Centurion Bank of Punjab

Dear Shareholder,
 
 During the past year we have witnessed a persistent trend of robust
 growth in the Indian economy, backed by strong performance across key
 sectors. The fundamentals of the economy remained strong and the
 long-term outlook continues to be positive.  During the year,
 inflationary concerns prompted a correction in interest rates. The
 inflation rates however, have now softened, indicating that interest
 rates may have stabilized.
 
 We continue to remain optimistic about the economic progress in India,
 especially in the vibrant SME and retail banking sectors and believe
 that your Bank is in an unique position to capitalize on these growth
 opportunities.
 
 The financial year 2006-07 has been yet another year of substantial
 growth and consolidation for your Bank and it continues to maintain
 this pace of growth in all the business areas that it operates in. The
 robust financial performance in the past year is a reflection of the
 many strategic initiatives undertaken by the Bank. In the process, we
 are creating an energetic, agile and flexible organization to harness
 immense growth opportunities. While the growth in the Bank's retail
 advances reiterates its retail focus, the growth in the SME advances
 demonstrates the emergence of the SME segment as a rapidly scaling up
 second growth engine for the Bank.
 
 Retail Banking continued to remain a strong growth engine for your
 Bank. This growth was achieved despite hardening interest rates and
 tighter market liquidity, particularly during the second half of the
 year. The SME segment has been one of the key focus areas for the
 management, the growth in the business has been in line with the
 initiatives taken at the Bank in this segment. As in the retail
 segment, your bank has now become a significant player in the SME
 segment.
 
 Your Bank offers its customers a well-rounded suite of products, along
 key business areas spanning assets, wealth management, agricultural
 lending and the NRI business. Additionally with a view to enhance
 shareholder's value and de-risk its business model, your Bank has built
 a strong focus on fee-based services. During the year the Bank has
 invested significant time, energy and resources towards creating one of
 the best technology platforms and IT systems in the country. I believe
 that going forward this initiative would enable your Bank to further
 enhance efficiency, increase customer service levels and strengthen its
 customer offerings across various businesses.
 
 In an endeavour to sustain its fast growth momentum, the Bank continues
 to pursue its strategy of growing organically and inorganically. After
 the unqualified success in all aspects of the amalgamation between
 Centurion Bank and Bank of Punjab in 2005-06, your Bank has applied to
 the Reserve Bank of India for its approval for the merger between your
 Bank and Lord Krishna Bank. This merger would strengthen the
 geographical reach of your bank in major towns and cities across the
 country and give the Bank dominance in the state of Kerala in addition
 to the existing dominance in the northern part of the country.
 
 Your Bank is committed to ride on a fast growth trajectory, despite
 market pressures and economic challenges. These will continue to be met
 and overcome, with the spirit, commitment and dedication demonstrated
 by employees at all levels.
 
 I would like to thank you for your continued support in pursuing the
 vision of Centurion Bank of Punjab emerging as India's most respected
 and admired Financial Services brand.
 
 With best wishes,
 Yours truly,
 Rana Talwar