Central Bank of India

The Board of Directors have pleasure in presenting the Annual Report of
 Central Bank of India with the audited statement of accounts and the
 cash flow statement for the year ended 31.03.2008.
 
 1.  FINANCIAL HIGHLIGHTS
 
 With a steep growth of 35.47 per cent, the total business of the Bank
 reached the level of Rs. 1,84,607 crore.
 
 At a growth rate of 33.27 per cent, total deposits stood at Rs.
 1,10,320 crore.
 
 With a rise of Rs.20,798 crore at a growth rate of 38.88 per cent, the
 Gross advances stood at Rs. 74,287 crore.
 
 Retail loan segment has recorded a growth rate of 32.12 per cent. Total
 retail credit stood at Rs. 7621 crore.
 
 At Rs. 25,442 crore, Priority Sector advances recorded growth rate of
 13.24 percent.
 
 Total agriculture advances rose to Rs. 11,287 crore from Rs. 9,117
 crore recording a growth of 23.80 per cent.
 
 Advances to SME sector touched the level of Rs. 6037 crore.
 
 The Bank has credit- linked 62,024 SHGs with outstanding balance of Rs.
 360 crore.
 
 The Bank sanctioned educational loans amounting to Rs. 294 crore to
 10,886 students. The aggregate Educational Loan stood at Rs. 561.00
 crore.
 
 In respect of Financial Inclusion, 100 percent Financial Inclusion has
 been completed in 3789 villages and 4,25,000 No-Frills Accounts were
 opened.
 
 Under the Differential Rate of Interest (DRI), Bank has extended loans
 of Rs. 44.20 crore during the year, 2007-08.
 
 Under advances to Minority Communities, Bank financed 3,45,145
 beneficiaries amounting to Rs.  1840 crore against Rs. 1498 crore
 registering a growth of 22.83 percent.
 
 The ratio of Gross NPA to Gross Advances showed substantial decrease by
 1.65 per cent to 3.16 per cent in 2007-08 from 4.81 percent in 2006-07.
 
 The ratio of Net NPAs to Net Advances declined by 25 basis points to
 1.45 per cent as at end of March 2008 from 1.70 per cent as at
 end-March 2007.
 
 During the year 96 branches were opened and 22 extension counters were
 upgraded to full-fledged branches taking the total number of branches
 to 3308.
 
 Of the 3308 branches, there were 1348 rural branches, 807 semi-urban
 branches, 613 urban branches and 540 metropolitan branches.
 
 Bank has implemented Core Banking Solutions (CBS) in 1020 branches, 128
 extension counters and one NBO covering 268 cities spread over 24
 States and 2 Union Territories. CBS branches covered 67 per cent of
 Banks business.
 
 As a part of para banking business, Bank has entered into cross tie-up
 with six top Mutual Funds viz. UTI Mutual Fund, Tata Mutual Fund,
 Franklin Templeton Investments, ICICI Prudential, Reliance Mutual Fund,
 and Sundaram BNPParibas.
 
 Demat services is available in 116 branches.
 
 The New Initiatives taken up by the Bank include , Cent Swabhiman, a
 reverse mortgage loan Scheme for senior citizens and Cent Udaan, a
 loan Scheme for training for commercial pilots.
 
 The Integrated Risk Management system as per the RBIs directives to
 take care of credit risks, market risks and operational risks is under
 successful implementation.
 
 The process of implementation of Basel II norms is in progress for
 compliance before March 2009.
 
 During the year, Bank initiated various pro-active HRD measures.
 
 2.  INCOME & EXPENDITURE
 
 During the year the total income increased to Rs.8786.60crore.
 
 Interest Income registered an increase of Rs.1761.33 crore [28.25%].
 
 Other income registered a rise of Rs.1 52.08crore [23.80%]
 
 The interest expenditure increased from Rs. 37 59.79 crore to
 Rs.5772.47 crore i.e. an increase of Rs. 2012.68 crore [53.53%].
 
 Total Operating expenditure stood at Rs. 1745.83 crore, recording an
 increase of Rs.61.48 crore [3.65%].
 
 NetProfitfortheyear2007-08rosetoRs. 550.1 6 crore as against Rs.498.01
 crore in 2006-07.
 
 Details of Income and Expenditure for the period 2007-08 are given
 hereunder:
 
                                                        Rs In Crore
 
 Particulars                              2006-07            2007-08
 
 Total Interest Iricome                   6234.21           7995.54
 
 Total Interest Expenditure                375979           5772.47
 
 Net Interest Income                      2474.42           2223.07
 
 Othe Income                               638.98            791.06
 
 Trading Profit on Investments [Net]        50.05             42.71
 
 Recovery in W/off. Accounts               163.33            168.42
 
 others                                    425.60            579.93
 
 Net Operating Income                     3113.40           3014.13
 
 Operating Expenses                       1684.35           1745.83
 
 Establishment cost                       1175.41           1214.34
 
 Other operating expenses                  508.94            531.49
 
 Operating Profit                         1429.05           1268.30
 
 Provisions & Contingencies                733.74            416.36
 
 Tax Expense                               197.30            301.78
 
 Net Profit:                               498.01            550.16
 
 
 
 Absolute Growth       % Of Growth
 
  1761.33                    28.25%
 
  2012.68                    53.53%
 
  -251.35                   -10.16%
 
   152.08                    23.80%
 
    -7.34                   -14.67%
 
     5.09                     3.12%
 
   154.33                    36.26%
 
   -99.27                    -3.19%
 
    61.48                     3.65%
 
    38.93                     3.31%
 
    22.55                     4.43%
 
  -160.75                   -11.25%
 
  -317.38                   -43.26%
 
   104.48                    52.95%
 
    52.15                    10.47%
 
 3.    SPREAD ANALYSIS
 
 The Net Interest Income stood at Rs. 2223.07 crore in 2007-08. The
 decrease in Net Interest Income is attributed to the increase in
 interest expenditure by 53.53 percent.
 
 Consequently, the Net Interest Margin reduced to 2.53 per cent in
 2007-08.
 
 Parameters                 2006-07
 
 Total Interest Income      6234.21
 
 Total Interest Expended    3759.79
 
 Spread                     2474.42
 
 Yield on Funds %              7.99
 
 Cost of Funds %               5.09
 
 Net Interest Margin % 
 [based on avg. 
 earning assets]               3.28
 
                     Rs. In Crore
 
 2007-08         Absolute Growth          % of Growth
 
 7995.54              1761.33                28.25%
 
 5772.47              2012.68                53.53%
 
 2223.07               251.35               -10.16%
    8.85                 0.86                10.76%
 
    6.27                 1.18                23.18%
 
    2.53                -0.75               -22.87%
 
 4.  IMPORTANT RATIOS
 
 Parameters                                  2006-07     2007-08
 
 Yield on Advances %                          8.52%      9.74%
 
 Yield on Investment %                        7.76%      7.37%
 
 Cost of Deposits %                           4.98%      6.24%
 
 Spread as a % to AWF                         3.08%      2.20%
 
 Net Interest Margin [NIM] 
 [based on avg. earning assets] %             3.28%      2.53%
 
 Establishment Cost as % to AWF               1.46%      1.20%
 
 Other Operating Expenses as a % to AWF       0.63%      0.53%
 
 Return on Average Assets [ROA] %             0.62%      0.54%
 
 Cost lncome Ratio %                         54.10%     57.92%
 
 Average Business Per Employee [Rs. In lacs] 303.85    400.99
 
 Profit per Employee [Rs. In lacs]             1.35      1.56
 
 Book value Rs                                          96.61
 
 Earning per Share [Rs.]                                12.48
 
 5.  Capital to risk weighted assets ratio (CRAR)
 
 During the year, Bank raised additional share capital of Rs.80crore by
 way of an Initial Public Offer.
 
 The Bank also raised Sub-ordinated debts [Tier II Capital] to the tune
 of Rs.389.10 crore.
 
 One time transitional liability for employees benefits under AS-1 5
 (Revised) of Rs 875 crore has been recognized and charged to opening
 Revenue Reserves.
 
 The Capital to Risk Weighted Assets Ratio [CRAR] of the Bank stood at
 10.42 per cent against the benchmark of 9 per cent.
 
 CRAR                                  [Rs. In crore]
 
 Composition of Capital         March-07     March-08
 
 Risk Weighted Assets           52017.88     71764.85
 
 Tier I Capital                  3289.82      3889.67
 
 CRAR [%] [Tier I]                  6.32%        5.42%
 
 Tier-II Capital                 2121.95      3589.57
 
 CRAR [%] [Tier II]                 4.08%        5.00%
 
 Total Capital                   5411.77      7479.24
 
 CRAR [%]                          10.40%       10.42%
 
 6.  PROVISIONS & CONTINGENCIES
 
 The amount provided for towards provisions (other than tax) and
 contingencies declined from Rs 733.94 crore in the previous year to Rs.
 416.36 crore in 2007-08 due to improvement in the loans and advances
 portfolio.
 
 7.  NET PROFITS DIVIDEND
 
 During the year, Net Profit before tax stood at Rs851.94 crore and Net
 Profit after tax stood at Rs 550.16 crore.
 
 The Board of Directors are pleased to recommend a dividend of 20 per
 cent. The total outflow on account of dividend is Rs 150.83 crore.
 
 8.  CHANGES IN THE BOARD DURING THE YEAR
 
 During the year under review, the following changes took place in the
 Board of Directors of the Bank :-
 
 The Government of India created an additional post of Executive
 Director and Shri Albert Tauro has been appointed as Executive Director
 with effect from 6th June, 2007.
 
 Smt. Vinita Kumar has been appointed as Government of India Nominee
 Director in place of Shri P.P. Mitra with effect from 11th December,
 2007.
 
 Shri M.S. Johar has been appointed as Part Time Non-official Director
 with effect from 2nd January, 2008.
 
 9.  DIRECTORS RESPONSIBILITY STATEMENT
 
 The Directors confirm that in the preparation of the annual accounts
 for the year ended March 31, 2008:
 
 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
 31.03.2008.
 
 Proper and sufficient care was taken for the maintenance of adequate
 accounting records in accordance with the provisions of the applicable
 laws governing banks in India: and
 
 The accounts have been prepared on a going concern basis.
 
 10.  CORPORATE GOVERNANCE
 
 The Board of the Bank is committed to adapt Corporate Governance
 practices in letter and spirit. The Bank has adopted well documented
 system and practice on Corporate Governance.
 
 11.  ACKNOWLEDGEMENT
 
 The Board of Directors places on record its gratitude to the Government
 of India, the Reserve Bank of India and the Securities & Exchange Board
 of India for their valuable guidance and support. We also wish to
 acknowledge with gratitude unstinted support and faith of millions of
 the Banks customers and shareholders. The performance of the Bank
 could not have been achieved but for the dedicated services provided by
 members of the staff.
 
 
 
                            For and on behalf of Board of Directors,
 
 Place : Mumbai             H.A. Daruwalla
 Date  : June 25, 2008      CHAIRPERSON & MANAGING DIRECTOR