Corporation Bank

Dear Shareholders,
 
 1. With immense pleasure I welcome all of you to the twelfth Annual
 General Meeting of Corporation Bank, which is my first turn as the
 Chairman & Managing Director of the Bank.  On this auspicious occasion
 I am happy to share with you in brief, the Economic Scenario of the
 Country and the salient features of your Banks Performance.
 
 2.  Economic Scenario
 
 2.1 During the year gone by, the world economy continued to suffer from
 recessionary conditions. Though the Indian economy suffered
 comparatively much less, there was nevertheless, a moderation in
 growth. After clocking over 8.5% average GDP growth for the last five
 years, the real GDP growth for 2008-09 has been pegged at 6.7%.
 
 2.2 In F.Y. 2009, while industrial growth decelerated to 2.8%, from
 8.8% in the corresponding period of the previous year, the trade
 deficit has expanded to 4 billion from  billion. Due to this and
 large FII outflows, the foreign exchange reserves have fallen by .7
 billion (to 2 billion at end March 2009). The likely growth in
 agriculture may only be 2.6% as compared to 4.9% last year. The saving
 grace was that (WPI) inflation, which had steadily been increasing,
 fell drastically from nearly 13% in August 2008 to 0.26% by end-March
 2009, largely due to fall in global commodity prices.
 
 2.3 On the banking front, during EY. 2009, aggregate deposits of
 Scheduled Commercial Banks increased by 19.8% compared to 22.4%
 recorded in the previous year. Growtli in non-food credit decelerated
 to 17.5% (23%). Broad money (M3) growth was 18.4% at end-March 2009,
 which was higher than the RBI projected growth of 16.5-17% for EY.
 2009.
 
 2.4 Through all these developments, your Bank continued its drive to
 grow rapidly by registering business growth of nearly 30%, with over
 one-fourth growth in profits and continued containment of both gross
 and net NPAs in a challenging environment. The Bank opened two overseas
 Representative Offices in Dubai and Hong Kong, as part of its global
 expansion plan and was more than adequately capitalized (13.61% under
 Basel II) to meet credit growth requirements for 2009-10.
 
 3. Consistent Performance
 
 3.1 Your Bank continued its journey on a high trajectory growth path in
 business and profitability in the traditional manner. A bank which
 started its presence in humble way in the temple town of Udupi 104
 years back has earned and won the confidence of the people through its
 meritorious service.  The sustained growth story reveals that:
 
 3.2 Net Profit: Your Banks Net Profit for the twelve months period
 ended 31.03.2009 registered a growth rate of 21.47% and increased to
 Rs.892.77 crore compared to Rs. 734.99 crore in the corresponding
 period ended 31st March, 2008.
 
 3.3 Operating Profit; The Operating Profit of the Bank went up by
 Rs.545.48 crore during the twelve months period ended 31.03.2009 to
 Rs.1,796.62 crore as compared to Rs.1,251.14 crore in the corresponding
 period of previous year, recording a growth rate of 43.60%.
 
 3.4 Total Income: The Total Income of the Bank for the 12 month period
 increased to Rs.7,174.57 crore registering a growth of 37.54% compared
 to Rs.5,216.33 crore registered as at 31.03.2008.
 
 3.5 Net Interest Income: The Net Interest Income increased by Rs.247.67
 crore (17.16%) from Rs.1,443.31 crore for the twelve months ended
 March, 2008 to Rs. 1,690.98 crore for the corresponding period ended
 March, 2009.
 
 3.6 Non-Interest Income: Non-interest income has increased from
 Rs.699.78 crore to Rs.1,107.22 crore for the twelve months period ended
 March, 2009, recording a growth of 58.22%.
 
 3.7 Business Growth: The Total Business of the Bank as on 31st March,
 2009 stood at Rs.122,496 crore. The total business increased by
 Rs.27,886 crore from Rs.94,610 crore in March, 2008. The increase
 recorded in business is 29.47%.
 
 3.8 Deposits: The Total Deposits of the Bank increased to Rs.73,983.91
 crore from Rs.55,424.42 crore as on 31st March, 2008, recording a
 growth of 33.49%. The average CASA has grown from Rs. 12,749 crores in
 March 2008 to Rs. 14,508 crores as on March, 2009, registering a Y-o-Y
 growth of 14%.
 
 3.9 Advances: The Y-o-Y growth in Advances is 23.80% from Rs.39,185.57
 crore to Rs.48,512.16 crore as on 31st March, 2009. The Credit Deposit
 ratio stood at 65.57%.
 
 3.10 NPA: The Gross NPA has come down to 1.14% compared to 1.47% as on
 31st March, 2008 and Net NPA stood at 0.29% as at 31st March, 2009.
 
 3.11 Cash Recovery: The Bank could effect a cash recovery and
 upgradation of NPAs of Rs.278.45 crore, during the period ended
 31.03.2009.
 
 3.12 Net worth: The Net worth of the Bank stood at Rs.4,897 crore
 compared to Rs.4,229 crore as on 31st March, 2008.
 
 3.13 Capital Adequacy Ratio: The Capital Adequacy Ratio of the Bank as
 on 31st March, 2009 as per Basel I is at a comfortable level of 13.66%,
 as compared to 12.09% as on 31st March, 2008. The Tier I ratio as on
 31st March, 2009 is at 8.93%. The CRAR as per Basel II stood at 13.61%.
 
 3.14 Return on Equity/EPS: The Return on Equity works out to 18.23%
 (annualised) for the year ended March, 2009 as compared to 17.38%
 (annualised) in March, 2008. The Earnings per Share (annualised) works
 out to Rs.62.24 as compared to Rs.51.24 as on March, 2008.
 
 3.15 Cost to Income Ratio: The Cost to Income ratio improved to 35.79%
 for the 12 month period ended March, 2009 from 41.62% in the
 corresponding period last year.
 
 3.16 Yield on Advances: The yield on advances improved to 10.82% for
 the 12 month period ended March, 2009 from 10.20% in the corresponding
 period last year.
 
 3.17 Cost of Deposits: The Cost of Deposits went up to 7.02% for the 12
 month period ended March, 2009 from 6.45% in the corresponding period
 last year, mainly due to the volatile and competitive market conditions
 which prevailed in the first half of the financial year.
 
 3.18 Staff Productivity: The Business per Employee of the Bank was
 higher at Rs. 10.49 crore compared to Rs.8.39 crore in March, 2008.
 
 4. Branch Expansion
 
 4.1 Domestic Footprint: During the current financial year the bank
 opened 73 new branches and 75 ATMs. The Total number of branches of the
 Bank as on 31st March, 2009 stood at 1054 and number of ATMs at 1032,
 as against 981 branches and 957 ATMs as at 31st March, 2008. The Bank
 has drawn plans to open 700 new branches in next five years.
 
 4.2 International Footprint: The Bank has opened a Representative
 Office at Hong Kong in January 2009 in addition to the office at Dubai,
 which was opened during August 2008.
 
 5. Technology Initiatives: The Bank has migrated all its units [1111]
 to the Core Banking solutions [CBS] covering 100% business. The Bank
 has also operationalised and networked 1032 ATMs across rhe country
 inclusive of 7 Biometric ATMs.  Out of these 75 ATMs have been
 commissioned during this financial year. 150 POS terminals have been
 installed at different merchant establishments. Internet Banking
 facility has been provided with robust scaleable Model View Controller
 (MVC) architecture. RTGS facility has been provided at 1034 units and
 NEFT facility provided at 1015 units of the Bank.  25 self service
 terminals (KIOSKS) have been installed at the identified branches.
 
 6.  Financial Inclusion: The Bank has extended Branchless Banking units
 to 411 villages as on 31.03.2009 as against the target of 400 villages.
 Smart Cards have been issued to all account holders at these villages
 to enable them to operate their accounts through the Business
 Correspondents from their villages.
 
 6.1 Financing SME Sector: The Bank has framed a comprehensive policy
 for financing to SMEs to step up the credit to Small Enterprises
 Sector, so as to increase credit by 20% p.a. The Bank has identified 50
 branches across the country to accelerate lending to SME Sector.
 
 7. Clientele Growth: On Y-o-Y basis, 11,65,360 new accounts were
 acquired under deposits as at the end of March, 2009.  To improve share
 of low cost deposits, the bank has added 9,71,600 new CASA accounts
 during period from 01.04.2008 up to 31.03.2009.
 
 8.  Awards & Accolades
 
 Your Bank has bagged the following prestigious awards during the
 financial year.
 
 8.1 During 2008, the Bank received the Gold Trophy of the SCOPE
 Meritorious Award for Best Managed Bank/Financial
 
 Institution/Insurance Company. Standing Conference of Public
 Enterprises, the apex body of Central Government owned enterprises, to
 encourage, recognise and reward the excellence achieved, instituted
 these awards for the first time.
 
 8.2 The Bank was also awarded the SKOCH Challenger Award 2008 for
 Customer Relationship Management.
 
 8.3 The Business Today - KPMG study has ranked our Bank as Best Bank in
 quality of assets category.
 
 8.4 The Bank has bagged the Runner-up award for Best Online and
 Multichannel Banking Team in the Banking Technology Award 2008
 instituted by Indian Banks Association [IBA] and Trade Fairs and
 Conference International [TFCI].
 
 8.5 Bank has also won die Use of Technology for Financial Inclusion
 award from the Institute for Development and
 
 Research in Banking Technology (IDRBT), Hyderabad for the Best use of
 IT in Retail Banking for its Branchless Banking and Financial Inclusion
 initiatives.
 
 9. I would like to thank all the employees for their active involvement
 and contribution to die progress of the Bank.  I would also like to
 thank RBI and Ministry of Finance, Government of India and die
 Directors of the Bank for their  support and guidance in achieving die
 progress.
 
 Yours sincerely,
 
 Place : Mangalore                                          (J. M. Garg)
 Date : 12-06-2009                          Chairman & Managing Director