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Directors Report of Indian Bank

Mar 31, 2015

The Members,

The Directors have immense pleasure in presenting the Bank''s Annual Report along with the Audited Statement of Accounts and the Cash Flow statement for the year ended 31 st March 2015.

FINANCIAL HIGHLIGHTS

The major highlights of your Bank''s performance during FY 2014-15 are as follows:

- Global Business of the Bank reached Rs. 2,98,056.96 crore during the year, registering a growth of 3.99 per cent.

- Total Deposits grew by Rs. 6 ,950.45 crore, or 4.28 per cent to Rs. 1,69,225.27 crore.

- Gross Advances at f1,28,831.69 crore, registered an increase of Rs.4 ,473.04 crore (3.60 per cent) as on 31.03.2015. Overall Credit-Deposit ratio was at 76.13 per cent.

- Priority Sector Advances at Rs.47,336.60 crore, grew by Rs.6 ,062.32 crore (14.69 per cent) as on 31.03.2015 and was 40.42 per cent of ANBC

- Agriculture Credit grew by Rs. 4,514.04 crore (23.55 per cent) to Rs.23,678.97 crore and accounted for 20.22 per cent of Adjusted Net Bank Credit (ANBC).

- In accordance with the priorities accorded by the Government of India, the Bank''s Advances to SC/STs reached Rs.2,149.41 crore as of 31st March 2015, constituting 5.06 per cent of total Priority Sector Advances.

- NetInterestMarginwasat2.50percentin FY2014-15.

- Operating Profit increased to Rs.3 ,013.71 crore as against Rs.2 ,900.60 crore in FY 2013-14, registering a growth of 3.90 per cent.

- Net Profit for FY 2014-15 was at Rs.1 ,005.17 crore as compared to Rs.1 ,158.95 crore for 2013-14.

- Return on Average Assets was at 0.54 per cent.

- Capital Adequacy Ratio (BASEL III) was at 12.86 percent as compared to 12.64 per cent as of March 2014.

- Return on Net worth for FY 2014-15 was at 8.34 percent, as compared to 10.22 per cent in FY2013-14.

- Gross NPAwas at 4.40 per cent as against 3.67 per cent in March 2014 while Net NPAwas at 2.50 per cent as against 2.26 per cent in March 2014.

- Total recovery of NPAs during FY 2014-15 amounted to Rs.753.74 crore as against Rs.625.13 crore in the previous year.

- Earnings per share were at Rs.21.62 and Book value was at Rs.261.46 during 2014-15.

- Total domestic branch network of the Bank in India increased to 2409 as on 31.03.2015. Besides, the Bank has 3 overseas branches, taking the total Branch Network to 2412.

- Total number of ATMs increased to 2344, which includes 599 offsite ATMs and customers can access more than 1,90,371 lakh ATMs in the shared network.

INCOME AND EXPENDITURE

- During the year, total income of the Bank increased by 3.58 per cent to Rs.17,216.28 crore, with interest income at Rs.15,852.93 crore.

- Net interest income at Rs.4 ,461.28 crore, registered a growth of 2.31 percent.

- The Bank''s total expenditure was at Rs.14,202.57 crore with interest expenditure at f 11 ,391.65 crore, an increase of Rs.502.86 crore or4.62 percent.

- Total operating expenses declined to Rs.2 ,810.92 crore for FY 2014-15 as compared to Rs.2 ,831.50 crore in FY 2013-14.

IMPORTANT RATIOS FOR THE PERIOD 2014-15 ARE AS UNDER:

(in per cent) Parameters 2014-15 2013-14

Yield on Advances 10.19 10.38

Return on Investments 7.31 7.43

Cost of Deposits 7.10 7.15

Return on Assets 0.54 0.67

Cost Income ratio 48.26 49.40

Business per employee (Rs. in lakh) 1443.40 1452.85

Profit per employee (Rs. in lakh) 4.95 5.97

DIVIDEND

- The Board of Directors has recommended a dividend of 42 per cent for FY 2014-15. The dividend shall be subject to tax on dividend to be paid by the Bank. The total outflow on account of dividend for FY 2014-15 is Rs.201.72 crore, excluding dividend tax. The payout ratio works out to 20.07 percent.

INFUSION OF EXTRA CAPITAL BY GOVERNMENT OF INDIA

- Hitherto, the Government of India was infusing capital into those banks that were having equity erosion. For FY 2014-15, Government adopted new criteria in which only banks which are more efficient would be rewarded with extra capital for their equity so that they can further strengthen their position.

- The efficiency parameter was based on the weighted average of return on assets (ROA) for all Public Sector Banks for the last three years and banks above the average have been selected for the equity infusion. The second parameter for capital infusion was return on equity (ROE) for the last financial year.

- Accordingly, Government of India infused capital of Rs.280 crore to Indian Bank. Following this infusion, Government holding in Indian Bank has gone up to 82.10 per cent.

- Out of this Rs.280 crore, Rs.15.44 crore was transferred to Share Capital Account and the remaining to Share PremiumAccount.

NET WORTH AND CRAR

- Networth of the Bank improved to Rs.12 ,557.73 crore as on 31.03.2015 from Rs.11535.58 crore as on 31.03.2014, registering a growth of 8.86 per cent.

- As per Basel III norms, the Capital to Risk weighted Assets Ratio (CRAR) was at 12.86 per cent as on March 2015, compared to 12.64 per cent as of March 2014, against the requirement of 9 per cent. The CRAR of Tier I capital was 10.61 per cent as of March 2015 as against 10.24 per cent asof March2014.

(in per cent) As on BASEL III March 2015 March 2014

Tier- I Capital 10.61 10.24

Tier-II Capital 2.25 2.40

Total 12.86 12.64

RECRUITMENT/TRAINING

- As per Government guidelines, during the process of direct recruitment and internal promotions, pre-recruitment and pre-promotion trainings were offered to SC/ST employees.

CHANGES IN THE BOARD DURING THE YEAR

- Dr N Srinivasa Rao was appointed as Government Nominee Director to the Board on November 25, 2014 in place of Smt. Sudha Krishnan who ceased to be Director from November24,2014.

- Shri B P Vijayendra was appointed as RBI nominee

Director to the Board on February 23, 2015 in place of Dr. Sathyan David who ceased to be Director from February 22,2015.

- Shri Vinod Kumar Nagar was appointed as Share Holder Director to the Board on July 01, 2014 in place of Shri. Chintaman Mahadeo Dixit who ceased to be Share Holder Director to the Board from June 30,2014.

- Shri Sriram Ramachandran was appointed as Share Holder Director to the Board on July 01, 2014 in place of Prof. Narendra Kumar Agrawal who ceased to be Share Holder Director to the Board from June 30,2014.

- Shri. Sanjay Maken ceased to be Non-Official Director to the Board from August 10,2014.

- Shri. Amarjit Chopra ceased to be Chartered Accountant Director to the Board from August 28,2014.

- Shri M Butchi Rami Reddy ceased to be Non-Official Director to the Board from September 21,2014.

DIRECTORS''RESPONSIBILITY STATEMENT

The Directors'' confirm that in the preparation of the annual accounts for the year ended March 31,2015: -

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

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

- 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 oftheBankforthe year ended March 31,2015.

- Proper and sufficient care were 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.

ACKNOWLEDGEMENT

The Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India and Securities & Exchange Board of India for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders. The Board places on record its appreciation for the valuable contribution made by Smt. Sudha Krishnan, Dr. Sathyan David, Shri. Chintaman Mahadeo Dixit, Prof. Narendra Kumar Agarwal, Shri. Sanjay Maken, Shri. Amarjit Chopra and Shri. M Butchi Rami Reddy, who ceased to be members during the year. The Board places on record its appreciation of the dedicated services and contribution made by members of staff for the overall performance of the Bank.

For and on behalf of Board of Directors MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER


Mar 31, 2014

The Directors have immense pleasure in presenting the Bank''s Eighth Annual Report of your Bank along with the Audited Statement of Accounts and the Cash Flow statement for the year ended 31st March 2014.

FINANCIAL HIGHLIGHTS

The major highlights of your Bank''s performance are as under:

- Global Business of the Bank reached Rs. 286,633 crore during the year, registering a growth of 15.1 per cent.

- Total Deposits grew by Rs. 20,295 crore, or 14.3 per cent for the year 2013-14 toRs.162,275 crore.

- Gross Advances at Rs. 124,359 crore, registered an increase of Rs. 17,203 crore (16.1 per cent) as on 31.3.2014. Overall Credit-Deposit ratio was at 76.63 per cent.

- Priority Sector Advances atRs.41,157 crore, grew byRs.4736 crore (13.0 per cent) as on 31.3.2014.

- Agriculture Credit grew by Rs. 2046 crore (12.0 per cent) to Rs.19,047 crore and accounted for 18.8 per cent of Adjusted Net Bank Credit (ANBC).

- In accordance with the priorities accorded by the Government of India, the Bank''s Advances to SC/ST reached Rs. 2165 crore as of 31st March 2014, constituting 5.25 per cent of total Priority Sector Advances.

- Net Interest Margin was at 2.60 per cent in FY 2013-14.

- Operating Profit was at Rs. 2901 crore, while Net Profit for FY 2013-14 was atRs.1159 crore.

- Return on Average Assets was at 0.67 per cent.

- Capital Adequacy Ratio (Basel II) was at 13.1 per cent.

- Return on Net worth for FY 2013-14 was at 10.22 per cent.

- Gross NPA was at 3.67 per cent as against 3.33 per cent in March 2013 while Net NPA was unchanged at 2.26 per cent in March 2014.

- Total recovery of NPAs (including AUC) during FY 2013-14 amounted to Rs. 625 crore as against Rs. 653 crore in the previous year.

- Earnings per share were at Rs. 26.07 and Book value per share was atRs.248.16 as of end-March 2014.

- Total domestic branch network of the Bank in India increased to 2250 as on 31.3.2014 and all the branches are under CBS. Besides, the Bank has 3 overseas branches.

- Total number of ATMs increased to 2123, which includes 511 offsite ATMs and customers can access more than 1.63 lakh ATMs in the shared network.

INCOME AND EXPENDITURE

- During the year, total income of the Bank increased by 9.5 per cent to Rs. 16,621 crore, with interest income constituting Rs. 15,249 crore. Growth in interest income was at 9.7 per cent.

- Net interest income was at Rs.4360 crore .

- On the Expenditure front, the Bank''s interest expenditure was at Rs. 10,889 crore, a growth of 16.2 per cent.

- Total Operating expenses at Rs. 2831 crore for FY 2013-14 has shown an increase of 2.93 per cent.

IMPORTANT RATIOS FOR THE PERIOD 2013-14 ARE AS UNDER:

(in per cent)

Particulars 2013-14 2012-13

Return on Average Assets 0.67 1.02

Average Cost of Funds 6.27 6.06

Average Yield on Advances 10.38 11.04

Net Interest Margin 2.60 3.09

Cost-Income Ratio 4940 4733

Book Value per Shared(Rs) 248.16 242.89

Business per employee(Rs.in lakh) 1452.85 1300.98

Profit per employees(Rs.in lakh) 5.97 8.38

DIVIDEND

- The Board of Directors has recommended a dividend of 47 per cent for FY 2013-14. The dividend shall be subject to tax on dividend to be paid by the Bank. The total outflow on account of dividend for FY 2013-14 is Rs. 243.2 crore, excluding dividend tax. The payout ratio works out to 20.2 per cent.

CONVERSION OF PERPETUAL NON CUMULATIVE PREFERENCE SHARES INTO EQUITY SHARES ALLOTTED TO GOVERNMENT OF INDIA

- The Bank after obtaining permission from Government of India (GoI) converted Perpetual Non Cumulative Preference Shares (PNCPS) of Rs. 400 crore (held by GoI) into equity shares.

- Bank made a preferential allotment of 3,50,78,488 equity shares of face value Rs. 10 each at Rs. 114.03 per share (including premium of Rs. 104.03) to GoI on February 10, 2014.

- Following the conversion, the Government holding in the Bank has gone up to 81.51 per cent (37,88,98,488 equity shares) from 80 per cent (34,38,20,000 equity shares).

NETWORTH AND CRAR

- Net worth of the Bank improved to Rs. 11535.58 crore as on 31.3.2014 from Rs. 10838.84 crore as on 31.3.2013, registering a growth of 6.43 per cent.

- As per Basel II norms, the Capital to Risk weighted Assets Ratio (CRAR) was at 13.10 per cent as on March 2014, compared to 13.08 per cent as of March 2013, against the requirement of 9 per cent. CRAR of Tier I capital was 10.51 per cent as of March 2014 as against 10.88 per cent in the previous year.

- As per Basel III norms, CRAR was at 12.64 per cent for March 2014 and Tier- I capital was at 10.24 per cent.

(in per cent) BASEL II As on BASEL III March 2014 March 2013 March 2014

Tier-I capital 10.51 10.88 Tier-I Capital 10.24 Tier-II Capital 2.69 2.20 Tier-II Capital 2.40 Total 13.10 13.08 Total 12.64

CHANGES IN THE BOARD DURING THE YEAR

- During the period under review, Shri. Mahesh Kumar Jain assumed charge as Executive Director on September 2013.

- Shri. Rajeev Rishi, Executive Director demitted office on July 31st 2013 on his elevation as Chairman and Managing Director, Central Bank of India.

- Smt. Sudha Krishnan was appointed as Government of India nominee to the Board on July 26th 2013 in place of

Dr. Rajat Bhargava who ceased to be Director from July 25th 2013.

- Dr. Sathyan David was appointed as RBI nominee to the Board on May 31st 2013 in place of Dr. N. Krishna Mohan who ceased to be Director from May 30th 2013.

- Shri P Venkata Krishna Rao was appointed as Workmen Employee Director on May 29th 2013 in place of Shri. M. Jayanath who ceased to be Director from April 29th 2013.

- Shri. Deepak D.Samant was appointed as Officers'' Employee Director to the Board on March 11th 2014.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2014 -

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

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

- 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 March 31, 2014.

- Proper and sufficient care were 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.

ACKNOWLEDGEMENT

The Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India and Securities & Exchange Board of India for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders.

The Board places on record its sincere appreciation of the valuable contribution made by Shri. Rajeev Rishi as Executive Director of the Bank from 01.10.2010 to 31.07.2013.

The Board places on record its appreciation of the valuable contribution made by Dr. Rajat Bhargava, Dr. N. Krishna Mohan, and Shri. M. Jayanath who ceased to be members during the year.

The Board places on record its appreciation of the dedicated services and contribution made by members of staff for the overall performance of the Bank.

For and on behalf of Board of Directors

CHAIRMAN AND MANAGING DIRECTOR


Mar 31, 2012

The Directors have great pleasure in presenting the Bank's Annual Report along with the Audited Statement of Accounts and the Cash Flow statement for the year ended 31st March 2012.

Financial Highlights

The major highlights of the Bank's performance are as follows:

-- Operating profit increased to Rs 3463.17 crore as against Rs 3291.68 crore for 2010-11.

-- Net profit for 2011-12 stood at Rs 1746.97 crore as compared to Rs 1714.07 crore for 2010-11.

-- Net Interest Margin was at 3.43 per cent.

-- Return on average assets was at 1.31 per cent.

-- Capital Adequacy Ratio was at 13.47 per cent as compared to 13.56 per cent as of March 2011.

-- Return on Net worth for FY2011-12 was at 18.73 per cent.

-- Earnings per share was at Rs 39.57 and Book value per share was Rs 214.94 during 2011-12.

-- Global Business of the Bank reached Rs 2,11,988 crore during the year, registering a growth of 16.8 per cent.

-- Total Deposits grew by Rs 15,000 crore to Rs 1,20,804 crore, a growth of 14.2 per cent for the year 2011-12.

-- Gross Advances were at Rs 91,184 crore, registering an increase of Rs 15,458 crore (20.4 per cent) as on 31.3.2012. Overall Credit Deposit ratio was at 75.5 per cent.

-- Priority Sector advances at Rs 30,027 crore, grew by Rs 4,058 crore (15.6 per cent).

-- Agriculture credit grew by Rs 2,306 crore (20.9 per cent) to Rs 13,354 crore and accounted for 18.47 per cent of Adjusted Net Bank Credit.

-- During 2011-12, total recovery of NPAs (including AUC) amounted to Rs 466.26 crore.

-- Gross NPA was at 2.03 per cent and Net NPA was at 1.33 per cent in March 2012.

-- Under Financial Inclusion project 5.98 lakh 'No-Frill' accounts have been opened.

-- Total domestic branch network of the Bank in India increased to 1955 as on 31.3.2012 and all the branches are under CBS. Besides, the Bank has 3 overseas branches.

-- Total number of ATMs increased to 1280, which included 357 offsite ATMs and customers can access more than 89,000 ATMs in the shared network.

Income and Expenditure

-- During the year, total income of the Bank increased to Rs 13,463 crore with interest income at Rs 12,231 crore.

-- Net interest income at Rs 4418 crore registered a growth of 9.5 per cent.

-- On the Expenditure side, the Bank's interest expenditure was at Rs 7813 crore, an increase of Rs 2488 crore or 46.7 per cent.

-- Total operating expenses at Rs 2187 crore for 2011-12 has shown an increase of Rs 260.67 crore or 13.53 per cent, when compared to Rs 1926.33 crore in 2010-11.

The income and expenditure for the period 2011-12 are given hereunder:

(Rs in crore) 2010-11 2011-12 Growth particulars Actuals Absolute %

Total Interest Income 9361.03 12231.32 2870.29 30.7

Total Interest Expenditure 5324.91 7813.32 2488.41 46.7

Net Interest Income 4036.12 4418.00 381.88 9.5

Net Operating Income 5218.01 5650.17 432.15 8.3

Operating Expenses 1926.33 2187.00 260.67 13.5

Operating Profit 3291.68 3463.17 171.49 5.2

Provisions & Contingencies 1577.61 1716.20 138.60 8.8 including depreciation on account of transfer of securities to HTM category

Net Profit 1714.07 1746.97 32.9 1.9

IMPORTANT RATIOS

(in per cent)

parameters 2010-11 2011-12

Yield on Advances 10.28 11.28

Yield on Investment 6.94 7.29

Cost of Deposits 5.41 6.68

Return on Assets 1.53 1.31

Cost Income ratio 36.92 38.71

Business per employee (Rs in lakh) 929.75 1114.23

Profit per employee (Rs in lakh) 8.88 9.30

DIVIDEND

-- The Board of Directors has recommended a dividend of 75 per cent for FY 2011-12. The dividend for financial year 2011-12 shall be subject to tax on dividend to be paid by the Bank. The total outflow on account of dividend for FY 2011-12 is Rs 362.33 crore excluding dividend tax. The total dividend payout ratio works out to 20.74% per cent.

NET WORTH AND CRAR

-- The Net worth of the Bank improved to Rs 9637.41 crore as on 31.3.2012 from Rs8326.55 crore as on 31.03.2011, reflecting a growth of 12.5 per cent

-- As per Basel II, the Capital to Risk weighted Assets Ratio (CRAR) is 13.47 per cent as of March 2012, compared to 13.56 per cent as of March 2011, against the requirement of 9 per cent.

-- The CRAR of Tier I capital was 11.13 per cent as of March 2012 as against 11.02 per cent as of March 2011.

(in per cent) As on March 2011 March 2012

Tier-I Capital 11.02 11.13

Tier-II Capital 2.54 2.34

Total 13.56 13.47

-- In accordance with the priorities accorded by the Government of India, the BankRss Advances to SC/STs reached Rs 2231 crore as on 31st March 2012 constituting

7.4 per cent of total Priority Sector advances.

-- Also, as per Government guidelines, during the process of direct recruitment and internal promotions, pre- recruitment and pre-promotion trainings were offered to SC/ST employees.

CHANGES IN THE BOARD DURING THE YEAR

-- During the period under review, Shri B Raj Kumar as- sumed charge as Executive Director with effect from January 1, 2012.

-- Shri. V RamaGopal, Executive Director demitted office on December 31, 2011 on superannuation.

-- Dr. N Krishna Mohan was appointed as the RBI nomi- nee to the Board on May 30, 2011. Shri Amarjit Chopra, Chartered Accountant, Part time Non Official Director was appointed on August 29, 2011. Shri Sanjay Maken and Shri Butchi Rami Reddy were appointed as Part time Non Official Directors on August 11, 2011 and on September 22, 2011 respectively.

-- Shri Chintaman Mahadeo Dixit was appointed Share- holder Director on July 01, 2011.

-- Shri S Karuppasamy and Shri. C K Ranganathan were Directors of the Bank upto 30.05.2011 and 30.06.2011 respectively.

DIRECTORS' RESpONSIBILITY STATEMENT:

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2012 -

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

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

-- 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 March 31, 2012.

-- Proper and sufficient care were 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.

ACKNOWLEDGEMENT

The Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India and Securities & Exchange Board of India for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders.

The Board places on record its sincere appreciation of the valuable contribution made by Shri V RamaGopal, as Executive Director of the Bank from 01.04.2011 to 31.12.2011.

The Board places on record its appreciation of the valuable contribution made by Shri S Karuppasamy and Shri. C K Ranganathan who ceased to be members during the year.

The Board places on record its appreciation of the dedicated services and contribution made by members of staff for the overall performance of the Bank.



For and on behalf of Board of Directors

CHAIRMAN AND MANAGING DIRECTOR


Mar 31, 2011

The Directors have great pleasure in presenting the Banks Annual Report along with the Audited Statement of Accounts and the Cash flow statement for the year ended 31st March 2011.

Financial Highlights

The Bank took forward its growth story and the major highlights are as follows:

- Operating profit increased to Rs.3291.7 crore as against Rs.2747.4 crore for 2009-10 registering a growth of 19.8 per cent.

Net profit for 2010-11 crossed the Rs.1700 crore mark and was at Rs.1714.1 crore as compared to Rs.1555 crore for 2009-10, showing a growth of 10.2 per cent.

- Net Interest Margin improved to 3.75 per cent from 3.55 per cent.

- Return on average assets was at 1.53 per cent.

- Capital Adequacy Ratio was at 13.56 per cent as compared to 12.71 per cent as of March 2010.

Return on Net worth for 2010-11 was at 21.50 per cent.

- Earnings per share was at Rs.38.79 and Book value per share was Rs.184.44.

- Global Business of the Bank crossed Rs.180,000 crore during the year and was at Rs.181,530 crore, registering a growth of 20.3 per cent.

Total Deposits grew by Rs.17,576 crore to Rs.105,804 crore, a growth of 19.9 per cent for the year 2010-11.

- Gross Advances were at Rs.75,726 crore, registering an increase of Rs.13,068 crore (20.9 per cent) as on 31.3.2011. Overall Credit Deposit ratio was at 71.6 per cent.

- Priority Sector Advances at Rs.25,969 crore, grew by Rs.4304 crore (19.9 per cent).

- Agriculture Credit grew by Rs.1904 crore (20.8 per cent) to Rs.11,048 crore and accounted for 18.57 per cent of Adjusted Net Bank Credit.

- The Bank scaled new heights in the recovery of NPA. During 2010-11, total recovery of NPA (including AUC) amounted to Rs.756.58 crore as against Rs.587.48 crore last year.

- Gross NPA was at 0.98 per cent as against 0.81 per cent for March 2010 and Net NPA was at 0.53 per cent as against 0.23 per cent in March 2010.

- Under Financial Inclusion project, a total of 1.53 lakh No-Frill accounts have been opened.

- Total domestic branch network of the Bank in India increased to 1860 as on 31.3.2011 and all the branches are under CBS. Besides, the Bank has 3 overseas branches.

- Total number of ATMs increased to 1128, which included 322 offsite ATMs and our customers can have access to 70000 ATMs in the shared network.

Income and Expenditure

- During the year, total income of the Bank increased to Rs.10542.9 crore with a strong growth in interest income to the tune of Rs.9361.0 crore or 21.4 per cent.

- Net interest income registered a rise to Rs.4036 crore (27.7 per cent).

- Core non-interest income increased to Rs.905.65 crore (26.7 per cent).

- On the Expenditure side, the Banks interest expenditure was at Rs.5324.9 crore, an increase of Rs.771.7 crore or 16.9 per cent.

- Total operating expenses at T1926.3 crore for 2010-11 has shown an increase of Rs.196.0 crore, an increase of 11.3 per cent, when compared to the level of Rs.1730.3 crore in 2009-10.

The income and expenditure for the period 2010-11 are given hereunder:

(Rs.. in crore)

Particulars 2009-10 2010-11 Absolute % Growth Growth

Total Interest Income 7714.37 9361.02 1646.65 21.4

Total Interest Expenditure 4553.18 5324.92 771.74 16.9

Net Interest Income 3161.19 4036.12 874.93 27.7

Net Operating Income 4477.60 5217.99 740.39 16.5

Operating Expenses 1730.25 1926.31 196.06 11.3

Operating Profit 2747.35 3291.68 544.33 19.8

Provisions & Contingencies 1192.36 1577.60 385.24 32.3 including depreciation on account of transfer of securities to HTM category

Net Profit 1554.99 1714.07 159.08 10.2

Spread Analysis

- The Banks Net Interest Income improved to Rs.4036 crore in 2010-11 from Rs.3161.2 crore in 2009-10, thereby registering a growth of 27.7 per cent.

- The increase in Interest Income led to an increase in Net Interest Margin to 3.75 per cent as of March 2011.

The Spread analysis is as under:

(Rs.. in crore)

Growth

Parameters 2009-10 2010-11 Absolute %

Interest Spread 3161.19 4036.12 874.93 27.7

Yield on Funds % 8.28 8.35

Cost of Funds % 4.89 4.75

Net Interest 3.55 3.75 Margin %

IMPORTANT RATIOS

(in per cent)

Parameters 2009-10 2010-11

Yield on Advances 10.71 10.28

Yield on Investment 6.35 6.91

Cost of Deposits 5.66 5.41

Return on Assets 1.67 1.53

Cost Income ratio 38.64 36.92

Business per employee (Rs. in lakh) 760.78 929.76

Profit per employee (Rs. in lakh) 7.92 8.88

DIVIDEND

The Board of Directors has recommended a dividend of 75 per cent for 2010-11. The dividend for financial year 2010-11 shall be subject to tax on dividend to be paid by the Bank. The total outflow on account of dividend for 2010-11 is Rs. 362.33 crore including dividend tax. The payout ratio works out to 21.1 per cent.

NET WORTH AND CRAR

- The Net worth of the Bank improved to Rs.8326.55 crore as on 31.3.2011 from n047.02 crore as on 31.03.2010, reflecting a growth of 18.16 per cent due to plough back of profits.

- As per Basel II, the Capital to Risk Weighted Assets Ratio (CRAR) is 13.56 per cent as of March 2011, compared to 12.71 per cent as of March 2010, against the requirement of 9 per cent.

The CRAR of Tier I capital was 11.02 per cent as of March 2011 as against 11.13 per cent as of March 2010.

(in per cent)

As on March 2010 March 2011

Tier-I Capital 11.13 11.02

Tier-ll Capital 1.58 2.54

Total 12.71 13.56

- In accordance with the priorities accorded by the Government of India, the Banks Advances to SC/ST reachedRs.1876.15croreasof31s,March2011 constituting 7.22 per cent of total Priority Sector advances.

- Also, as per Government guidelines, during the process of Direct Recruitment and Internal Promotions, Pre- recruitment and Pre-promotion trainings were offered to SC/ST employees.

- Periodical Quarterly Meetings were conducted and grievances, if any, were resolved then and there. The Cell also ensures prompt disposal of grievances/ representations of SC/ST employees. A Chief Liaison Officer in the rank of General Manager has been nominated for this purpose.

CHANGES IN THE BOARD DURING THE YEAR

During the period under review, Shri Rajeev Rishi assumed charge as Executive Director on October 1, 2010.

Shri. A S Bhattacharya, Executive Director demitted office on September 30, 2010 on his elevation as Chairman & Managing Director, Bank of Maharashtra.

Shri S Karuppasamy, was appointed as the RBI nominee to the Board on July 30, 2010. Shri M Jayanath, was appointed as the Workmen Employee Director of the Bank by the Government of India and assumed charge on April 21,2010.

Shri C R Gopalasundaram, Shri T T Natarajan, Shri G Charath Chandran and Mrs. Saria Khan were Directors of the Bank upto 29.07.2010, 21.11.2010, 13.01.2011 and 30.01.2011 respectively.

DIRECTORS RESPONSIBILITY STATEMENT:

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2011 -

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

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

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 March 31, 2011.

- Proper and sufficient care were 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.

ACKNOWLEDGEMENT

The Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India and Securities & Exchange Board of India for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders.

The Board places on record its sincere appreciation of the valuable contribution made by Shri A S Bhattacharya as Executive Director of the Bank from 01.04.2010 to 30.09.2010

The Board places on record its appreciation of the valuable contribution made by Shri C R Gopalasundaram, Shri T T Natarajan, Shri G Charath Chandran and Mrs. Saria Khan, who ceased to be members during the year.

The Board places on record its appreciation of the dedicated services and contribution made by members of staff for the overall performance of the Bank.

For and on behalf of Board of Directors CHAIRMAN AND MANAGING DIRECTOR


Mar 31, 2010

The Directors have great pleasure in presenting the Banks Annual Report along with the Audited Statement of Accounts and the Cash flow statement for the year ended 31st March 2010.

Financial Highlights

The Bank took forward its growth story and major highlights are as follows:

- Operating profit increased to Rs. 2747.35 crore as against Rs. 2,055.83 crore for 2008-09 registering a growth of 33.64%.

Net profit for 2009-10 crossed the Rs. 1500 crore mark and was at Rs. 1554.99 crore as compared to Rs. 1245.32 crore for 2008-09, showing a growth of 24.87% in the current year.

- Net Interest Margin improved to 3.71% from 3.54%.

- Return on average assets improved to 1.67% from 1.62% in 2008-09.

- Capital Adequacy Ratio was at 12.71% as compared to 13.98% as of March 2009.

Return on Networth for 2009-10 was at 23.74% as against 23.35% for 2008-09.

- Earnings per share was Rs. 35.09 and Book value per share was Rs. 154.66 during the current year.

- Global Business (Gross) of the Bank crossed Rs. 150000 crore during the year and stood at Rs. 1,50,886 crore registering a growth of 21.28%.

Total Deposits grew by Rs. 15646 crore to Rs. 88228 crore, a growth of 21.56%

- Gross Advances were at Rs. 62658 crore, registering an increase of Rs.10827 crore (20.89%) as on 31.3.2010. Overall Credit Deposit ratio was at 71.02%.

- Priority Sector Advances at Rs. 21665 crore, grew by Rs. 3239 crore ( 17.58%).

Agriculture Credit grew by Rs. 1306 crore ( 16.66%) to Rs.9144 crore and accounted for 18.73% of Adjusted Net Bank Credit (ANBC)

- The Bank scaled new heights in the recovery of NPA. During 2009-10, total recovery of NPA (including AUC) amounted to Rs. 587.48 crore as against Rs. 457.10 crore last year.

Gross NPA was at 0.81% as against 0.89% for March 2009 and Net NPA was at 0.23%.

- Under Financial Inclusion project, a total of 22.31 lakh No-Frills accounts have been opened in 4637 villages. Cumulatively, Overdraft / General Credit Card facility has been allowed in 52678 accounts to the tune of Rs.11.60 crore.

- Total Branch network of the Bank in India increased to 1756 as on 31.3.2010 and all the branches are under CBS.

- Total number of ATMs increased to 1005 which included 274 offsite ATMs and customers can have access to ATMs in the shared network.

Income and Expenditure

- During the year, total income of the Bank increased to Rs. 9030.78 crore with a strong growth in interest income to the tune of Rs. 1026.73 crore or 15.03 %.

- Net interest income registered a rise of Rs.695.36 crore (26.66 %).

- Other Income at Rs. 1173.72 crore registered an increase of 13.33 %.

- On the Expenditure side, the Banks interest expenditure was at Rs. 4553.18 crore an increase of Rs. 331.37 crore or 7.85 %.

- Total operating expenses at Rs. 1730.25 crore for 2009-10 has shown an increase of Rs. 142.12 crore, an increase of 8.92 %, when compared to the level of Rs. 1588.13 crore in 2008-09.

The income and expenditure for the period 2009-10 are given hereunder:

(Rs. in crore)

Particulars 2008-09 2009-10 Absolute % Growth Growth

Total Interest Income 6830.33 7857.06 1026.73 15.03

Total Interest Expenditure 4221.81 4553.18 331.37 7.85

Net Interest Income 2608.52 3303.88 695.36 26.66

Profit on sale of 194.77 217.63 22.86 11.74 Investments

Net Operating Income 3643.96 4477.60 833.64 22.88

Operating Expenses 1588.13 1730.25 142.12 8.95

Operating Profit 2055.83 2747.35 691.52 33.64

Provisions & Contingencies including depreciation on account of transfer of 810.51 1192.36 381.85 47.11 securities to HTM category

Net Profit 1245.32 1554.99 309.67 24.87

Spread Analysis

- The Banks Net Interest income improved to Rs. 3303.88 crore in 2009-10 from Rs. 2608.52 crore in 2008-09, thereby registering a growth of 26.66 %.

- The increase in interest income led to an increase in Net Interest Margin to 3.71% as of March 2010.

The Spread analysis is as under:

(Rs. in crore

Growth

Parameters 2008-09 2009-10 Absolute %

Interest Spread 2608.52 3303.88 659.36 26.66

Yield on Funds 8.90 8.44 %

Cost of Funds 5.50 4.89 %

Net Interest 3.54 3.71 Margin %

IMPORTANT RATIOS

(in per cent)

Parameters 2008-09 2009-10

Yield on Advances 11.02 10.71

Yield on Investment 7.61 6.84

Cost of Deposits 6.27 5.66

Return on Assets 1.62 1.67

Cost Income ratio 43.58 38.64

Business per employee (Rs in lakh) 616.78 760.78

Profit per employee (Rs in lakh) 6.23 7.92

DIVIDEND

- The Board of Directors recommended a dividend of 65% (including the interim dividend of 25%). The dividend for financial year 2009-10 shall be subject to tax on dividend to be paid by the Bank. The total outflow on account of dividend for 2009-10 is Rs.319.35 crore including dividend tax. The payout ratio works out to 20.54%

NETWORTH AND CRAR

- The Networth of the Bank improved to Rs.7047.02 crore as on 31.3.2010 from Rs. 5880.30 crore as on 31.03.2009 reflecting a growth of 19.84% due to plough back of profits.

- As per the Basel II the Capital Risk Weighted Assets Ratio (CRAR) is 12.71% as of March 2010, compared to 13.98% as of March 2009, against the requirement of 9%.

The CRAR of Tier I capital was 11.13% as of March 2010 as against 11.88% as of March 2009.

As on March 2009 March 2010

Tier-I Capital 11.88 11.13

Tier-ll Capital 2.10 1.58

Total 13.98 12.71

In accordance with the priorities accorded by the Government of India, the Banks Advances to SC/ST reached Rs.1667.08 crore as of 31st March 2010 constituting 7.69% of total Priority Sector advances.

Also as per Government guidelines, during the process of Direct Recruitment and Internal Promotions, Pre-recruitment and Pre-promotion trainings were offered to SC/ST candidates.

Periodical Quarterly Meetings were conducted and grievances, if any were resolved then and there. The cell also ensures prompt disposal of grievances/representations of SC/ST employees. A Chief Liaison Officer in the rank of General Manager is nominated for this purpose.

CHANGES IN THE BOARD DURING THE YEAR

During the period under review, Shri V Rama Gopal assumed charge as Executive Director on 07.12.09. Shri Shaktikanta Das and Shri G Charath Chandran joined the Board as Directors on 09.12.09 and 22.12.09 respectively.

Shri. M.S. Sundara Rajan, Chairman and Managing Director laid down office on 31.3.2010 on superannuation. Shri T.M. Bhasin assumed charge as Chairman and Managing Director of the Bank on April 01,2010.

Shri. A Subramanian Executive Director superannuated on June 30, 2009. Shri.P.Sudhakar Reddy, Shri. Ashok Gupta, Dr. G. Sudhakar Rao and Shri. Kumar Sanjay Krishna were Directors of the Bank upto April 03, 2009, September 25,2009, October 12, 2009 and December 08, 2009, respectively. DIRECTORS RESPONSIBILITY STATEMENT:

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2010 -

- The applicable accounting standards have been followed along with proper explanation relating to material departures, if any; *

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

- 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 March 31, 2010.

- Proper and sufficient care were 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.

ACKNOWLEDGEMENT

The Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India and Securities & Exchange Board of India for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders.

The Board places on record its sincere appreciation of the valuable contribution made by Shri M S Sundara Rajan, as Chairman and Managing Director of the Bank from 04.06.2007 to 31.03.2010.

The Board places on record its appreciation for the valuable contribution made by Shri ASubramanian, Shri.P.Sudhakar Reddy, Shri. Ashok Gupta, Dr. G. Sudhakar Rao and Shri.Kumar Sanjay Krishna, who ceased to be members during the year.

The Board placed on record its appreciation of the dedicated services and contribution made by members of staff for the overall performance of the Bank.

For and on behalf of Board of Directors CHAIRMAN AND MANAGING DIRECTOR



 
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