Speech delivered by
Sri P.T. KUPPUSWAMY
Chairman & CEO
at the
89TH ANNUAL GENERAL MEETING
KARUR, 24TH JULY, 2008
Ladies and Gentlemen,
I take great pleasure in welcoming you all to the 89th Annual General Meeting of your bank this morning.
A copy of the Director’s Report and the audited accounts of the bank for the financial year ended 31st March, 2008 is already in your hands and with your permission, I shall take them as read.
ECONOMIC OVERVIEW: India’s economic growth during 2007-08 was at 9%, making it three in a row when the growth levels have been at 9% and above. The agriculture and allied sectors lifted India’s growth as they grew by 4.5% during the fiscal as compared to earlier estimates of 2.6%. But the manufacturing sector witnessed a slow down with the growth rate at 8.8% as against the initial estimates of 9.4%. The performance of transport, communication, trade and hotels sectors was at 12%. While the performance of electricity and gas supply activities was at 6.3% that of the construction sector was at 9.8%.
The country’s balance of payments position was comfortable with foreign exchange reserves reaching USD 309.7 bn by the end of the financial year.
The Indian Rupee appreciated substantially against the US Dollar. It has since started declining in recent months. The bourses scaled fantastic heights in the course of the year before it began its descent during the latter portion of the fiscal. Inflation too began to flare up with the dawn of 2008. RBI stepped up its monetary controls by increasing CRR by 150 basis points. The regulator’s intervention continues in this year also as inflation rises unchecked.
Deposit rates remained passive through the earlier part of the year; but rose by about 0.5% during the latter half on account of the demand for credit as well as the monetary polices of RBI. As compared to the previous fiscal, there was diminished interest in credit off take during this year.
BUSINESS PERFORMANCE: Your bank recorded a 33.77% growth in total business during fiscal 2007-08. The bank’s total business was at Rs. 22118.83 cr., up from Rs. 16534.66 cr. of the previous year.
DEPOSITS: The aggregate deposits of your bank recorded a 34.36% rise over the previous fiscal to stand at Rs. 12549.99 cr., up from Rs. 9340.29 cr., a year ago. Significantly, the growth of net deposit (excluding bank deposits) was at 34.12%, which is higher than the total deposit growth rate of 23.99% recorded by all the scheduled commercial banks put together.
In order to contain the cost of deposits, your bank took initiatives to improve its low cost deposits and broaden the clientele base by celebrating the year as the Year of Low Cost Deposits. A new SB product, Freedom SB account with multicity features and several freebies was launched. Another customer friendly variant, KVB Economy, with monthly average balance of Rs. 10000/- was added to our Multicity Current Account product.
Out of the total deposits of the bank, savings bank deposits portfolio accounted for Rs. 1672.83 cr. (13.33%) followed by demand deposits at Rs. 1539.26 cr. (12.27%). Term deposits constituted 74.40% of total deposits at Rs. 9337.90 cr.
ADVANCES: The credit portfolio of the bank registered an impressive growth of 33% compared to 26.20% of the previous year. Aggregate advances of the bank were at Rs. 9568.84 cr. this year up from Rs. 7194.37 cr. during the previous fiscal.
FOREX: Forex turnover of the bank rose to Rs. 8520 cr. during 2007-08 as against Rs. 5306 cr. of the previous year. Export credit accounted for Rs. 631.53 cr. of the total advances. Forex operations yielded a gross income of Rs. 86.86 cr. this year as against Rs. 63.76 cr. of the previous year.
INCOME AND PROFITS: The total income of the bank for the year ended 2007-08 rose by 30.69% to Rs. 1289.33 cr. from Rs. 986.55 cr. Operating profit of the bank was at Rs. 307.76 cr. The net profit of the bank rose above the Rs. 200 cr. mark. Net profit for fiscal 2007-08 was at Rs. 208.33 cr. up by 30.20% over the previous year’s profit of Rs. 160.01 cr.
RECOVERY: Your bank has been taking every effort to ensure best asset quality at the sanctioning stage itself. Proactive recovery strategies and execution ensured recoveries in and closure of several high value accounts during the year, thereby bringing down Gross NPAs from 2.82% as of March, 2007 to 2.03% for March, 2008 with the Net NPAs dropping from 0.23% to 0.18% during the same period.
CAPITAL FUNDS: The Net Owned Funds of your bank improved by 11.93% to Rs. 1190 cr. as on 31.03.2008 up from Rs. 1063.16 cr. a year ago.
CAPITAL ADEQUACY: The Capital Adequacy Ratio of the bank stood at 12.58% at the end of the fiscal against the statutory requirement of 9%.
SHARE CAPITAL: On account of the payment of call money by the share holders who held partly held rights shares at the end of the previous year, paid up share capital of your bank increased from Rs. 49.49 cr. to Rs. 53.94 cr.
DIVIDEND: Your bank has a record of declaring 100% dividend consecutively for four years. For the financial year 2007-08, your directors are pleased to recommend, subject to approval by the shareholders, a dividend of 120%. The dividend is free of tax at the hands of the shareholders.
BRANCH EXPANSION: Since the past few years, with a view to ensuring a pan India coverage, your bank has been expanding its base at several new centres which also provide good business opportunities. During fiscal 2007-08, the bank has opened eighteen new branches taking the total network to 291 as of 31.03.2008. The ATM network matched the number of branches and was at 291, through the addition of 49 new ATMs.
INITIATIVES: The bank migrated to a higher version of software to provide transactional convenience to the customers and operational convenience to the counter staff. All branches and offices have started using Flexcube 6.7 version from January, 2008. Your bank also launched depository services at select branches.
PLANS FOR 2008- 09: Your bank is targeting total business of Rs. 28000 cr. for fiscal 2008-09. The youth are the driving force of the country today. Acknowledging this, the bank has designated fiscal 2008-09 as the Year of Youth with a view to improve the youth clientele base. Your bank has adopted a new slogan – KVB now! Banking for a young India and product roll outs are planned with young persons in mind. A new SB product – Yuvashakti has been launched recently. E-commerce facility that provides for on line air and rail ticket booking and shopping at points of sale has been enabled.
Upcoming technological initiatives include introduction of on-line bills payment utility, online shopping facility, and 24 X 7 toll free professional help desk facility. Travel card and gift card are also to be launched.
MoUs have been signed with five mutual fund companies and sale of their products will commence at our counters shortly.
The bank will continue with its bullish network expansion strategies and plans to open new branches to take the branch network to 300 by September, 2008 and 320+ by the end of the fiscal.
RECOGNITIONS: The Founders’ Day for the year 2007 was conducted at Karur, for which, we had the privilege of receiving Dr. A P J Abdul Kalam, former President of India as the Chief Guest.
Your bank was recognized by two publications for the second year in succession in their ranking of India’s Best Banks. Based on the financials of the financial year 2006-07, Business Today – KPMG ranked your bank as the Most Efficient Small Bank, while Financial Express – Ernst & Young ranked your bank as the No. 1 Old Private Sector Bank.
Apart from this, the Council for Fair Business Practices, Mumbai awarded the 20th Jamnalal Bajaj Award for Fair Business Practices in the financial sector for the year 2007 to your bank. The bank was rated for its exemplary performance under customer satisfaction, customer communication, employee motivation, social conscience, corporate social responsibility and compliance with laws.
ACKNOWLEDGEMENTS: Our customers and shareholders are our eternal source of strength. It is their continued support that has seen your bank rise to greater heights year after year. I thank each one of them for their confidence in us.
My colleagues on the Board have always extended their advice, encouragement and counsel to me at all times which has helped me to ensure the smooth functioning of the bank. I value their support and thank them.
I would also like to thank the regulator, Reserve Bank of India, the Government of India, State Governments, the Securities Exchange Board of India, National Stock Exchange and Depositories and other Government agencies, for their support and guidance to us.
I also thank the Export Credit and Guarantee Corporation of India, our Bancassurance partners, M/s Bajaj Allianz General Insurance Company and M/s Birla Sun Life Insurance Company, our IT partners, M/s i-flex Solutions Ltd., IBM, HCL Comnet, BSNL, CISCO and other service providers who have contributed to ensure the continued efficiency of our various delivery channels.
The cream of our success has come from the dedicated work of our committed work force that has left no stone unturned in their endeavour to bring and retain business. I thank each and every Kayveebian for their role in building up the institution.
I thank all of you for joining us this morning.
Thank you.
