Speech of
Sri P.T. KUPPUSWAMY
Managing Director & CEO
at the
90TH ANNUAL GENERAL MEETING
KARUR, 27TH JULY, 2009
Ladies and Gentlemen,
I take great pleasure in welcoming you all to the 90th Annual General Meeting of your Bank.
A copy of the Director’s Report and the audited accounts of the bank for the financial year ended 31st March, 2009 are already in your hands and with your permission, I shall take them as read.
Economic Overview: Fiscal 2008-09 was, by any standards, a very difficult one for the global economy. Financial institutions across the globe went through a period of great upheaval and several giant institutions across leading nations in America and Europe fell like nine pins, a situation that was reminiscent of the Great Depression. Though the situation is thankfully improving, it is still a long road to recovery.
Fortunately, the stringent controls and effective monitoring of the banks by the Reserve Bank of India ensured that Indian banks did not go the way other banks across the world did. Yet problems were aplenty. The economy could not sustain the high growth levels of about 9%, which had been the norm for the past few years. There was volatility in the foreign exchange rates, interest rates, money market and the stock market. Industrial growth fell, demand for capital and consumer goods plummeted, inflation rose to fantastic levels, lending and borrowing rates faced repeated upward revisions, export demand dropped, pink slips became common and there was an overall sense of despondency in the economy. In fact, it is to our credit that in spite of testing times, Indian Commercial banks have been able to post good results.
Business Performance: In spite of such trying circumstances, your bank has been able to do well. I am happy to inform you that your bank reached a milestone mark of Rs. 25000 cr. total business in March 2009, thereby becoming the first Tamilnadu based private sector bank to do so. Total business of the bank was at Rs. 25664.29 cr. as on 31.03.2009.
Deposits: Your bank’s deposits increased by 20.33% from Rs. 12549.99 cr. as on 31.03.2008 to Rs. 15101.39 cr. as on 31.03.2009. The growth in average deposits of the bank was by 25.36% at Rs.13246.74 cr. up from Rs. 10566.56 cr. a year ago. Improving the CASA base received more attention. With demand deposits at Rs. 1496.77 cr. and Savings Bank deposits at Rs. 1808.82 cr., the low cost deposits of your bank stood at 21.89% of total deposits. Recognizing the increasing financial clout of the youth in the development of the country, Fiscal 2008-09 had been designated as the Year of Youth. All steps were taken to improve the number of young customers in our clientele base. I am happy to inform you that the percentage of young customers to total customers improved from 32% to 37% during the course of the year, with nearly 50% of the new customer acquisition coming from the youth segment.
Advances: I am happy to inform you that your bank became the first Tamilnadu based private sector bank to cross the Rs. 10000 cr. mark under advances. Whereas your bank registered a 10.39% growth in advances to reach a level of Rs. 10562.90 cr. as on 31.03.2009, the growth of average advances was by 26.91%. Your bank adhered to the required norms under priority sector lending to net bank credit by achieving 40.10%. Focus of lending moved towards the SME sector even while retaining due share in the corporate and retail sectors.
NPA Management: The proactive action taken by your bank through system based Asset Classification and Income Recognition monitoring of the advances portfolio ensured identifying potential NPA accounts in time and prevent them from slipping into NPA category. While Gross NPA fell below 2% to 1.96% and stood at Rs. 205.86 cr., Net NPA was at 0.25% (Rs. 25.82 cr.). Significantly the effective monitoring and recovery systems have witnessed an arrest of the average incremental NPA to incremental advances since the past three years.
Forex: With the merchant turnover for the fiscal at Rs. 8323 cr., gross income from forex transactions improved from Rs. 86.86 cr. as of 31.03.2008 to Rs. 107.51 cr. this year. Export credit amounted to Rs. 559.98 cr.
Income and profits: The total income of the bank for the year ended 2008-09 rose from Rs. 1289.33 cr. to Rs. 1711.30 cr. registering a 32.73% growth. The operating profit of the bank was at Rs. 418.02 cr. Net profit for fiscal 2008-09 was at Rs. 235.84 cr. up from Rs. 208.33 cr. of the previous year.
Capital funds: The Net Owned Funds of your bank improved by 13.45% to Rs. 1350.16 cr. as on 31.03.2009 up from Rs. 1190 cr. a year ago.
Share capital: The paid-up capital of your bank stood at Rs. 53.95 Cr.
Capital adequacy: At the end of the fiscal, Capital Adequacy Ratio of the bank stood at 14.92%, based on Basel II norms, against the statutory requirement of 9%. As per Basel I norms, it was 13.08%.
Dividend: Your bank has been declaring dividend of 100% and more since 2004. Your directors are happy to recommend a dividend of 120% per equity share for fiscal 2008-09 also, subject to approval by the shareholders. The dividend shall be subject to tax on the dividend payable by the bank.
Branch and ATM network: Your bank kept up the agenda of improving its branch as well ATM network and added 23 new branches and 36 new ATMs to its network taking the number of branches and ATMs to 312 and 324 respectively.
Initiatives: FY 2008-09 saw your bank entering into arrangements with six leading Mutual Fund AMCs of the country to distribute their products. Demat customers were provided the facility to trade through our tie-up with M/s Religare Securities Ltd. Your bank has introduced several technological services, which include among others card to card and card to account funds transfer through ATMs, payment of institutional fees through ATMs, payment for purchasing airline tickets of Kingfisher through ATMs and on-line utility bill payment and shopping facilities through Internet Banking. 24 X 7 toll free professional help desk services for all ATM, Internet Banking, Mobile Banking and e-commerce transactions was also launched.
Recognitions: Your bank has been awarded the "Banking Technology Excellence Awards - 2008" for Best use of IT for Customer Service in Semi-Urban and Rural Areas by Institute for Development and Research in Banking Technology, Hyderabad. The award was received from the Governor of Reserve Bank of India, Dr. D. Subba Rao
Plans for 2009-10: Your bank has embarked on an ambitious plan to reach total business figure of Rs. 50000 cr. by March 2012. The targets for 2009-10 have been set with that goal in sight and your bank has set for itself a target level of Rs. 32200 cr. Focus will be on improving CASA and advances segments and emphasis will be on customer acquisition, particularly young customers.
Acknowledgements: We are extremely grateful to our stakeholders and customers for their continued support and encouragement to all our initiatives. We are also thankful to the Reserve Bank of India and other Government and Regulatory agencies for their guidance and support. Thanks are also due to all our partners in our business initiatives. The informed Board has also been a great support in the smooth functioning and over all development of the bank. As always, our dedicated work force has been ably assisting the Management in implementation of the various plans and campaigns which has enabled the bank to reach several milestones.
I thank you all for joining us this morning.
Thank you!
