Corporation Bank

1.  The Board of Directors have pleasure in presenting the Annual
 Report together with Balance Sheet and Profit and Loss Account of the
 Bank for the year ended 31st March, 2008.
 
 1.1 The Bank has put in place a well articulated frame work of 3
 (People, Process, Products) to identify and execute new initiatives to
 accelerate business growth on sound and sustainable lines. This
 framework is also designed to improve customer engagement at all
 customer touch points. Innovation is actively encouraged. People
 initiatives include new programmes for leadership development,
 succession planning, appointment of executive coach, incentives for
 high performers, performance enhancement programmes through counsellors
 etc. Process initiative include centralization of back office
 functions, separation of credit marketing and approved process and feed
 forward MIS to Branches. New products like Branchless Banking are
 introduced to implement financial inclusion strategies. The Bank is
 actively chalking out strategies to take the Bank to higher growth
 trajectory.
 
 2.  Performance at a glance
 
 2.1 The aggregate business of the Bank crossed another milestone mark
 of Rs.94,000 crore during the financial year 2007-08. The total
 business of the Bank increased by Rs.22,302 crore to Rs.94,610 crore at
 the end of the year 2007-08, from Rs.72,307 crore, recording a growth
 rate of 30.85%.
 
 2.2 The total deposits of the Bank have grown by Rs. 13,067 crore from
 Rs.42,357crore as on 31st March, 2007 to Rs.55,424 crore as on 31st
 March, 2008, registering a growth rate of 30.85%.
 
 2.3 The Bank continued its prudent approach in expanding quality credit
 assets in line with its policy on Credit Risk Management. The advances
 of the Bank increased by Rs.9,236 crore from Rs.29,950 crore as on 31st
 March, 2007 to Rs.39,186 crore as on 31st March, 2008, registering a
 growth rate of 30.83%.  During the year, focused attention was given
 for accelerated lending under agriculture, SSI and midsize corporate
 segments for expansion of credit.
 
 2.4 The performance of the Bank under recovery of NPAs during the year
 continued to be good. During the year, the Bank effected a cash
 recovery and upgradation of NPAs of Rs.315.75 crore compared to
 Rs.312.69 crore in the previous year.
 
 2.5 While the encouraging performance in different functional areas
 during the year 2007-08 resulted in increased earnings in absolute
 terms, the margins were under pressure and the interest spread declined
 to 2.71% as on 31st March, 2008 compared to 3.08% during the previous
 year.
 
 3.  Income Analysis
 
 3.1 Interest income of the Bank recorded a growth of Rs. 1,156.08 crore
 from Rs.3,360.47 crore in the year 2006-07 to Rs.4,516.55 crore
 [34.40%] in the year 2007-08, as against the interest expenses which
 grew by 49.74% from Rs.2,052.37 crore during the year 2006-07 to
 Rs.3,073.24 crore during the year 2007-08. The Net Interest Income
 recorded a growth of Rs. 135.21 crore or [+10.34%] during the same
 period.
 
                                                      [Rs. in crore] 
                                             2006-07         2007-08
 
 Interest Income                             3360.47        4516.55
 Interest Expenditure                        2052.37        3073.24
 Net Interest Income                         1308.10        1443.31
 Fees, Commission & Other                     635.54         699.78
 Revenue
 Operating Income                            1943.63        2143.09
 Operating Expenses                           803.59         891.95
 Gross profit                                1140.04        1251.14
 Provisions & Contingencies                   323.46         185.73
 Profit before Tax                            816.58        1065.41
 Provision for Tax                            280.44         330.42
 Net Profit                                   536.14         734.99
 
 3.2 The total income [total of interest income and non- interest
 income] of the Bank improved to Rs.5,216.33 crore during the year
 2007-08 from Rs.3,996 crore in the previous year recording a rise of
 Rs.1,220.33 crore [30.54%]
 
 3.3 Non-interest Income increased by Rs.64.24 crore [10.11%] from
 Rs.635.54 crore in the financial year 2006-07 to Rs.699.78 crore in the
 financial year 2007-08. The share of total Non-Interest Income to Total
 Income stood at 13.42%.
 
 3.4 The Net Income from operations [Interest Spread plus Non-interest
 Income] has increased to Rs.2,143.09 crore in the financial year
 2007-08 from Rs. 1,943.63 core in the financial year 2006-07 recording
 a growth of 10.26%.
 
 3.5 The Operating Expenses have shown an increase of 11% during the
 financial year 2007-08 and stood at Rs.891.95 crore as compared to
 Rs.803.59 crore in 2006-07.
 
 3.6 The Cost to Income ratio (operating expenses to Net Operating
 Income) marginally increased from 41.34% in the financial year 2006-07
 to 41.62% in the financial year 2007-08.
 
 4.  Spread Analysis
                               2006-07      2007-08
 
 Average Working Funds        42,530       53,350
 Total Interest Income      3,360.47     4,516.55
 Total Interest Expended    2,052.37     3,073.24
 Interest Spread            1,308.10     1,443.31
 Yield on Funds                 7.90%        8.47%
 Cost of Funds                  4.83%        5.76%
 Net Interest Margin            3.08%        2.71%
 
                   Growth
 Absolute            %
 
   10,820         25.44%
 1,156.08         34.40%
 1,020.87         49.74%
   135.21         10.34%
 
 5.  Gross Profit
 
 5.1 The Gross Profit for the financial year 2007-08 stood at
 Rs.1,251.14 crore as compared to Rs.1140.04 crore in the financial year
 2006-07 registering an increase of Rs. 111.10 crore [9.74%].
 
 5.2 The Asset Utilisation Ratio [percentage of Gross Profit to Average
 Working Funds] stood at 2.35% in the financial year 2007-08.
 
 6.  Provisions
 
 6.1 The Provision for Loan Losses, Provision on Standard Assets,
 Taxation and others aggregated to Rs.516.15 crore in the financial year
 2007-08 as compared to Rs.603.90 crore in the financial year 2006-07.
 
 7.  Net Profit and Dividend
 
 7.1 The Bank registered a Net Profit of RsJ34.99 crore for the
 financial year 2007-08 compared to Rs.536.l4 crate in the financial
 year 2006-07.
 
 Year             Net Profit [Rs. in Crore]
 
 2005-06            444.46
 2006-07            536.14
 2007-08            734.99
 
 Out of the Net Profit a sum of Rs.469.18 crore was transferred to
 Statutory & General Reserves and Rs.15 crore was set aside for Staff
 Welfare Fund.
 
 7.2 The Bank has already paid an interim dividend of 45% on 23.4.2008
 for the year 2007-08. The Board of Directors has recommended the final
 dividend of 60% for the financial year 2007-08. The total dividend for
 the year 2007-08 will be 105%, which works out to Rs. 10.50 per fully
 paid-up share of Rs. 10/-each.
 
 7.3 In terms of extant guidelines, the Bank will pay the dividend
 distribution tax for the financial year 2007-08. Accordingly the total
 outflow on account of Dividend [inclusive of both interim and final]
 for the year 2007-08 will be Rs. 176.21 crore including the dividend
 distribution tax.
 
 8.  Net Worth and CRAR
 
 8.1 The Net Worth of the Bank improved to Rs.4,229 as on 31st March
 2008 from Rs.3,765 crore as on 31st March, 2007.
 
 8.2 During the year, the Bank raised tier II Capital by way of
 subordinated debts aggregating to Rs.500 crore.
 
 8.3 The Capital to Risk Adjusted Assets Ratio [CRAR] stood at 12.09% as
 on 31st Match, 2008 as against 12.76% as on 31st Match, 2007 which is
 much above the norm of 9% stipulated by the Reserve Bank of India.
 
 8.4 The tier I component of CRAR is 9.64% as on 31st March, 2008
 compared to 11.30% as on 31st March, 2007.
 
                                              As on
                                  March 2007       March 2008
 
 Tier I Capital                      11.30%          9.64%
 Tier ll Capital                      1.46%          2.45%
 Total                               12.76%         12.09%
 
 8.5 The Return on Net Worth, Earnings Per Share and Book Value per
 Share for the financial year 2007-08 stood at 17.38%, Rs.51.24 and
 Rs.294.79 respectively, against 14.24%, Rs.37.38 and Rs.262.51
 respectively for the previous year.
 
 9.  Consolidation of Accounts
 
 As per RBI guidelines, the Bank has consolidated the financial accounts
 as at 31st March, 2008 with those of its wholly owned Subsidiary viz.,
 Corp Bank Securities Ltd. As per the consolidated statement as on 31st
 March, 2008, the Net Worth of the Corp Bank group stood at Rs.4,283.22
 crore as compared to Rs.3,804.74 crore as at 31st March, 2007. The
 consolidated Gross Profit and Net Profit for the year 2007-08 were
 Rs.l,262.47crore and Rs.750.4l crore, respectively compared to Rs.
 1,143.93 crore and Rs.516.19 crore, respectively for the year 2006-07.
 The Bank has complied with the RBI guidelines and the Accounting
 Standards prescribed by the Institute of Chartered Accountants of
 India.
 
 10.  Branch Network
 
 10.1 During the financial year 2007-08, 82 branches were added, thereby
 taking the number of branches to 981 as on 31-03-2008, spread over 24
 states and 2 union territories. The Bank has received licence for
 opening Representative office at Dubai and Hongkong, making our
 overseas presence.
 
 11.  ATMs
 
 11.1 The Bank has 957 ATMs across the country and the continuos focus
 on increasing the utilisation of ATMs.
 
 12.  Advertising and Publicity
 
 12.1 During the year, concerted efforts were made for brand building
 and the Bank continued to communicate messages on its products,
 services, interest rates and the performance to the customers,
 shareholders and the general public through advertisements and outdoor
 publicity units.
 
 13.  Insurance & Mutual Fund Business
 
 13.1 The Bank earned an income of Rs.7.67 crore through third party
 product sales of Mutual Funds and Insurance.
 
 13.2 Under Mutual Fund Business, the Bank mobilised Rs. 3,795 crore
 business as against Rs. 512 crore during the previous year.  The Bank
 earned brokerage of Rs. 1.65 crore as against Rs. 0.33 crore during the
 previous financial year.
 
 14.  Government Business
 
 14.1 The total tax collection for the year ended March 2008 stood at
 Rs.33,207 crore as against Rs.21,390 crore for the previous financial
 year.
 
 14.2 The Bank is authorised to collect Customs Duty in Delhi, Chennai,
 Mangalore and Vishakhapatnam Commissionerates through e-payment mode.
 The facility is already operationalised in Delhi and Chennai.
 
 14.3 The Bank is authorised for Sales Tax Collection in the States of
 Maharashtra, Gujarat and Delhi. The aggregate collections during the
 year have crossed Rs.967 crore as compared to Rs.683 crore during the
 previous financial year.
 
 14.4 The Bank is providing exclusive banking services to BSNL in the
 States of Karnataka, Maharashtra and Goa.
 
 15.  Corporate Social Responsibility-CSR
 
 15.1 As in the previous years, the Bank took several measures during
 2007-08 to fulfil its social commitment.
 
 15.2 The Bank had launched, in its centenary year, the project of
 setting up 100 village libraries. During the year 2007-08, the Bank
 identified 25 villages and took steps for establishing libraries there.
 With this, the total number of libraries set up by the Bank is 75.
 
 15.3 The Bank also gave scholarship to about 50 students of identified
 villages across the country as a part of the rural development
 programme.
 
 15.4 Being conscious of its corporate social responsibility, the Bank
 decided to give donations to charitable institutions @ Rs.10 per SB
 account and Rs.25 per Current Account opened during the campaign for
 such accounts. A record number of 3.6 lakh new customers were added
 during the campaign period.  Accordingly, the Bank has extended
 donation to nearly 50 charitable institutions working for different
 under-privileged sections of the society in the country.
 
 15.5 With a view to promote excellence among students, the Bank also
 launched the CorpBank Gold Medal scheme. Under the scheme, gold medal
 weighing 8 gms. would be presented to the best outgoing student of 25
 reputed higher educational institutions of the country, every year.
 Apart from the above, the Bank also actively associated with various
 social concerns in promotion of art and culture activities.
 
 16.  Corporation Bank Self-Employment Training Institute [COBSETI]
 
 The Corporation Bank Self-Employment Training Institute [COBSETI]
 established on 22-03-1996 is a training institute sponsored by the
 Bank. The institute takes care of the vocational training needs of
 Chikmagalur and Kodagu districts wherein the Bank has Lead Bank
 responsibility. During the training period, boarding and lodging is
 provided free to the candidates. As at March, 2008, the Institute
 imparted ttaining to 7180 candidates, out of which 4449 persons have
 taken up self-employment ventures.
 
 Bank has planned to establish one more COBSETI in Kodagu district.
 Karnataka Government has assured to provide capital expenses of Rs.20
 lakh. Upon providing suitable site by the Govt, of Karnataka, the
 training institute will be established.
 
 1.7. Corporation Bank Economic Development Foundation
 
 The Bank, as a responsible corporate citizen continues to fulfill its
 social obligations, in tune with the corporate mission, under the aegis
 of Corporation Bank Economic Development Foundation (CBEDF). Financial
 grants to the extent of Rs. 11.54 lakh were approved during the year
 for execution of various projects. .
 
 During the year CBEDF has also provided assistance to Neonatal
 Intensive Care Unit in Lady Goschen Hospital, Mangalore and Paediatric
 Intensive Care Unit at Wenlock Hospital, Mangalore, under the Save
 Babies Project. Besides the CBEDF organised two workshops for
 sensitising the staff of the bank and also residents of Mangalore city
 on Water Conservation and Rain Water Harvesting techniques.
 
 18.  Progressive use of Official Language
 
 18.1 During the year 2007-08, the performance of the bank under
 Official Language Implementation has been quite satisfactory. The Bank
 could achieve targets prescribed by the Department of Official
 Language, Ministry of Home Affairs, Government of India in the Annual
 Programme under various parameters. Sahsrabdi Rashtriya Rajbhasha
 Shield was conferred on our Bank by Rashtriya Hindi Academy,
 Roopambara.  Our Bank also bagged prize under RBIs Rajbhasha Shield
 Competition. The quarterly Hindi house magazine of the bank Mangala
 continues to be one among the top under RBIs Inter Bank Hindi House
 Magazine competition.
 
 18.2 The Bank organised a national level seminar first of its kind at
 Banks Head Office on 17.01.2008 on Role of TOLICs in changing
 Scenario.
 
 18.3 The Bank is represented in a number of committees/ working groups
 constituted by various apex institutions like RBI, IBA, Govt, of India,
 MHRD etc. for promoting the use of Hindi.  The Bank has been
 contributing under the scheme Original Book Writing in Hindi
 instituted by College of Agricultural Banking, Reserve bank of India.
 
 19.  Performance of Subsidiaries and other units sponsored by the Bank
 
 19.1 Corp Bank Securities Limited
 
 During the year, the wholly owned subsidiary of the Bank, Corp Bank
 Securities Limited (CBSL) posted Profit before tax of Rs. 11.32 crore
 as against Rs.3.90 crore posted previous year and the Profit after tax
 of Rs. 14.57 crore, as against the loss of Rs.20.18 crore posted
 previous year. Accordingly, the Companys Net Owned Funds rose from Rs.
 135.03 crore to Rs. 142.85 crore Further to the discontinuation of
 Primary Dealership business activity as at the end of March 2007, the
 Company ceased to be an NBFC and it started the distribution of Mutual
 Fund products and earned an income of Rs.0.59 crore from it. Besides,
 it has earned interest & dividend income amounting to Rs. 11.03 crore
 on its investment of surplus funds. The Company would continue to
 pursue various other business activities during the fiscal 2008-09,
 after securing approvals from its Board and other regulatory
 authorities.
 
 19.2 Chikmagalur-Kodagu Grameena Bank [CHIKO Bank]
 
 The Chikmagalur-Kodagu Grameena Bank [CHIKO Bank], sponsored by the
 Bank has a network of 47 branches. Deposits of CHIKO Bank stood at
 Rs.191.65 crore and advances at Rs.161.04 crore [gross] as on
 31-03-2008. CHIKO Bank recorded a net profit of Rs.3.38 crore [before
 taxation] and Rs.2.42 crore [after taxation] for the year ended
 31-03-2008.  Head Office and 46 branches [except one satellite branch]
 have been computerized as at the end of the year. Further, the RRB
 secured RBI license to open six more branches.
 
 20.  Constitution of Board of Directors
 
 The following changes have taken place in the Board Directors of the
 Bank during the year ended 31st March, 2008.
 
 Shri Satish Goel has been nominated by the Government of India as part
 time Non official Director who assumed office from 7th December, 2007
 for a period of three years.
 
 Shri K. L. Gopalakrishna,Executive Director of the Bank retired from
 the services of the Bank on 31st December, 2007 on attaining
 superannuation.
 
 20.1 The Board places on record its appreciation of the guidance and
 counsel received from Shri K. L. Gopalakrishna during deliberations of
 the Board/Committees of the Board and also in the conduct of the Banks
 business during his tenure of office as Executive Director of the Bank.
 
 20.2 The Board also noted with pleasure that Shri. Suvarna Sanyal has
 been nominated by the government of India as part time Non Official
 Director for a period of three years and has joined the Board of the
 Bank on 4th April, 2008.  20.3 The period of office of existing three
 Shareholder Directors is going to be completed on 25-07-2008 and the
 vacancies to be filled by election of Shareholder Directors,
 accordingly it is also proposed to conduct the election in the ensuing
 Annual General Meeting of the Bank.
 
 21.  Directors Responsibility Statements
 
 The Directors confirm that in the preparation of the Annual Accounts
 for the year ended 31st March, 2008:
 
 21.1 The applicable accounting standards have been followed along with
 proper explanation relating to material departures, if any;
 
 21.2 The accounting policies framed in accordance with the guidelines
 of the Reserve Bank of India, were consistently applied.
 
 21.3 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 on 31st March, 2008.
 
 21.4 Proper and sufficient care was taken for the maintenance of
 adequate accounting records in accordance with the provisions of
 applicable laws governing Banks in India and the accounts have been
 prepared on a going concern basis.
 
 22.  Acknowledgements
 
 22.1 The Directors thank the valued customers, shareholders,
 well-wishers and correspondents of the Bank in India and abroad for
 their goodwill, patronage and support.
 
 22.2 The Directors acknowledge with gratitude the valuable and timely
 advice, guidance and support received from Government of India, Reserve
 Bank of India, Securities and Exchange Board of India (SEBI), Stock
 Exchanges, various State Governments, Financial Institutions and the
 Statutory Central Auditors of the Bank in the functioning of the Bank.
 
 22.3 The Directors place on record their deep appreciation of the
 valuable contribution of the members of the staff at all levels for the
 progress of the Bank during the year and look forward to their
 continued co-operation in realisation of the corporate goals in the
 years ahead.
 
                           For and on behalf of the Board of Directors
 
 Place : Mangalore                   (B. Sambaniurthy)
 Date  : 02-06-2008                 Chairman & Managing Director