a total of 33 zonal offices spread across the country to have a better control, monitoring and follow up with the branches for business development. The Bank also has 6 Circle offices headed by General Managers operating at Mumbai, Delhi, Bangalore, Chennai, Kolkata and Ahmedabad. The Circle offices function as an extended arm of the Corporate Office, better equipped to support and drive business development plans through the Zonal Offices in their Command area. The Corporate office functions that are delegated to Circle offices are Planning, Development and Resource Mobilisation, Credit Sanctions, Credit Risk Management, Recovery and Legal, Human Resource Management, Support Services and Inspection and Audit.

11. Advertisement and Publicity

11.1 During the year, concerted efforts were made for enhancing the brand and image of the Bank. The Bank continued to disseminate messages on its products, services, interest rates and its performance, to the customers, shareholders and the general public through advertisements and publicity in Newspapers, Periodicals, TV Channels, FM Radio Stations, Hoardings, Translites, Website, ATMs, etc.

12. Government Business and Bancassurance

12.1 The total Direct/Indirect tax and Customs duty collections of the Bank for the year ended 31st March, 2015 reached Rs. 44,453 crore from 16.77 lakh challans as compared to Rs.43,125 crore from 17.33 Lakh challans collected during the last year. The total State VAT collections for the year ended 31st March, 2015, reached Rs.6,597 crore from 6.56 Lakh challans as against Rs.5,884 crore from 5.05 Lakh challans collected last year, with a growth rate of 12.12% and 29.90% respectively under amount collected and challans handled.

12.2 The Bank has earned an aggregate income of Rs.7.93 crore under Govt. Business during the FY ended March 2015 as compared to Rs.8.69 crore earned last year. The downward revision of commission from Rs.45 to Rs.12 per challan in case of e-payments has impacted the income generated out of tax collection.

12.3 Some of the new initiatives undertaken by the Bank during the year are — Secured authorization for handling State taxes for the states of Rajasthan, Chhattisgarh and UT of Daman & Diu in addition to 11 states where the Bank is already authorized for state tax collections. Ministry of Finance has authorized the Bank to handle E-payment of Railway Freight in all 16 Railway Zonal offices. The Bank has approached Corporates in this regard for E-Freight accounts. The Bank has secured authorization for integration with e-treasury portal of Kerala State Government, which enables remitters to make online payment in favour of Government using net banking facility of designated banks and also secured authorization for collecting fees/taxes of Transport Dept. of Govt. of Tamilnadu.

12.4 Bancassurance : Bank has been aggressively marketing Bancassurance products like Life insurance, General insurance and Mutual Fund business. During the year, the Bank has earned an income of Rs.10.46 crore from these businesses as compared to Rs.10.85 crore in the previous year. During the year, Bank has earned Rs.7.12 crore from LIC business, Rs.3.09 crore from General Insurance business and Rs.0.25 crore from Mutual Fund business.

13. Corporation Bank Economic Development Foundation

13.1 As a responsible Corporate citizen, the Bank initiated several welfare measures aiming at the under privileged Sections of the society in fulfillment of its commitment to social priorities, during the financial year 2014-2015.

13.2 The Corporation Bank Economic Development Foundation® a non-profit economic outfit Trust, founded in the year 1992, has been pursuing its objectives of fulfilling social obligation in tune with corporate mission. Financial grants to the extent of Rs.615.85 lakhs were disbursed for execution of various projects of social concerns during the year 2014-15, through CBDEF. Amongst others, CBEDF implemented following major projects during FY 2014-15.

13.2.1 "CorpKiran"— Association of Spouses of Bank Executives

Through "CorpKiran", the Bank granted Rs.22.34 lakhs to various Institutions during 2014-15, for the welfare of the underprivileged. The activities included providing food, clothing, books, etc., to poor school children and inmates of orphanages, old age homes, destitute homes, helping physically and mentally challenged people, extending medical help to poor people in distress, supporting green initiatives, conducting awareness programmes and other community development activities benefitting poor people.

13.2.2 Corporation Bank Self Employment Training Institutes [COBSETI]

The Corporation Bank Self Employment Training Institutes established on 22.03.1996 in Chikmagalur and on 23.01.2013 at Kodagu are sponsored by the Bank to cater to the training needs of the rural unemployed youth hailing from the districts of Chikmagalur and Kodagu, where the Bank has lead bank responsibility. 27351 candidates have been trained by both the institutes since inception. 10673 candidates trained under EDP by COBSETI Chikmagalur, have settled indicating a success rate of 78%. The Bank has incurred an expenditure of Rs.33.66 lakh during the year for conducting the training programmes at both the Institutes. COBSETI, Chikmagalur has been graded as "AA" Training Institute by the Ministry of Rural Development for second year in a row for the year 2014. The Bank has developed a new campus for COBSETI Institute at Kudige near Kushalnagar in Kodagu District by providing financial support of Rs.1.17 crore in 2014-15.

13.2.3 "Gramina Abhyudaya Financial Literacy and Credit Counselling Trust" [GAFLCC Trust]

The Bank has sponsored GAFLCC Trust for establishing "Financial Literacy Centres"[ FLCs] at various locations. These Centres educate people about the usefulness of the Bank account for all their economic needs and empowerment. The Centres also provide counseling to the borrowers on the financial aspects including insurance, savings and credit related products/services in the Bank etc. As on 31.03.2015, GAFLCC Trust has established 4 District level and 17 Block level FLC centers.

The Bank has provided Rs.37.00 Lakh for meeting the recurring cost of the Trust, during the year 2014-15. The Trust has conducted 2271 Financial Literacy Camps at schools, colleges, other institutions, SHGs and others, involving 1,15,219 persons.

13.2.4 PMJDY publicity

Under Prime Minister''s Jan Dhan Yojana (PMJDY), the Bank has opened 21,18,067 new accounts. Thousands of account holders are making transactions in their accounts and experiencing the benefits of banking services at grassroot level. Multimedia publicity has helped to a great extent to create awareness about PMJDY in the remote rural areas and Bank has contributed Rs.1.44 crores for this purpose.

13.2.5 SHG formation

The Bank has spent Rs.1.21 crore for promoting 12100 new Self Help Groups (SHGs) in 5 districts of Karnataka. Through this major initiative, Bank has helped about 1,81,500 families, who are members of these SHG groups to become financially empowered. They now have access to banking facilities including deposits and loans. They also receive training in record maintenance and account keeping of their respective groups. Regular meetings of the groups encourage the members to freely interact and become more financially independent.

14. Progressive use of Official Language:

14.1 The Bank ensures compliance of the provision of Official Languages Act, 1963, Official Languages Rules, 1976 and various directions with regard to Official Language issued from time to time by Department of Official Language, Ministry of Home Affairs, Financial Services Department, Ministry of Finance and the Reserve Bank of India.

14.2 The overall performance ofthe Bank in the field of official language implementation during the year 2014-15 has been very good. Bank received Indira Gandhi Rajbhasha Shield constituted by Deptt. of Official Language, Ministry of Home Affairs, Govt. of India in the benign hands of the Hon. President of India for doing excellent work in the field of Official Language.

14.3 The Town Official Language Implementation Committee (TOLIC), Mangaluru, under the convenorship of the Bank, secured Indira Gandhi Rajbhasha Shield and received Ist Prize in TOLIC category from the Deptt. of Official Language, Ministry of Home Affairs, Govt. of India in the benign hands of Hon. President of India.

14.4 Apart from this, Bank received Ist Prize from Regional Implementation Office (South), Department of Official Language, Ministry of Home Affairs, Govt. of India for excellence in the field of Official Language implementation, by the benign hands of Hon. Governor of the Karnataka State.

14.5 The Bank is the convenor of Town Official Language Implementation Committee (TOLIC), Mangaluru, Belgaum, Vijayawada and Nellore as well as that of the Official Language Committee of South Based Public Sector Banks. Various activities are conducted every year for the benefit of staff members of member organisations/banks.

14.6 During the Financial Year, the Third Sub-Committee of the Committee of Parliament on Official Language visited the Zonal Office Mysore and appreciated the efforts being made by the Bank in official language Implementation.

14.7 Bank is the Convenor of the Official Language Implementation Committee of the south based Public Sector Banks. During the year a special meeting of the official language implementation committee of South based Public Sector banks was convened at Madikeri, Karnataka on 06th Sept., 2014 in the presence of Ms. Nita Choudhary, IAS, Secretary, Official Language, Ministry of Home Affairs, Govt. of India.

14.8 On 07 th Sept., 2014 Ms. Nita Chaudhary, IAS, Secretary, Official Language, Ministry of Home Affairs, Govt. of India reviewed the O.L. implementation work at the Head office of the Bank and an official language seminar for top executives of the Bank and member organisations of TOLIC, Mangaluru, was also organised.

14.9 Bank organized a seminar on the Expectations of Parliamentary Committee on O.L. under the auspices of Ministry of Finance in the presence of Smt. Poonam Juneja, Joint Secretary (OL), Ministry of Home Affairs, Govt. of India, on 28th Feb., 2015.

14.10 On 28 March 2015, Mrs. Sneh Lata Kumar, IAS, Secretary (OL), Mrs. Poonam Juneja, Joint Secretary (OL), Harindar Kumar, Director (Impl.), Deptt. of Official Language, Ministry of Home affairs, reviewed the progress in implementation of Official Language at head office and an Official Language Seminar for Top Executives of Bank was arranged in their presence. The efforts of the Bank in the field of official Language implementation, was appreciated at the meeting.

14.11 The Bank is bringing out various publications for popularizing Official Language Hindi. These include "Mangala" — quarterly Hindi house-journal of the Bank, "Tridhara" — Hindi Journal published on behalf of TOLIC, Mangaluru and "Bharat Bharati" — Hindi journal published on behalf of Official Language Committee of South Based Public Sector Banks. Apart from these publications bank has published a booklet an Annual Programme and Incentive Schemes 2014-15, A book on Hindi Workshop, Compendium of the orders of Ministry of Finance and various brochures.

14.12 Hindi workshops and training programmes were conducted on a regular basis for the benefit of staff members.

15. Performance ofSubsidiaries and other units sponsored by the Bank

15.1 Corp Bank Securities Limited: The Bank''s wholly owned subsidiary, Corp Bank Securities Limited (CBSL) has earned a total income of Rs.9.93 crore, posted Profit Before Tax of Rs.9.17 crore and Profit After Tax of Rs.6.12 crore (after accounting for tax provision of Rs.1.85 crore, reversal of deferred tax asset of Rs.0.0004 crore and MAT credit set off of Rs.1.19 crore) for F.Y. 2014-15, while the corresponding figures for F.Y. 2013-14 were Rs.10.29 crore, Rs.9.96 crore and Rs.6.77 crore respectively (after accounting for tax provision of Rs.1.96 crore, reversal of deferred tax asset of Rs.0.54 crore and Rs.0.69 crore being MAT credit set off). The Paid up Equity Share Capital remained at Rs.75 crore as on 31.3.2015 while the Net worth stood at Rs.104.22 crore, after providing for Rs.10.00 crore towards interim & final dividend and Rs.1.70 crore as dividend distribution tax thereon, with the plough back of surplus. The Earning per Share for fiscal ended March, 2015 was Rs.0.82 while it was Rs.0.90 for the fiscal ended March, 2014. The Company continues to pursue its activity of distribution of Mutual Fund Products and trading in approved Securities like Certificate of Deposits, Treasury Bills etc. The Company has secured requisite regulatory approvals for commencement of equity broking business and activity is proposed to be started during the FY 2015-16.

16. Constitution of Board of Directors

16.1 The following changes have taken place in the Board of Directors of the Bank during the financial year ended 31st March, 2015.

16.2 Shri Arun Pasricha was appointed as the RBI Nominee Director on the Board of the Bank with effect from 10.06.2014.

16.3 Shri Sushobhan Sarker, Ms. Chitra Gouri Lal and Shri Ramesh Kumar Bhat, were elected as Shareholder Directors on the Board of the Bank and they resumed office with effect from 26th August, 2014.

16.4 Shri Pradyumna Kumar Jena, was appointed RBI Nominee Director on the Board of the Bank with effect from 23.02.2015, in place of Shri Arun Pasricha.

16.5 The following members retired from the Board of the Bank during the period:

- Shri U. S. Paliwal as RBI Nominee Director on 09.06.2014.

- Shri Sushobhan Sarker, Shri Kawaljit Singh Oberoi and Shri Shabbeer S. Pasha, retired on completion of their term as shareholder directors on 22.08.2014.

- Shri Vincent D''Souza, Workmen Employee Director retired on 27.12.2014.

- Shri Arun Pasricha retired as RBI Nominee Director on 22.02.2015.

- Shri Amar Lai Daultani completed his term of office as Executive Director on attaining superannuation on 31.03.2015.

16.6 The Board places on record its appreciation for the guidance and counsel received from Shri U. S. Paliwal, Shri Vincent D''Souza, Shri Sushobhan Sarker, Shri Kawaljit Singh Oberoi, Shri Shabbeer S. Pasha, Shri Arun Pasricha and Shri Amar Lal Daultani, during deliberations of the Board/Committees of the Board and also in the conduct of the Bank''s business during their tenure of office as Directors of the Bank.

17. Directors'' Responsibility Statements

The Directors confirm that in the preparation of the Annual Accounts for the year ended 31st March, 2015.

17.1 The applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any.

17.2 Accounting Policies had been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for that period.

17.3 Proper and sufficient care was taken for the maintenance of adequate Accounting Records in accordance with the provisions of the relevant Acts for safeguarding the assets of the bank and for preventing and detecting fraud and other irregularities.

17.4 The Annual Accounts were prepared on a going concern basis.

17.5 Internal financial controls had been laid down to be followed by the Bank and that such internal financial controls are adequate and were operating effectively.

17.6 Proper systems were in place to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

18. Acknowledgements

18.1 The Directors thank the shareholders, valued customers, well-wishers, Share Transfer Agent and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

18.2 The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Karnataka, Reserve Bank of India, Securities and Exchange Board of India (SEBI), BSE, NSE, NSDL, CDSL, various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank, in the functioning of the Bank.

18.3 The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realisation of the corporate goals of the Bank in the years ahead.

For and on behalf of the Board of Directors

Place : Mangaluru (S. R. Bansal)

Date : 28.05.2015 Chairman & Managing Director


Mar 31, 2014

1. The Board of Directors have pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit and Loss Account of the Bank for the year ended 31st March, 2014.

2. Performance at a glance :

2.1 The total business reached an impressive level of Rs.3,30,479 crore as on 31st March, 2014, recording an absolute growth of Rs.45,757 crore over the business figure of Rs.2,84,722 crore as on 31.03.2013, at a growth rate of 16.07%.

2.2 The total deposits of the Bank increased to Rs.1,93,393 crore as on 31.03.2014 from Rs.1,66,005 crore as on 31st March, 2013 registering a growth of 16.50% y-o-y.

2.3 Share of CASA in total deposits stood at 20.33% as on 31.03.2014 as compared to 21.68% as on 31.03.2013. Savings Deposits grew at a rate of 17.91%

2.4 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The Bank''s credit figure reached a level of Rs.1,37,086 crore as on 31.03.2014 from Rs.1,18,717 crore as on 31st March, 2013, recording an absolute growth of Rs.18,369 crore at a growth rate of 15.47%. During the financial year, focused attention was given for accelerated lending under Agriculture, Priority sector, SMEs and midsize corporate and retail segments for expansion of credit.

2.5 Credit-Deposit Ratio stood at 70.88% as on 31.03.2014 as compared to 71.51% as on 31.03.2013.

2.6 The Bank continued its drive for recovery of NPAs. During the financial year, the Bank effected a cash recovery and upgradation of NPAs of Rs.1,355.53 crore as compared to Rs.1,509.30 crore in the previous financial year.

2.7 Despite the economic slowdown and prevailing adverse situation, the Bank recorded a fairly good performance in different functional areas during the financial year 2013- 14. The bank posted a Net Profit figure of Rs.561.72 crore.

2.8 As on 31.03.2014, the Bank had 8,617 functional units spread across 28 States comprising of 2,021 Branches, 2,264 ATMs and 4,332 Branchless banking units.

3. Income Analysis

3.1 Interest Income of the Bank recorded a growth of Rs.2,624.49 crore (17.12%) from Rs.15,334.08 crore in the year 2012-13 to Rs.17,958.57 crore, as against the Interest expenses which grew by 19.03% from Rs.11,908.23 crore during the financial year 2012-13 to Rs.14,174.88 crore during the year 2013-14. The Net Interest Income recorded a growth of Rs.357.84 crore [10.45%] during the same period.

(Rs. in crore)

Particulars 2012-13 2013-14 Change in %

INCOME

Interest Income 15,334.08 17,958.57 17.12%

Non-Interest Income 1,607.94 1,647.72 2.47%

Total Income 16,942.02 19,606.29 15.73%

EXPENDITURE

Interest Expenditure 11,908.23 14,174.88 19.03%

Operating Expenses 1,996.79 2,392.01 19.79%

Total Expenditure 13,905.02 16,566.89 19.14%

Operating Profit 3,037.00 3,039.40 0.08%

Provisions & Contingencies (Excl. Tax) 1351.40 2,797.71 107.02%

Profit before Tax 1,685.60 241.69 -85.66%

Provision for Tax 250.93 -320.03 -227.54%

Net Profit 1,434.67 561.72 -60.85%

3.2 The total Income of the Bank [total of Interest Income and Non-Interest Income] improved to Rs.19,606.29 crore during the financial year 2013-14 from Rs.16,942.02 crore in the previous financial year recording a rise of Rs.2,664.27crore [15.73%].

3.3 Non-Interest Income from Core Areas increased by Rs.90.60 crore [9.18%] from Rs.986.79 crore in the financial year 2012-13 to Rs.1,077.39 crore in the financial year 2013-14. The Total Non-Interest Income has increased from Rs.1,607.94 crore as on 31.03.2013 to Rs.1,647.72 crore as on 31.03.2014 by 2.47%.

3.4 The Operating Expenses has shown an increase of 19.79% during the financial year 2013-14 and stood at Rs.2,392.01 crore as compared to Rs.1,996.79 crore in 2012-13.

4. Spread Analysis

(Rs. in crore)

Growth Particulars 2012-13 2013-14 Absolute %

Average Working Funds 1,62,800.00 1,95,005.00 32,205.00 19.78%

Total Interest Income 15,334.08 17,958.57 2,624.49 17.12%

Total Interest Expended 11,908.23 14,174.88 2,266.65 19.03%

Interest Spread 3,425.85 3,783.69 357.84 10.45%

Particulars 2012-13 2013-14

Yield on Funds 9.42% 9.21%

Cost of Funds 7.31% 7.27%

Yield on Advances 11.65% 11.29%

Cost of Deposits 8.12% 8.03%

Net Interest Margin 2.29% 2.10%

5. Operating Profit

5.1 The Operating Profit increased by a marginal amount and stood at Rs.3,039.40 crore as at the end of March, 2014, as compared to Rs.3,037 crore as on 31.03.2013.

5.2 The Asset Utilisation Ratio [percentage of Operating Profit to Average Working Funds] stood at 1.56% for the financial year 2013-14 compared to 1.87% for the financial year 2012-13.

6. Provisions

6.1 The Provision for Bad and Doubtful Debts, Provision on Standard Assets, Taxation, Investment Depreciation and others aggregated to Rs. 2,477.68 crore in the financial year 2013-14 as compared to Rs. 1,602.33 crore in the financial year 2012-13.

7. Net Profit and Dividend

7.1 Due to the increased provision, the Net Profit of the Bank has come down from Rs.1,434.67 crore for the previous financial year to Rs.561.72 crore for the year ended 31.03.2014.

Net Profit Year Growth % [Rs.in crore]

2011-12 1,506.04 6.56

2012-13 1,434.67 (-)4.74

2013-14 561.72 (-)60.85

7.2 The Bank has already paid an Interim Dividend of 45% (Rs.4.50 per equity share of Rs.10.00 each). In addition to the above, the Board of Directors has recommended a Final Dividend of 22.50% for the financial year 2013-14. The total dividend during the financial year 2013-14 thus works out to Rs.6.75 per share of Rs. 10/- each.

7.3 In terms of extant guidelines, the Bank will pay the Dividend Distribution Tax for the Financial Year 2013-14. Accordingly, the total outflow on account of Dividend for the year 2013-14 will be Rs. 132.31crore including the Dividend Distribution Tax.

7.4 Out of the Net Profit a sum of Rs.202.16 crore was appropriated to Statutory & General Reserves, Rs.207 crore was transferred to Special Reserve, Rs.23.17 crore to Capital Reserve, Rs.1.54 crore to Investment Reserve. Also Rs.15 crore was appropriated towards Staff Welfare Fund.

8. Net Worth and CRAR

8.1 The Net Worth of the Bank improved to Rs.10,085 crore as on 31st March, 2014 from Rs.9,566 crore as on 31st March, 2013.

8.2 During the year 2013-14, the Bank has issued and allotted 1,46,27,486 Equity shares of the face value of Rs.10/- each at an issue price of Rs.307.64 per share, amounting to Rs.450 crore for infusion of capital by Government of India, on preferential basis, to further strengthen its CRAR under Basel III capital. Under Tier I and Tier II, no fresh bonds were issued during the year 2013-14.

8.3 The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 12.21% (Basel II)as on 31st March, 2014 as against 12.33% as on 31st March, 2013 which is above the norm stipulated by Reserve Bank of India. The CRAR as per Basel III guidelines works out to 11.64%.

Category Basel III Basel II March March March March 2013 2014 2013 2014

Tier I Capital NA 8.14% 8.33% 8.37%

Tier II Capital NA 3.50% 4.00% 3.84%

Total NA 11.64% 12.33% 12.21%

8.4 The Return on Equity, Earnings per Share and Book Value per Share for the Financial Year 2013-14 stood at 5.72%, Rs.35.75 and Rs.601.95 respectively, as against 16.27%, Rs.96.74 and Rs.645.76 respectively for the previous Financial year.

9. Consolidated Accounts

9.1 As per RBI guidelines, the Bank has consolidated the financial accounts as at 31st March, 2014 with those of its wholly owned Subsidiary viz., Corp Bank Securities Ltd. As per the consolidated statement as on 31st March, 2014, the Net Worth of the Corp Bank group stood at Rs.10,120 crore as compared to Rs.9,603 crore as at 31st March, 2013. The consolidated Operating Profit and Net Profit for the financial year 2013-14 are Rs.3,049.35 crore and Rs.568.48 crore, respectively, compared to Rs.3,050.37 crore and Rs.1,443.24 crore, respectively, for the financial year 2012-13. The Bank has complied with the RBI guidelines and the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

10. Bank''s Service Outlets

10.1 The Bank''s total service outlets crossed 8,600 mark during the year ended 31st March, 2014 to reach 8,617 service outlets, comprising of 2,021 branches, 2,264 ATMs and 4,332 Branchless Banking Units across the country. Out of these 314 branches (including 111 branches opened in unbanked rural centres), 839 ATMs and 787 Branchless banking Units were opened during the year. The Bank is also having its representative offices at Hongkong and Dubai for catering to the existing and prospective NRI customers. Out of the total 2,021 branches, 501 branches are in Rural areas, 672 in Semi-urban centres, 427 in Urban areas and 421 in Metro centres. Similarly, of the total 2,264 ATMs, 269 are in rural areas, 661 in Semi-urban centres, 682 in urban areas and 652 are in metros.

10.2 To exploit the potential of Eastern Region of India and to have a focused approach for business development in that region, the Bank has opened a new Zonal office at Bhubaneswar in the state of Odisha, during the year which has started functioning from 7th August, 2013.

With the above, the Bank now has a total of 32 zonal offices spread across the country to have a better control, monitoring and guiding the branches for the development of the Bank''s business. The Bank also has 6 Circle offices headed by General Managers operating at Mumbai, Delhi, Bangalore, Chennai, Kolkata and Ahmedabad. The Circle offices function as an extended arm of the Corporate Office, better equipped to support and drive business development plans of the Zonal Offices in their Command area. The Corporate office functions that are delegated to Circle offices are Planning, Development and Resource Mobilisation, Credit Sanctions, Credit Risk Management, Recovery and Legal, Human Resource Management, Support Services and Inspection and Audit.

11. Advertisement and Publicity

11.1 During the year, concerted efforts were made for enhancing the brand and image building of the Bank. The Bank continued to disseminate messages on its products, services, interest rates and its performance to the customers, shareholders and the general public through advertisements and publicity in Newspapers, Periodicals, TV Channels, FM Radio Stations, Hoardings, Translites, Website, ATMs, etc.

12. Government Business and Bancassurance

12.1 The total Direct/Indirect tax and Customs duty collections of the Bank for the year ended 31st March, 2014 reached Rs. 43,125 crore from 17.33 lakh challans as compared to Rs.43,136 crore from 15.87 Lakh challans collected during the last year. The total State VAT collections for the year ended 31st March, 2014, reached Rs.5,884 crore from 5.05 Lakh challans as against Rs.4,920 crore from 3.62 Lakh challans collected last year, with a significant growth rate of 19.59% and 39.50% respectively under amount collected and challans handled.

12.2. The Bank has earned an aggregate income of Rs.8.69 crore under Govt. Business during the FY ended March, 2014 as compared to Rs.8.88 crore earned last year. The downward revision of commission from Rs.45 to Rs.12 per challan in case of e-payments effective from1st July, 2012, has impacted the income generated out of tax collection.

12.3 Some of the new initiatives undertaken by the Bank during the year are – Extension of E-stamping facility to the States of Uttar Pradesh and Rajasthan, Commencement of online payment of pension to telecom pensioners, through the Centralized Pension Processing Cell set up at Corporate Office, Registration of over 4000 employees under the Corporate New Pension Scheme, entering into tie-up arrangement with Geojit BNP Paribas for providing online trading platform for the Bank''s clients and entering into tie-up arrangement with M/s UTI Infrastructure Technology & Services Ltd., for Issue of PAN card coupons through 57 branches.

12.4 Bancassurance : Bank has been aggressively marketing Bancassurance products like Life insurance and General insurance. During the year, the Bank has earned an income of Rs.10.85 crore from this business, registering an absolute growth of Rs.2.58 crore at 31.13%. Under life insurance, while the bank has earned an income of Rs.7.17 crore registering a growth of 28.34%, under general insurance, the bank earned Rs.3.20 crore registering a growth of 60.15%.

13. Corporate Social Responsibility:

13.1 As a responsible Corporate citizen, the Bank initiated several welfare measures aiming at the under privileged section of the society in fulfillment of its commitment to social priorities during the financial year 2013-2014.

13.2 Support to Societal Concerns:

13.2.1 Assistance to Uttarakhand:

The State of Uttarakhand was hit by torrential rains followed by cloudbursts, landslides and flash floods, washing away dwelling houses, roads and bridges. As a responsible Corporate Citizen, the Bank donated Rupees One crore to the Chief Minister''s Relief Fund, Uttarakhand, towards relief and rehabilitation of the victims.

13.2.2 Other CSR initiatives:

The Bank has also involved itself with several initiatives in the field of Education, Development of infrastructure, Rural development, Health and Hygiene and Promotion of Art and Culture. The Bank supported many institutions who have been serving the Destitute, Orphans, Senior citizens and Special Children, etc.

13.3 Corporation Bank Economic Development Foundation [CBEDF]

The Corporation Bank Economic Development Foundation® a non-profit economic outfit Trust was launched in the year 1992 and continues to fulfill its social obligation in tune with corporate mission. The objective of the trust is to carry out or assist in carrying out economic development activities to help people realize their full potential for economic advancement, social development and to raise quality of their life. Financial grants to the extent of Rs.74.22 lakh were disbursed for execution of various projects of social concerns during the year 2013-14. The areas of assistance included providing ambulance, transport vehicle and Dialysis Machine for hospitals, assistance for construction of class rooms, library building and open-air theatre in schools, providing furniture, drinking water facility and water- filter-cum-purifier in schools etc.

13.4 CSR Activities through "CorpKiran"

During the year, the Bank formed Women Welfare Associations under the name "CorpKiran" to extend the CSR activities through Circle Offices and Zonal Office levels, in addition to Head Office. The Bank granted Rs.10.64 lakh to various institutions during the year for CSR activities through "CorpKiran". The activities included providing of food, clothing, books etc., to poor school children and inmates of orphanages, old age homes, destitute homes, helping physically and mentally challenged people, extending medical help to poor people in distress, supporting green initiatives, conducting awareness programmes and other community development activities benefitting poor people. In 2014-15 the Bank will extend the activities of "CorpKiran" to more number of Institutions and beneficiaries, throughout the country.

13.5 Corporation Bank Self Employment Training Institutes [COBSETI]

The Corporation Bank Self Employment Training Institutes, established on 22.03.1996 in Chikmagalur, and the other in Kodagu on 23.01.2013 are sponsored by the Bank to cater to the training needs of the rural un-employed youth hailing from the districts of Chikmagalur and Kodagu, where the Bank has the Lead Bank responsibility. The training is imparted free of cost with free boarding and lodging, to the trainees. The trained youth are also assisted in getting credit facilities from banks to set up self-employment ventures. 25,121 candidates have been trained by both the institutes since inception. 9,831 candidates were trained under regular EDPs, of which 6,685 have settled indicating a success rate of 68%. The Bank has incurred an expenditure of Rs.25.25 lakh during the year for conducting the training programmes at both the Institutes. COBSETI, Chikmagalur has been graded as "AA" Training Institute by the Ministry of Rural Development, Government of India for the year 2013.

13.6 "Gramina Abhyudaya Financial Literacy and Credit Counseling Trust" [GAFLCC Trust]

13.6.1 The Bank has sponsored "Gramina Abhyudaya Financial Literacy and Credit Counseling Trust" [GAFLCC Trust] for establishment of "Financial Literacy-cum-Credit Counseling Centres" [FLCCs] at various locations. These Centres educate people who are yet to avail the Banking services, about the usefulness of the Bank account for their economic needs and empowerment. The Centres also provide counseling for the borrowers on the basis of financial aspects including insurance, savings and credit related products/services in the Bank etc. As on 31.03.2014 GAFLCC Trust has established 4 District level and 14 Block level FLCC centers.

13.6.2 The Bank has provided Rs.60.98 Lakh for meeting the capital and recurring cost of the Trust and for establishment of new centers, during the year 2013-14. The Trust has conducted 1,918 Financial Literacy Camps at schools, colleges, other institutions, SHGs and others, involving 1,21,456 persons. The trust has also conducted credit counseling to 4,421 persons in the villages. Further, 791 persons were counseled through mobile phone.

14. Progressive use of Official Language:

14.1 The Bank ensures compliance of the provisions of Official Languages Act, 1963, Official Languages Rules, 1976 and various directions with regard to Official Language issued from time-to-time by Department of Official Language, Ministry of Home Affairs, Financial Services Department, Ministry of Finance and the Reserve Bank of India.

14.2 The overall performance of the Bank in the field of official language implementation during the year 2013-14 has been very good and it has been lauded by the Ministry of Finance. Hindi workshops and training programmes were conducted on a regular basis for the benefit of staff members.

14.3 The Bank is the convenor of Town Official Language Implementation Committee (TOLIC), Mangalore, Belgaum, Vijayawada and Nellore as well as that of the Official Language Committee of South Based Public Sector Banks. Various activities are conducted every year for the benefit of staff members of member organisations/ banks.

14.4 During the Financial Year, the Third Sub-Committee of the Committee of Parliament on Official Language visited the Bank''s Headquarters and appreciated the efforts being made by the Bank in official language Implementation. The Joint Secretary, Department of Financial Services, Ministry of Finance and Joint Director (OL) also inspected the Bank with regard to official language implementation during the year. The Ministry expressed its satisfaction and appreciated the Bank for initiatives taken for OL implementation.

14.5 The Bank is bringing out various publications for popularizing Hindi as the Official Language. These include "Mangala" – quarterly Hindi house-journal of the Bank, "Tridhara"– Hindi Journal published on behalf of TOLIC, Mangalore and "Bharat Bharati"- Hindi journal published on behalf of Official Language Committee of South Based Public Sector Banks.

14.6 The Town Official Language Implementation Committee (TOLIC), Mangalore under the convenership of the Bank secured shield from the Regional Implementation Office (South-West), Department of Official Language, Ministry of Home Affairs, Government of India for excellence in performance during the year 2012-13.

15. Performance of Subsidiaries and other units sponsored by the Bank

15.1 Corp Bank Securities Limited: The Bank''s wholly owned subsidiary, Corp Bank Securities Limited (CBSL) has earned a total income of Rs.10.29 crore, posted Profit Before Tax of Rs.9.96 crore and Profit After Tax of Rs.6.77 crore (after accounting for tax provision of Rs.1.96 crore, reversal of deferred tax asset of Rs.0.54 crore and MAT credit set off of Rs. 0.69 crore) for FY 2013-14, while the corresponding figures for FY 2012-13 were Rs.13.81 crore, Rs.13.37 crore and Rs.8.57 crore respectively (after accounting of tax provision of Rs.2.66 crore, reversal of deferred tax asset of Rs.4.22 crore while Rs.2.07 crore being MAT credit available was added back). The Paid up Equity Share Capital remained at Rs.75 crore as on 31.3.2014 while the Net worth stood at Rs.109.81 crore, after providing for Rs.7.50 crore towards proposed final dividend and Rs.1.27 crore as dividend distribution tax thereon, with the plough back of surplus. The Earning per Share for fiscal ended March, 2014 was Rs.0.90 while it was Rs.1.14 for the fiscal ended March, 2013. The Company continues to pursue its activity of distribution of Mutual Fund Products and trading in approved Securities like Certificate of Deposits, Treasury Bills etc. The Company has secured requisite regulatory approvals for commencement of equity broking business and the connectivity and is taking forward to activate the business.

16. Constitution of Board of Directors

16.1 The following changes have taken place in the Board of Directors of the Bank during the financial year ended 31st March, 2014.

16.2 Shri S. R. Bansal was appointed as the Chairman and Managing Director of the Bank by the Central Government and he assumed office on 5th October, 2013.

16.3 Ms. Anna Roy was appointed by the Central Government as Government Nominee Director on the Board of the Bank and she assumed office with effect from 23rd May, 2013. With effect from 16.04.2014, Shri Manish Gupta has been appointed by the Central Government as Government Nominee Director on the Board of the Bank, replacing Ms. Anna Roy.

16.4 Shri Ekanath Baliga was appointed by the Central Government as Officer employee Director and he assumed office with effect from 17.10.2013.

16.5 Shri Bonam Venkata Bhaskar was nominated by the Central Government as Part time Non-official Director on the Board of the Bank and he assumed office with effect from 4th November, 2013.

16.6 Shri Adish Kumar Jain was nominated by the Central Government as Part time Non-official Director on the Board of the Bank and he assumed office with effect from 26.12.2013.

16.7 The following members retired from the Board of the Bank during the period:

- Ms. Anna Roy retired as Government Nominee Director on 15.04.2014.

- Shri Ajai Kumar retired as Chairman and Managing Director on 30.06.2013.

- Shri Lalit Kishore Meena retired as Government Nominee Director on 23.05.2013.

- Shri Kaushik Kumar Ghosh completed his term as Officer Employee Director on 15.04.2013.

16.8 The Board places on record its appreciation for the guidance and counsel received from Shri Ajai Kumar, Shri Lalit Kishore Meena, Ms. Anna Roy and Shri Kaushik Kumar Ghosh, during deliberations of the Board/Committees of the Board and also in the conduct of the Banks business during their tenure of office as Directors of the Bank.

17. Directors'' Responsibility Statements

The Directors confirm that in the preparation of the Annual Accounts for the year ended 31st March, 2014:-

17.1 The applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any.

17.2 Accounting Policies had been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for that period. Any change in the Accounting policies, are properly disclosed.

17.3 Proper and sufficient care was taken for the maintenance of adequate Accounting Records in accordance with the provisions of the relevant Acts for safeguarding the assets of the bank and for preventing and detecting fraud and other irregularities.

17.4 The Annual Accounts were prepared on a going concern basis.

17.5 Internal financial controls had been laid down to be followed by the Bank and that such internal financial controls are adequate and were operating effectively.

17.6 Proper systems were in place to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

18. Acknowledgements

18.1 The Directors thank the shareholders, valued customers, well-wishers, Share Transfer Agent and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

18.2 The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Karnataka, Reserve Bank of India, Securities and Exchange Board of India (SEBI), BSE, NSE, NSDL, CDSL, various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank, in the functioning of the Bank.

18.3 The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realisation of the corporate goals of the Bank in the years ahead.

For and on behalf of the Board of Directors

Place : Mangalore (S. R. Bansal)

Date : 23.05.2014 Chairman & Managing Director


Mar 31, 2013

1. The Board of Directors have pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit and Loss Account of the Bank for the year ended 31st March, 2013.

2. Performance at a glance :

2.1 Total Business of the Bank reached an impressive figure of Rs. 284122 crore as on 31st March 2013, recording an absolute growth of Rs.48111 crore over the 31.03.2012 business figure of Rs.236611 crore, at a growth rate of 20.33%.

2.2 The total deposits of the Bank increased to Rs. 166005 crore as on 31.03.2012 from Rs. 136142 crore as on 31st March, 2012 registering a growth of 21.94% y-o-y.

2.3 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The Bank''s credit figure reached a level of Rs. 118111 crore as on 31.03.2013 from Rs. 100469 crore as on 31st March, 2012, recording an absolute growth of Rs. 18241 crore at a growth rate of 18.16%. During the financial year, focused attention was given for accelerated lending under Agriculture, SSI, SMEs and midsize corporate and retail segments for expansion of credit.

2.4 The Bank continued its good performance under recovery of NPAs. During the financial year, the Bank effected a cash recovery and upgradation of NPAs of Rs. 1509.30 crore as compared to Rs. 158.60 crore in the previous financial year.

2.5 The Bank recorded an encouraging performance in different functional areas during the financial year 2012-13 which resulted in achieving a Net Profit figure of Rs. 1434.61 crore.

2.6 As on 31.03.2013, the Bank had 6611 functional units spread across 26 States comprising of 1101 Branches, 1425 ATMs and 3545 Branchless banking units.

3. Income Analysis

3.1 Interest Income of the Bank recorded a growth of 2316.30 crore (11.19%) from Rs.13011.18 crore in the year 2011-12 to Rs. 15334.08 crore, as against the Interest expenses which grew by 20.64% from Rs. 9810.88 crore during the financial year 2011-12 to Rs. 11908.23 crore during the year 2012-13. The Net Interest Income recorded a growth of Rs.218.96 crore [8.86%] during the same period.

(Rs. in crore)

Particulars 2011-12 2012-13 Change in %

INCOME

Interest Income 13,017.78 15334.08 17.79%

Non-Interest Income 1,492.62 1,607.94 7.73%

Total Income 14,510.40 16,942.02 16.76%

EXPENDITURE

Interest Expenditure 9,870.88 11908.23 20.64%

Operating Expenses 1,783.55 1996.79 11.96%

Total Expenditure 11,654.43 13,905.02 19.31%

Operating Profit 2,855.97 3,037.00 6.34%

Provisions & Contingencies (Excl. Tax) 950.46 1351.4 42.18%

Profit before Tax 1,905.51 1685.6 (-) 11.54%

Provision for Tax 399.47 250.93 (-) 37.18%

Net Profit 1,506.04 1434.67 (-) 4.74%

3.2 The total Income of the Bank [total of Interest Income and Non-Interest Income] improved to Rs. 16942.02 crore during the financial year 2012-13 from Rs. 14510.40 crore in the previous financial year recording a rise of Rs. 2431.62 crore [16.76%].

3.3 Non-Interest Income from Core Areas increased by Rs. 155.08 crore [18.65%] from Rs.831.71 crore in the financial year 2011-12 to Rs. 986.79 crore in the financial year 2012-13. The Total Non-Interest Income has increased from Rs. 1492.62 crore as on 31.03.2012 to Rs. 1607.94 crore as on 31.03.2013 by 7.73%.

3.4 The Net Interest Income reached a level of Rs.3425.85 crore during the financial year from Rs.3146.89 crore as on 31.03.2012.

3.5 The Operating Expenses has shown an increase of 11.96% during the financial year 2012-13 and stood at Rs. 1996.79 crore as compared to Rs. 1783.55 crore in 2011-12.

3.6 The Cost to Income Ratio stood at 39.67%.

4. Spread Analysis

(Rs. in crore) Particulars 2011-12 2012-13 Growth

% Absolute

Average Working Funds 142076.00 162800.00 20724.00 14.59%

Total Interest Income 13017.78 15334.08 2316.30 17.79%

Total Interest Expended 9870.89 11908.23 2037.34 20.64%

Interest Spread 3146.89 3425.85 278.96 8.86%

Particulars 2011-12 2012-13

Yield on Funds 9.16% 9.42%

Cost of Funds 6.95% 7.31%

Yield on Advances 11.62% 11.65%

Cost of Deposits 7.63% 8.12%

Net Interest Margin 2.48% 2.29%

5. Operating Profit

5.1 The Operating Profit for the financial year 2012-13 increased by 6.34% from Rs. 2855.97 crore as on 31.03.2012 to 3037.00 crore as on 31.03.2013.

5.2 The Asset Utilisation Ratio [percentage of Operating Profit to Average Working Funds] stood at 1.87% for the financial year 2012-13 compared to 2.01% for the financial year 2011-12.

6. Provisions

6.1 The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs. 1602.33 crore in the financial year 2012-13 as compared to Rs. 1349.93 crore in the financial year 2011-12.

7. Net Profit and Dividend

7.1 The Bank registered a Net Profit of Rs. 1434.67 crore for the financial year 2012-13 as compared to Rs. 1506.04 crore in the financial year 2011-12 as under:

Year Net Profit Growth % [Rs. in crore]

2010-11 1413.27 20.77

2011-12 1506.04 6.56

2012-13 1434.67 (-)4.74

7.2 The Board of Directors has recommended a Dividend of 190% for the financial year 2012-13 which works out to Rs.19.00 per share of Rs. 10/- each.

7.3 In terms of extant guidelines, the Bank will pay the Dividend Distribution Tax for the Financial Year 2012-13. Accordingly the total outflow on account of Dividend for the year 2012-13 will be Rs. 333.90 crore including the Dividend Distribution Tax

7.4 Out of the Net Profit a sum of Rs. 698.80 crore was transferred to Statutory & General Reserves, Rs. 343 crore was transferred to Special Reserve, Rs. 39.88 crore to Capital Reserve, Rs. 4.09 crore to Investment Reserve and Rs. 15 crore was set-aside for Staff Welfare Fund.

8. Net Worth and CRAR

8.1 The Net Worth of the Bank improved to Rs. 9566 crore as on 31st March, 2013 from Rs. 8216 crore as on 31st March 2012.

8.2 The Bank has issued and allotted 4185131 Equity shares of the face value of Rs. 10/- each at an issue price of Rs.426.32 per share, amounting to Rs. 204.00 crore for infusion of capital by Government of India on preferential basis, to further strengthen its CRAR under Tier I capital. Further there is plough back of profit amounting to Rs. 1085.11 crore for the year 2012-13 under Tier I capital. Under Tier-I and Tier-II, no fresh bonds were issued during the year 2012-13.

8.3 The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 11.38% (Basel I) as on 31st March, 2013 as against 11.94% as on 31st March, 2012 which is above the norm of 9% stipulated by Reserve Bank of India. The CRAR as per Basel II guidelines works out to 12.33%.

8.4 The CRAR under Basel I declined from 11.94% as on 31.03.2012 to 11.38% as on 31.03.2013. Tier-I capital ratio (Basel I) improved marginally and stood at 1.69% as on 31.03.2013 as against 1.65% as on 31.03.2012 and Tier II capital ratio (Basel I) declined from 4.29% to 3.69% during the year. Under Basel II, the CRAR declined from 13.00% to 12.33% with a Tier I capital ratio of 8.33% at par with previous year and Tier II capital ratio declined from 4.61% to 4.00% during the year as under:

I Basel I II Basel II

Category March March March March 2012 2013 2012 2013

Tier-I Capital 1.65% 1.69% 8.33% 8.33%

Tier-II Capital 4.29% 3.69% 4.61% 4.00%

Total 11.94% 11.38% 13.00% 12.33%

8.5 The Return on Equity, Earnings Per Share and Book Value per Share for the Financial Year 2012-13 stood at 16.27%, Rs. 96.74 and Rs. 645.76 respectively, as against 18.20%, Rs. 101.67 and Rs. 558.69 respectively for the previous Financial year.

9. Consolidated Accounts

9.1 As per RBI guidelines, the Bank has consolidated the financial accounts as at 31st March, 2013 with those of its wholly owned Subsidiary viz., Corp Bank Securities Ltd. As per the consolidated statement as on 31st March, 2013, the Net Worth of the Corp Bank group stood at Rs. 9603 crore as compared to Rs. 8345 crore as at 31st March, 2012. The consolidated Operating Profit and Net Profit for the financial year 2012-13 are Rs. 3050.37 crore and Rs. 1443.24 crore, respectively compared to Rs.2869.79 crore and Rs. 1518.39 crore, respectively for the financial year 2011-12. The Bank has complied with the RBI guidelines and the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

10. Bank''s Service Outlets

10.1 The Bank''s total service outlets crossed 6600 mark during the year ending 31st March 2013 to reach 6677 service outlets, comprising of 1707 branches, 1425 ATMs and 3545 Branchless Banking Units across the country. Out of these 207 branches, 151 ATMs and 155 Branchless banking Units were opened during the year. The Bank is also having its representative offices at Hongkong and Dubai.

10.2 To improve the administration and ensure faster decisions in the matters relating to business development, 6 new Circle Offices headed by General Managers were opened during the year at Mumbai, Delhi, Bangalore, Chennai, Kolkata and Ahmedabad. The Circle offices will function as an extended arm of the Corporate Office, better equipped to support and drive business development plans of the Zonal Offices in their Command area. The Corporate office functions that are delegated to Circle offices are Planning, Development and Resource Mobilisation, Credit Sanctions, Credit Risk Management, Recovery and Legal, Human Resource Management, Support Services and Inspection and Audit. The circle offices have commenced functioning effective from May 1, 2012.

11. Advertisement and Publicity

11.1 During the year, concerted efforts were made for brand and image building of the Bank. The Bank continued to disseminate messages on its products, services, interest rates and its performance to the customers, shareholders and the general public through advertisements and publicity in newspapers, periodicals, TV channels, FM radio stations, hoardings, translites, website, ATMs etc.

12. Government Business

12.1 The total Direct/Indirect tax collections of the Bank for the year ended 31st March 2013, reached Rs.43136 crore from 15.87 lakh challans, as compared to Rs. 38039 crore from 12.68 lakh challans collected during the corresponding period last year. The total State tax collections for the year ended 31st March 2013 reached Rs.4919 crore from 3.62 lakh challans, as compared to 3139 crore from 2.3° lakh challans collected during the corresponding period last year.

12.2 The Bank has earned an aggregate income of Rs.8.88 crore under Government Business during the FY ended March 2013 as against Rs.9.95 crore earned during the corresponding previous year. The downward revision of commission by the Reserve Bank of India in case of e-payments from Rs.45 per challan earlier to Rs.12 per challan impacted the income generated out of tax collection.

12.3 Some of the new initiatives undertaken by the Bank during the year are - commencement of collection of State VAT in the States of Uttar Pradesh, West Bengal and Tamil Nadu, Setting up of the Centralised Pension Cell at Corporate Office commencing online payment of pension to defense pensioners effective from July 2012 and Obtention of approvals from Indian Railways for taking up New Pension System and e-payment of freight and the process is on to launch these products.

13. Corporate Social Responsibility:

13.1 As a responsible Corporate citizen, the Bank initiated several welfare measures aiming at the under privileged section of the society in fulfillment of its commitment to social priorities, during the financial year 2012-13.

13.2 Support to Societal Concerns:

13.2.1 Assistance to Charitable Institutions:

The Bank, on the occasion of its 108th Foundation Day, extended financial support by way of Donations to the following institutions involved in the service of the society:

a) Bhagwan Mahaveer Vikalang Sahayata Samiti, Jaipur, towards providing artificial limbs, calipers and other aids and appliances, free of charge to the disabled who are below the poverty line.

b) Vivekananda Education Centre, Hyderabad, to support 108 socially backward students belonging to under-privileged/below poverty line families to provide free education, uniforms, books and mid day meals etc.

c) Bharatiya Vidya Bhavan, Mangalore, towards maintenance of its building and upgrading of the existing infrastructure to carry out the educational and cultural activities more productively.

13.2.2 Supply of Books to Rural Libraries set up by the Bank: As part of its Centenary celebrations, the Bank had launched the project of setting up 100 rural libraries at identified rural centres across the country in association with local Village Panchayats/Educational Institutions, to be developed as Rural Knowledge Centres, The Project which culminated with the setting up of 100 rural libraries, has been well received by the rural users. The Bank supplied additional sets of books worth Rs. 10,000/- to each of these libraries during the year 2012-13. Aggregate value of the books supplied was Rs. 10 lakh.

13.2.3 Other CSR initiatives:

- "CorpBank Gold Medal Award" was given by the Bank to the Best Outgoing Student 2011-12 of NITK, Surathkal, as a mark of recognition of excellence in academics and extra- curricular performances.

- As part of 108th Foundation Day, the Bank organized more than 300 ''Wellness Camps'' across the country, providing free health check-up facilities for all the people.

- Blood Donation Camps were organized by the Bank at its Head Office and Zonal Offices, in co-ordination with the local medical colleges, to provide free blood to the needy patients.

- The Bank organized a free Summer Camp for the young Golf enthusiasts at Pilikula Golf Club, Mangalore and three promising youngsters were sponsored by the Bank for pursuing higher training for one year.

13.3 The Bank has also involved itself with several initiatives in the field of Education, Development of infrastructure, Rural development, Health and Hygiene and Promotion of Art and Culture. The Bank supported many institutions who have been serving the Destitute, Orphans, Senior citizens and Special Children, etc. by funding the rehabilitation projects during the year.

13.4 Corporation Bank Self Employment Training Institute [COBSETI]

The Corporation Bank Self Employment Training Institute, established on 22.03.1996 in Chikmagalur, is an institute sponsored by the Bank to cater to the training needs of the rural un-employed youth hailing from the districts of Chikmagalur and Kodagu, where the Bank has the Lead Bank responsibility. The training is imparted free of cost with free boarding and lodging to the trainees. The trained youths are also assisted in getting credit facilities from banks to set up self-employment ventures. 23119 candidates have been trained in the institute since inception. 9323 candidates were trained under regular EDPs, of which 6233 have settled indicating a success rate of 61%. The Bank has incurred an expenditure of Rs. 11.01 lakh during the year of which Rs. 13.40 lakh has been reimbursed by NABARD/Govt./ ZPs etc. The Bank has established one more COBSETI at Kodagu which has started functioning from the Bank''s Lead Bank Office at Madikeri. The Bank has approved a financial grant of Rs. 1.01 crore for construction of the building and providing amenities to the Kodagu unit. The institute is managed by Governing body at apex level and local advisory committee at local level. COBSETI, Chikmagalur has been graded as A Training Institute by the Ministry of Rural Development, Government of India for the year 2012.

13.5 Corporation Bank Economic Development

Foundation [CBEDF]

The Corporation Bank Economic Development Foundation® a non-profit economic outfit Trust was launched in the year 1992 and continues to fulfill its social obligation in tune with corporate mission. The objective ofthe trust is to carry out or assist in carrying out economic development activities to help people realize their full potential for economic advancement, social development and to raise quality of their life. Financial grants to the extent of Rs. 92.81 lakh were disbursed for execution of more than 12 projects of social concerns during the year 2012-13. The areas of assistance included providing of vehicle for Mid day meal project of Akshaya Patra Foundation, providing life saving equipments to Government hospitals/Red Cross Society, infrastructure facilities such as clean drinking water, health and sanitary to schools, class rooms to schools, furniture, Ambulance for NGOs for relief measures to Endosulphan affected victims in Kerala etc.

13.6 "Gramina Abhyudaya Financial Literacy and Credit Counseling Trust "[GAFLCC Trust]

13.6.1 Based on the directions of the Reserve Bank of India to form the model scheme on Financial Literacy and Credit Counseling, the bank established "Gramina Abhyudaya Financial Literacy and Credit Counseling Trust"[GAFLCC Trust] for Establishment of "Financial Literacy-cum-Credit Counseling Centres" [ FLCCs] at various locations. The scheme envisages educating people who are yet to avail the Banking services, about the usefulness of the Bank account for all their economic needs and empowerment. As on 31.03.2013 GAFLCC Trust has established 4 District level and 11 Block level FLCC centers as detailed below:

Sl. No. Office/ center/ District Place Date of opening

1. Registered Office Udupi 18.08.2011

District level FLCCs

1. Chikmagalur Dist. Chikmagalur 22.11.2011

2. Kodagu Madikeri 23.11.2011

3. Ramanagara Ramanagara 19.01.2012

4. Udupi Udupi 12.03.2011

Block level FLCCs : 11 Centers

13.6.2 The Bank has approved an expenditure budget of Rs. 76.55 Lakh for meeting the capital and recurring cost of the trust and for establishment of new centers, during the year 2012-13. The Trust has conducted 893 Financial Literacy Camps at schools, colleges, other institutions, SHGs and others, involving 85194 persons. The trust has also conducted credit counseling to 5466 persons in the villages of whom, 4734 were women.

14. Progressive use of Official Language:

14.1 The Bank ensures compliance of the directives of Government of India and RBI with regard to Official Language implementation.

14.2 The overall performance of the Bank in the field of official language implementation during the year 2012-13 has been very good. Hindi workshops and trainings were also conducted on a regular basis for the benefit of staff members. The Bank has developed Rajbhasha Portal in its intranet which serves as a single point reference for all Official Language implementation related directions and guidelines.

14.3 The Bank is the convener of the Town official Language Implementation Committee (TOLIC), Mangalore, Belgaum & Nellore. Various activities including workshops are conducted for the benefit of staff members of member organisations. The Bank is also the convener of the Official Language Committee of South Based Public Sector Banks. The Bank hosted National Level Seminar in Hindi on Productivity Efficiency in Banking Industry under the auspices of College of Agricultural Banking, Reserve Bank of India.

14.4 As part of its efforts to popularize Hindi among staff and general public, the Bank organized "Indradhanush"- a cultural programme, "Sanskritik Sandhya", a cultural evening staging Munshi Premchand''s Stories by Ideal Drama & Entertainment Academy and "Vivek Darshan", a Musical Monologue on Swami Vivekananda, by renowned singer and actor, Shri Shekhar Sen, on the occasion of his 150th birth anniversary. The Bank also published a booklet on Swami Vivekananda and a book titled "Aradhana", during the year.

14.5 The Bank has received various awards and accolades from Government of India and the Reserve bank of India for Official Language Implementation. The Bank''s quarterly Hindi house magazine "Mangala" received award under RBI''s Inter Bank House Magazine competition.

15. Performance of Subsidiaries and other units sponsored by the Bank

15.1 Corp Bank Securities Limited: The Bank''s wholly owned subsidiary, Corp Bank Securities Limited (CBSL) has earned a total income of Rs. 13.81 crore, posted Profit Before Tax ofRs. 13.37 crore and Profit After Tax of Rs. 8.57 crore (mainly on account of tax provision of Rs. 2.66 crore, and reversal of deferred tax asset of Rs. 4.22 crore) for FY 2012-13, while the corresponding figures for FY 2011-12 were Rs. 14.20 crore, Rs. 13.81 crore and Rs. 12.07 crore (mainly on account of tax provision of Rs. 2.81 crore and reversal of deferred tax asset of Rs. 2.10 crore) respectively. The Paid up Equity Share Capital remained at Rs. 15 crore as on 31.3.13, while the Net worth stood at Rs.111.83 crore, after the payment of interim/final dividend of Rs. 30 crore and dividend distribution tax of Rs. 4.81 crore thereon and after plough back of surplus. The Earning per Share for fiscal ended March, 2013 was Rs. 1.14 while it was Rs. 1.61 for fiscal ended March 2012. The Company continues to pursue its activity of distribution of Mutual Fund Products and trading in Certificate of Deposits, etc.

15.2 Chikmagalur—Kodagu Grameena Bank [CHIKO Bank] : As per the notification dated 01.11.2012 issued by the Government of India, Ministry of Finance, Department of Financial Services, the Regional Rural Bank sponsored by the Bank and established on 28th April 1984, was amalgamated with the Regional Rural Bank sponsored by State Bank of Mysore and the amalgamated entity is renamed as "Kaveri Grameena Bank", with its Head Quarters at Mysore.

16. Constitution of Board of Directors

16.1 The following changes have taken place in the Board of Directors of the Bank during the year ended 31st March, 2013.

16.2 Shri B. K. Srivastav was appointed by the Central Government as Executive Director of the Bank and he assumed office on 28th January 2013.

16.3 The following members retired from the Board of the Bank during the period:

- Shri Ashwani Kumar retired as Executive Director on 31.12.2012

- Shri Raj Kumar Agrawal retired as Chartered Accountant Director on 28.12.2012 upon his resignation.

16.4 The Board places on record its appreciation for the guidance and counsel received from Shri Ashwani Kumar and Shri Raj Kumar Agrawal, during deliberations of the Board/Committees of the Board and also in the conduct of the Bank''s business during their tenure of office as Directors of the Bank.

17. Directors'' Responsibility Statements

The Directors confirm that in the preparation of the Annual Accounts for the year ended 31st March, 2013 —

17.1 The applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any.

17.2 The Accounting Policies framed in accordance with the guidelines of the Reserve Bank of India were consistently applied.

17.3 Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the Financial Year and of the profit of the Bank for the year ended on 31st March, 2013.

17.4 Proper and sufficient care was taken for the maintenance of adequate Accounting Records in accordance with the provisions of applicable laws governing Banks in India and the accounts have been prepared on a going concern basis.

17.5 Proper systems were in place to ensure compliance of all laws applicable to the Bank.

18. Acknowledgements

18.1 The Directors thank the shareholders, valued customers, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

18.2 The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Karnataka, Reserve Bank of India, Securities and Exchange Board of India (SEBI), BSE, NSE, NSDL, CDSL, various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

18.3 The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realisation of the corporate goals in the years ahead.

For and on behalf of the Board of Directors

Place : New Delhi (Ajai Kumar)

Date : 23.05.2013 Chairman & Managing Director


Mar 31, 2010

1. The Board of Directors have pleasure in presenting the Annual Report together with Balance Sheet and Profit and Loss Account of the Bank for the year ended 31st March, 2010.

2. Performance at a glance :

2.1 The aggregate business of the Bank crossed another milestone mark of Rs. 150,000 crore during the financial year 2009-10. The total business of the Bank increased by Rs.33,440 crore to reach Rs.155,936 crore at the end of the year 2009-10, from Rs. 122,496 crore at the end of previous financial year 2008-09, recording a growth rate of 27.30%.

2.2 The total deposits of the Bank have grown by Rs. 18,750 crore from Rs.73,984 crore as on 31st March, 2009 to Rs.92,734 crore as on 31st March, 2010, registering a growth rate of 25.34%.

2.3 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The advances of the Bank increased by Rs. 14,691 crore from Rs.48,512 crore as on 31st March, 2009 to Rs.63,203 crore as on 31st March, 2010, registering a growth rate of 30.28%. During the year, focused attention was given for accelerated lending under agriculture, SSI and midsize corporate segments for expansion of credit.

2.4 The performance of the Bank under recovery of NPAs during the year continued to be good. During the year, the Bank effected a cash recovery and up gradation of NPAs of Rs.320.08 crore compared to Rs.278.45 crore in the previous year.

2.5 While the encouraging performance in different functional ateas during the year 2009-10 resulted in increased earnings in absolute terms, the margins were under pressure and the interest spread declined to 2.41% as on 31st March, 2010 compared to 2.43% during the previous year.

3. Income Analysis

3.1 Interest income of the Bank recorded a growth of Rs.1,227.25 crore (20.23%) from Rs.6,067.35 crore in the year 2008-09 to Rs.7,294.60 crore , as against the interest expenses which grew by 16.18% from Rs.4,376.37 crore during the year 2008-09 to Rs.5,084.35 crore during the year 2009-10. The Net Interest Income recorded a growth of Rs.519.27crore [30.71%] during the same period.

[Rs. in crore] 2008-09 2009-10 Change in %

Interest Income 6,067.35 7,294.60 20.23

Interest Expenditure 4,376.37 5,084.35 16.17

Net Interest Income 1,690.98 2,210.25 30.71

Fees, Commission & Other 1,107.22 1,186.43 7.15 Revenue

Operating Income 2,798.20 3,396.68 21.38

Operating Expenses 1,046.58 1,259.95 20.39

Operating Profit 1,751.61 2,136.73 21.98

Provisions & Contingencies- 365.37 474.43 29.85 (Excl. Tax)

Profit before Tax 1,386.25 1,662.30 19.91

Provision for Tax 493.48 492.05 (-)0.29

Net Profit 892.77 1,170.25 31.08





3.2 The total income [total of interest income and non-interest income] of the Bank improved to Rs.8,481.03 crore during the year 2009-10 from Rs.7,174.57 crore in the previous year recording a rise of Rs. 1,306.46 crore [18.21 %].

3.3 Non-interest Income increased by Rs.79.21crore [7,15%] from Rs. 1,107.22 crore in the financial year 2008-09 to Rs.1,186.43 crore in the financial year 2009-10. The share of total Non-Interest Income to Total Income stood at 13.99%. The Non-Interest Income from the core areas (viz. commission, exchange and brokerage etc.) increased from Rs.448.90 crore to Rs.645.82 crore in FY 2009-10 recording a growth rate of 43.87%.

3.4 The Net Income from operations [Interest Spread plus Non-interest Income] has increased to Rs. 3,396.68 crore in the financial year 2009-10 from Rs. 2,798.20 core in the financial year 2008-09 recording a growth of 21.39%.

3.5 The Operating Expenses have shown an increase of 20.39% during the financial year 2009-10 and stood at Rs.l,259.95crore as compared to Rs. 1,046.58 crore in 2008-09.

3.6 The Cost to Income ratio (operating expenses to Net Operating Income) has come down from 37.40% for the financial year 2008-09 to 37.09% in the financial year 2009-10.

4. Spread Analysis

[Rs. in crore] Growth 2008-09 2009-10 Absolute %

Average Working 69,500.00 91,750.00 22,250.00 32.01 Working Funds

Total Interest 60,67.35 7,294.60 1,227.25 20.23 Income

Total Interest 4,376.37 5,084.35 707.98 16.18 Expended

Interest Spread 1,690.98 2,210.25 519.27 30.71

Yield on Funds 8.73% 7.95%

Cost of Funds 6.30% 5.54%

Netlnterest 2.43% 2.41% Margin



5. Operating Profit

5.1 The Operating Profit for the financial year 2009-10 stood at Rs.2,136.73 crore as compared to Rs. 1,751.62 crore in the financial year 2008-09 registering an increase of Rs.385.11 crore [21.99%].

5.2 The Asset Utilisation Ratio [percentage of Operating Profit to Average Working Funds] stood at 2.33% for the financial year 2009-10 compared to 2.59% for the financial year 2008-09.

6. Provisions

6.1 The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs.966.48 crore in the financial year 2009-10 as compared to Rs.858.85 crore in the financial year 2008-09.

7. Net Profit and Dividend

7.1 The Bank registered a Net Profit of Rs. 1170.25 crore for the financial year 2009-10 compared to Rs.892.77 crore in the financial year 2008-09.

Year Net Profit Growth % [Rs. in crore]

2007-08 734.99 37.09

2008-09 892.77 21.47

2009-10 1,170.25 31.08



7.2 The Board of Directors has recommended a dividend of 165% for the financial year 2009-10 which works out to Rs. 16.50 per fully paid-up share of Rs.10/- each.

7.3 In terms of extant guidelines, the Bank will pay the dividend distribution tax for the financial year 2009-10. Accordingly the total outflow on account of Dividend for the year 2009-10 will be Rs.276.89 crore including the dividend distribution tax.

7.4 Out of the Net Profit a sum of Rs.580.13 crore was transferred to Statutory & General Reserves and Rs. 15 crore was set-aside for StafFWelfare Fund.

8. Net Worth and CRAR

8.1 The Net Worth of the Bank improved to Rs.5,775 crore as on 31st March, 2010 from Rs.4,85>7 crore as on 31st March 2009.

8.2 For the year ended 31.03.10, the Bank has raised bonds aggregating to Rs.2,050 crore [Rs.500 crore under Tier-I and Rs.1,550 crore under Tier-II] for strengthening the capital adequacy and enhancing the long term resources of the bank.

8.3 The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 15% (Basel I) as on 31st March, 2010 as against 13.66% as on 31st March, 2009 which is much above the norm of 9% stipulated by Reserve Bank of India. The CRAR as per Basel II guidelines works out to 15.37%

8.4 The Tier-I component of CRAR under Basel I is 9.03% as on 31st March, 2010 compared to 8.93% as on 31st March, 2009.

Basel I Basel II March March March March 2009 2010 2009 2010

Ticr-I Capital 8.93% 9.03% 8.89% 9.25%

Tier-II Capital 4.73% 5.97% 4.72% 6.12%

Total 13.66% 15.00% 13.61% 15.37%



8.5 The Return on Equity, Earnings Per Share and Book Value per Share for the Financial Year 2009-10 stood at 20.26%, Rs.81.58 and Rs.402.60 respectively, against 18.23%, Rs.62.24 and Rs.341.36 respectively for the previous year.

9. Consolidated Accounts

9.1 As per RBI guidelines, the Bank has consolidated the financial accounts as at 31st March, 2010 with those of its wholly owned Subsidiary viz., Corp Bank Securities Ltd. As per the consolidated statement as on 31st March, 2010, the Net Worth of the Corp Bank group stood at Rs.5832 crore as compared to Rs.4,942 crore as at 31st March, 2009. The consolidated Operating Profit and Net Profit for the year 2009-10 is Rs.2,146.03 crore and Rs. 1,181.35 crore, respectively compared to Rs. 1,805.79 crore and Rs.900.32 crore, respectively for the year 2008-09. The Bank has complied with the RBI guidelines and the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

10. Branch Network

10.1 The Banks network spread across 3,434 functional units comprises of 1,155 branches, 1,079 ATMs and 1,200 Branchless Banking Units across the country. Out of which 101 branches, 48 ATM units and 411 Branchless banking Units opened during the year. The Bank is also having its representative offices at Hongkong and Dubai.

11. Advertising and Publicity

11.1 During the year, concerted efforts were made for brand

Building and the Bank continued to communicate messages on its products, services, interest rates and the performance to the customers, shareholders and the general public through advertisements and outdoor publicity units.

12. Government Business

12.1 Tax collections of the Bank for the year ended March, 2010 stood at Rs.33,149 crore as against Rs.37,659 crore during the corresponding period of the previous financial year. Number of challans in Indirect Tax and Sales Tax has registered increase when compared to previous year.

12.2 In the area of Tax collections and others (E-stamping, Pensions etc.) for the year ended March, 2010, the bank has earned an income of 6.62 crore.

13. Corporate Social Responsibilities - CSR Activities

13.1 The Bank initiated several welfare measures focusing on the society at large, to fulfill its commitment to social priorities as a responsible corporate citizen.

13.2 The Bank launched CorpCompassion scheme in 2008, with a societal concern to extend compassionate support to various humanitarian and social welfare activities of charitable institutions all over the country by donating Rs.10/- per new Savings Bank account opened during the Savings Bank Campaign, 2008 and the corpus thus mobilised is used for helping 40 identified charitable institutions across the country were considered to support their activities.

13.3 As part of its Centenary celebrations, the Bank had launched the project of setting up of 100 rural libraries, to be developed as Rural Knowledge Centres, in association with Village Panchayats/Educational institutions in a phased manner. The project, which culminated with the setting up of 100 rural libraries, has been well received by the rural users. The Bank, as per the scheme, also supplied additional sets of books worth Rs. 10,000/- each during 2009-10 to all 100 libraries.

13.4 As part of its Rural Development scheme, the Bank supported 15 eligible economically backward students of identified villages across the country with educational scholarships to pursue higher/technical education.

13.5 The Bank instituted The Best Outgoing Student Awards in 25 identified educational institutions under its CorpBank Gold Medal Scheme for promoting excellence, both in the academic and extra-curricular activities. As per the scheme,

Medal weighing 8 grams gold [99.9 pure] have been awarded to the Best Outgoing Students of the identified institutions across the country.

13.6 The Bank extended donation towards fully equipped Ambulance to Chirantana Charitable Trust Regd., Suratkal and Little Sisters of the Poor, Mangalore, construction of additional building of Dr. Giridhar Rao-Sanjeevi Bai Vriddhashrama, Mangalore, Shree Navchetan Andhjan Mandal, Madhapar and. Saanidhya- Residential School for Special Children, Mangalore, and sponsoring of 40 wheel chairs to the needy poor patients through Mata Amritanandamayi Math.

13.7 The Bank took initiatives to help providing quality medical facilities with modern medical equipments, upgrading of the existing facilities and innovative calipers for Polio victims, with an aim to benefit the needy economically weaker section of the society, in hospitals serving at Chennai, Ernakulam, Haridwar, Bangalore and Hyderabad.

13.8 The Bank organised voluntary Blood Donation camps at its Corporate Office, Mangalore and at the 19 Zonal Office centres in association with the local Red Cross Society.Hospitals and other NGOs as part of the Foundation Day Celebrations and collected blood for donation to the needy patients.

13.9 The Bank has also involved in several initiatives in the field of Education, development of infrastructure, Rural Development, Health and Hygiene, promotion of Art and Culture.

13.10 The Bank supported many institutions who have been serving the Dumb andDeaf, Blind and Physically Challenged, Destitutes and Orphans, Senior Citizens and Special Children, all over the country by funding their rehabilitation projects.

13.11 The Bank funded several projects for providing basic hygienical facilities like toilets, clean drinking water facilities in schools/colleges. Several institutions were provided with Computers, LCD projectors and IT. related accessories to provide modern computer education to rural students. ,

14. Corporation Bank Self-Employment Training Institute [COBSETI]

14.1 The Corporation Bank Self Employment Training Institute [COBSETI] established at Chikmagalur in 1996 is an institute sponsored by the Bank to cater to the training needs of the rural unemployed youth hailing from the districts

of Chikmagalur and Kodagu where the Bank has the Lead Bank responsibility. The training is imparted free of cost with free boarding and lodging to the trainees. Since inception to till 31.03.2010, the Institute has conducted 519 training programmes and trained 15,857 candidates, of which 8,084 candidates under Skill Development/regular programme and 7)773 under Govt, sponsored programmes like SHG, SGSY, PMRY etc. Out of 8,084 candidates under Skill development, 5,285 have become self-employed/settled, indicating a success rate of 65%. Out of 15,857 candidates, 10,463 are women, 1,072 are from minority communities and 2,884 belong to SC/ST communities. The process of establishment of one more COBSETI in Kodagu district is under progress for which the Government of Karnataka has recently granted about one acre of land near Kushalnagar.

15. Corporation Bank Economic Development Foundation

15>1 The Corporation Bank Economic Development Foundation ® was launched in the year 1992 as a non-profit economic outfit of the Bank and continues to fulfill its social obligation. Financial grants to the extent of Rs.29.61 lakh were disbursed during the year for execution of various projects of social concerns. The areas of assistance during the financial year included providing life saving equipments to Government hospital, infrastructure facilities such as clean drinking water, malaria control project, health and sanitary to schools, class rooms, computers, furniture, midday meal projects at various schools etc.

16. Progressive use of Official Language

16.1 The Bank achieved high standard in the matter of implementation of official language in its working. The Bank has received various awards and recognition from Reserve Bank, Government of India for die exemplary work in this direction. The Bank has been awarded Rajbhasha Shield for better implementation of official language. The quarterly Hindi house magazine of the Bank "Mangala" continues to get prize under RBIs Inter Bank Hindi House Magazine competition.

16.2. The Bank made substantial progress in the matter of bilingualisation of its computer applications. All the computers of the branches/Offices of the Bank have bilingual word processing facility.

16.3 The Bank regularly conducts Hindi workshops and training through Video Conference and computer training for all the O.L. Officers.

16.4 The Bank is the convener of the Town Official Language Implementation Committee, Mangalore. The committee has been awarded First Prize for the year 2008-09 for excellent performance in O.L. Implementation in Southern region by the Department of Official Language, Ministry of Home Affairs, and Government of India. The Bank is also the convener of the Official Language Committee of South Based Public Sector Banks. The committee has been conducting half yearly meetings regularly.

17. Performance of Subsidiaries and other units sponsored by the Bank

17.1 Corp Bank Securities Limited

The Banks wholly owned subsidiary, Corp Bank Securities Limited, (CBSL) has earned total income of Rs .9.40 crore, posted Profit before tax of Rs .9.20 crore and Profit after tax of Rs. 10.99 crore (after setoff various Tax Liabilities available provided to the tune ofRs. 1.79 crore pertain to earlier years) for 2009-10 while it was Rs.8.64 crore, Rs.8.29 crore and Rs.6.67 crore respectively for 2008-09. Income from its business operations has gone up to Rs.8.11 crore from Rs.0.97 crore. The Paid up Equity Share Capital remained at Rs.75 crore as on 31.3.10, while the tangible net worth after plough back of surplus has gone up to Rs.91.45 crore and the Return on Average Tangible Net worth improved to 12.61% for March 2010 as against 5.91% for March 2009. The Earning Per Share for fiscal ended March, 2010 was Rs. 1.47 while it was Rs.0.77 for fiscal ended March 2009. The Company is in the process of setting up Equity Broking Activity and would also pursue other business activities in the ensuing fiscal 2010-11 after securing approvals from its Board and other regulatory authorities.

17.2 Chikmagalur-Kodagu Grameena Bank [CHIKO Bank]

The Chikmagalur-Kodagu Grameena Bank, a Regional Rural Bank [RRB] sponsored by the Bank and established on 28.04.1984 has 52 branches. This year the Bank has celebrated 25 years of its fruitful existence. The deposits of the Bank stood at Rs.300.14 crore and advances at Rs.211.91 crore [gross advances] as at 31.03.2010. The Bank has posted a net profit of Rs.0.76 crore as at the year-ended 31.03.2010.

18. Constitution of Board of Directors

18.1 The following changes have taken place in the Board of Directors of the Bank during the year ended 31st March, 2010. -

18.2 Shri Narendra Singh has been appointed as the Executive Director of the Bank by Central Government and assumed office on 7th December, 2009.

18.3 Shri Lalit Kumar has j oined the Board as the Government of India nominee director on 9th December, 2009.

18.4 Shri Kaushik Kumar Ghosh joined the Board as the Officer Employee Director on 16th April, 2010.

18.5 Shri Raj Kumar Agrawal also joined the Board as Chartered Accountant category Director on 14th May, 2010.

18.6 The following members of the board retired from the Board during the period.

18.7 Shri Mukul Singhal retired from the Board on 8th December, 2009.

18.8 Shri T. Ramachandra Bhat retired from the Board of the Bank effective from 31.12.2009.

18.9 Shri S. Ravi resigned from the Board on 24.06.2009.

18.10 The Board places on record its appreciation for the guidance and counsel received from Shri Mukul Singhal, Shri T Ramachandra Bhat, Shri S. Ravi during deliberations of the Board/Committees of the Board and also in the conduct of the Banks business during their tenure of office as Directors of the Bank

19. Directors Responsibility Statements

The Directors confirm that in the preparation of the Annual Accounts for the year ended 31st March, 2010:

19.1 The applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

19.2 The accounting policies framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied.

19.3 Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for the year ended on 31 st March, 2010.

19.4 Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws Governing Banks in India and the accounts have been prepared on a going concern basis.

20. Acknowledgements

20.1 The Directors thank the valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

20.2 The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

20.3 The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for die progress of the Bank during die year and look forward to their continued co-operation in realisation of the corporate goals in the years ahead.

For and on behalf of the Board of Directors Place : Mangalore (J. M. Garg) Date: 01-06-2010 Chairman & Managing Director



 
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