It is my great pleasure to place before you the Annual Report of your
 Bank for the financial year 2010-11. As the Chairman & Managing
 Director of this great institution with a rich legacy, I would like to
 put on record that because of your unstinted support your Bank has
 successfully withstood the upheavals in the global as well as domestic
 financial markets.
 
 There was hardening interest rate environment and high price spirals
 during last financial year. The Reserve Bank of India has been
 tightening the monetary policy and has already increased the Repo and
 Reverse Repo rates eight times since March, 2010 in an effort to
 contain inflation. For the Bank, this is also a signal for hardening of
 interest rates in the current financial year.
 
 The performance of the Bank in 2010-11 has been very good and the Bank
 has lived up to its slogan of Consistent Growth All the Way. It has
 done better than the industry in a number of key financial parameters.
 The Banks visibility has increased considerably. This led to an
 upsurge in public confidence and was reflected in the elevated and
 steady share price of the Bank. The Bank was awarded 1st prize for
 excellence in MSE lending by Her Excellency the President of India. The
 Bank was ranked at 8th position among Indias Best Banks by Business
 Today-KPMG study of the strongest, fastest growing and most efficient
 Banks in the country. Again Business Today ranked the Bank 1st among
 Indias Best Banks in the growth of fee based income.
 
 I am most candidly placing before you an analysis of the performance of
 your Bank during 2010-11 along with a brief account of the Indian
 economic and banking scenario.
 
 2. Economic and Banking Scenario
 
 2.1 Indian economy has shown great resilience and has been on
 sustainable growth path. The estimated GDP growth of 8.6% in 2010-11
 was mainly contributed by rebounded agriculture sector performance
 (5.4%) and accelerated services sector growth (9.7%).
 
 2.2 The broad macro-economic parameters are still conducive for
 achieving a high growth. Exports for the year ending March, 2011
 touched US$ 245.9 billion registering a growth of 37.5%. There is a
 prediction of normal monsoon and coupled with this, both industry and
 service sectors could be growth drivers in 2011-12.
 
 2.3 It is no denying the fact that India is being confronted with the
 double edged problem of high inflation and moderating economic growth
 dealing with which has been the focal agenda of the policy makers. This
 is
 
 being reflected in the rise in key policy rates in quick succession,
 the latest being the 50 basis points hike in the repo and reverse repo
 rates raising the rates to 7.25% and 6.25% respectively in the Annual
 Monetary and Credit Policy 2011-12 announced on 3rd May, 2011.  The
 measures, taken in the series of monetary policy statements in India,
 have been prepared with the common agenda of sustaining the
 anti-inflationary drive keeping the ongoing growth process sustainable.
 
 2.4 The banking sector growth has been encouraging during the year. On
 year-on-year basis, SCBs credit grew by 21.4% on March 25, 2011, which
 exceeded RBIs indicative projection of 20% for 2010-11. The Aggregate
 deposits of Scheduled Commerical Banks (SCBs) grew by 15.8% on y-o-y
 basis as on March 25, 2011. We expect for banking industry, a deposit
 growth of around 17% and credit growth of around 19% in 2012.
 
 2.5 Your Bank has shown commendable performance during the year which
 was reflected in an increase of 7 bps in market share of deposit & 8
 bps in credit. The market share of deposits in SCBs has increased to
 2.31% in 2011 as against 2.24% in 2010 and credit share increased to
 2.23% in 2011 from 2.15% in 2010.
 
 2.6 The Bank has put itself into the orbit of fast growing Public
 Sector Banks. The market share of your bank is projected to grow
 further this year. The confidence is coming from the capacity that we
 have built up over the last few years like implementation of 100% Core
 Banking Solution (CBS), Pan India presence of more than 2400 branches,
 introduction of structured products and establishing Central Retail
 Banking Boutiques (CRBBs) etc.
 
 3.  Performance of the Bank
 
 3.1 In the backdrop of above economic & banking scenario, your Bank has
 shown a commendable performance to add to stakeholders value which
 ultimately helped in increasing market perception manifold.
 
 3.2 The net profit of the Bank showed a growth of 17.97% to reach
 Rs.1423 crore during 2010-11 from Rs.1206 crore in the preceding year.
 Operating profit of the Bank went up to Rs.3055 crore during 2010-11
 from Rs.2549 crore in the previous year, showing a growth of 19.86%.
 
 3.3 The non-interest income of the Bank increased from Rs.697 crore
 last year to Rs.857 crore this year. The Bank, in its endeavor to
 improve the Fee Based income, apart from tie-up and joint ventures for
 insurance and sale of third party products, took several new
 initiatives in the form of ASBA, NPS Subscription, marketing of e-
 products, sale of gold coin business, loan syndication etc. The Bank
 was able to generate an income of Rs.18 crore from selling of Third
 Party Products (TPP) this year.
 
 3.4 The cost to income ratio stood at 43.36% as on 31.03.2011. An
 amount of Rs.575 crore was provided towards the liability for pension
 and gratuity in 2010-11.
 
 In view of this also , the ratio of establishment expenses to total
 expenses increased to 16.69% in 2010-11 from 13.79% in 2009-10 while
 the ratio of other operating expenses to total expenses increased to
 8.37% from 8.26% during the period.
 
 4. Cost, Yield & Margin
 
 The year was challenging for managing cost of funds as interest rates
 were hardening throughout the year but the cost of deposits of your
 bank decreased by 14 bps i.e. 5.83% during 2010-11 from 5.97% during
 2009-10, reducing the overall cost of fund of the Bank to 5.85% from
 5.99% during the period. With cautious credit growth along with
 rebalancing of portfolio, Yield on advances decreased by only 7 bps
 i.e.  10.50% during 2010-11 from 10.57% during 2009-10. The NIM of the
 Bank increased to 3.38% in 2010-11 from 2.94% in the previous year.
 
 5. Profitability Ratios
 
 Return on Assets stood at 1.11% as on 31.03.2011 as against 1.16% as on
 31.03.2010. Profit per Employee improved to Rs.6.70 lacs during 2010-11
 from Rs.5.76 lacs during 2009- 10. Earnings per share went up to
 Rs.31.85 during 2010-11 from Rs.27.01 during 2009-10 while book value
 per share improved to Rs.178.64 from Rs. 151.17 during the period.
 
 6. Business
 
 6.1 Focused approach towards enhanced customer service, network
 expansion and new products resulted in increase of Banks total
 business mix by 26.87% to reach the level of Rs.2,26,458 crore as on
 31.03.2011 from Rs.1,78,493 crore as on 31.03.2010. Total Deposits grew
 by 24.36% to Rs.1,31,887 crore as on 31.03.2011 from Rs.1,06,056 crore
 as on 31.03.2010.  Gross credit of the Bank went up by 30.56% to
 Rs.94,571 crore as on 31.03.2011 from Rs.72,437 crore as on 31.03.2010.
 
 6.2 Business per Employee increased to Rs.10.63 crore as on 31.03.11
 from Rs.8.45 crore as on 31.03.10 while business per branch went up to
 Rs.93.38 crore from Rs.77.62 crore during the same period.
 
 7.  Network & Delivery Channels
 
 Your Bank has leveraged technology to lower transaction costs and
 invested in capacity building for future earnings.  There was focus on
 increasing the number of delivery channels and we opened 129 new
 branches during 2010- 11. The Bank has planned to open around 150
 Branches and 500 ATMs in the current financial year.
 
 8. Non- Performing Assets
 
 It was a big challenge to maintain our asset quality during the year.
 The gross non-performing assets of the Bank stood at 1.74% of gross
 bank credit as on 31.3.2011 as compared to 1.69% as on 31.03.2010. The
 net non-performing assets stood at 0.79% as on 31.03.2011 as compared
 to 0.66% as on 31.3.2010. The Bank had provision coverage ratio of
 75.67% against the new RBI norm of 70%.
 
 9. Capital Adequacy Ratio
 
 Bank has allotted around 2.95 crore equity shares of Rs 10 each at a
 premium of Rs 217 per share amounting to Rs 670 crore approximately on
 preferential allotment basis to Government of India. With the capital
 infusion & retention of profit, the capital adequacy ratio is attained
 at 12.96% on our increased business as on 31.03.2011 as against 13.62%
 as on 31.03.2010 as per Basel-II norms.
 
 10. Technology
 
 I feel happy to inform you that the Bank has brought all its branches
 and offices under CBS ambit as promised by me in the last years
 report. The notable developments in the area of technology adoption
 include launching of internet banking, SMS banking, e-banking,
 implementation of Real Time Gross Settlement / National Electronic Fund
 Transfer (RTGS/NEFT), On-line Tax Accounting System (OLTAS) etc.  Bank
 plans to facilitate issuance of Unique Identification Number (UID) to
 most of the Customers of the Bank under the project ADHAAR. Banks
 Internet Website is now available in 3 languages i.e. Hindi, English
 and Bengali.
 
 11. Human Resource Development
 
 Your bank is committed to developing its human capital by enhancing its
 skill and capacity in tandem with the growing aspirations of the
 organization. We have imparted suitable training to 11300 employees
 during the year. The Bank has recruited 1,851 employees (972 Officers
 and 879 Clerks) during the year. The productivity of staff of your Bank
 has been consistently increasing as evident from the fact that Business
 per Employee increased to Rs.10.63 crore as on 31.03.11 from Rs.8.45
 crore as on 31.03.10.
 
 12. Financial Inclusion
 
 Bank has been given with the responsibility of 2618 villages having
 population of 2000 and above where banking services are to be provided
 by opening of banking outlet by March, 2012 under ICT enabled Financial
 Inclusion by adopting various models viz. Biometric Smart Card solution
 through Business Correspondents, Mobile Banking Van fitted with ATM,
 and opening of Brick & mortar branches. During the year the Bank had
 covered 1054 villages against a target of 1046 villages by opening of 5
 Branches, by launching of 2 Mobile Banking Vans and 1031 villages
 through BC model and 2.51 lacs accounts were opened in those FI
 villages.
 
 13. Corporate Social Responsibility
 
 Your Bank believes in Corporate Social Responsibility and has taken a
 number of welfare measures on this score. In this endeavor, Bank has
 taken initiatives for social projects like establishment and
 facilitation of RSETI (Rural Self Employment Training Institute),
 opening of Financial Literacy and Credit Counseling Centers (FLCCs) and
 adoption of wild animals at ‘Van Vihar Bhopal which can facilitate
 visible change in the society and environment in which the Bank
 operates.
 
 14. Subsidiaries
 
 All Bank Finance Ltd., a fully owned subsidiary of the Bank registered
 with SEBI as Category-I Merchant Banker, earned a profit after tax
 (PAT) of Rs.2.80 crore in 2010-11.
 
 15. New Initiatives
 
 15.1 Bank has taken several new initiatives to put your bank on a high
 trajectory of growth. The Bank entered into Tie-Up
 
 arrangement with Unique Identification Authority of India Ltd with a
 view to allot Unique Identification Number to Customers of the Bank
 nation-wide. The Bank has introduced net-banking facility to the
 Current Account holders under Internet Banking Facility to the
 Corporate Customers. To cater to the needs of the salaried employees a
 value added savings account product Allbank Advantage Salary Premium
 was introduced with inbuilt overdraft facility and several concessions
 in service charges. All Bank Baalika Mangal Yojana, a special deposit
 scheme for the welfare of minor girl child has been extended for the
 current financial year also.
 
 15.2 We have started Online Retail Processing and sanction facility to
 our internet customers through the lead generating branches of 27
 Centralised Retail Banking Boutiques (CRBB) across the country.
 
 16.  Future Outlook
 
 16.1 In order to increase overseas presence, apart from the existing
 overseas branch at Hong Kong as well as representative office at
 Schenzen China, the Bank has planned to open more overseas branches. To
 increase the resource base, the Bank is planning for MTN issue of
 around US 0 million.
 
 16.2 Sustaining the growth momentum of the Bank, your Bank has targeted
 a business growth of 24% during the current year and projected a
 business level of around Rs.2,80,000 crore as at March 2012 .
 
 17. Awards & Achievement
 
 Your Bank has been awarded the First Prize for excellence in MSE
 Lending for 2009-10 by the Govt. of India. The Prize was received by
 your Chairman & Managing Director from H.E.  Smt. Pratibha Devi Singh
 Patil, Honble President of India in New Delhi on 31.08.2010. The Bank
 has been awarded Indira Gandhi Rajbhasha Puraskar by H.E Md. Hamid
 Ansari, Honble Vice-President of India for excellence in
 implementation of Rajbhasha in the Bank for 2008-09 on 14.09.2010. Your
 Bank has also been awarded the Reserve Bank Rajbhasha Puraskar for
 excellence in implementation of Rajbhasha in the Bank from Dr. D.
 Subbarao, Honble Governor, RBI on 26.05.2010.
 
 18. Acknowledgement
 
 Before I close, I would like to place on record our deep sense of
 gratitude to Government of India and RBI for their unstinted support
 and continued guidance. The Board of Directors has always been
 supportive and I thank the members of the Board for their encouragement
 and guidance. Cordial atmosphere in the Bank continued during the year
 and the participation of rank and file in the business development
 deserves a word of appreciation. It is the confidence of 26 million
 customers which keeps up our spirits and inspires us to better
 performance.
 
 19. Conclusion
 
 As your Bank enters the 147th year of purposeful existence, I am
 confident that with the continued support and patronage of the
 shareholders, customers, employees and well wishers as well as the
 Government of India & Reserve Bank of India, your bank will continue
 its march toward excellence and will be a force to reckon with within
 the Industry.
 
                                              Yours sincerely,
 
                                                 (J. P. Dua)
                                         Chairman & Managing Director
 
 5th May, 2011