To The Members
 
 The Board of Directors, Federal Bank is indeed pleased to present to
 you the 80th Annual Report of the business & operations along with the
 audited accounts for the year ended March 31, 2011.
 
 Financial Performance
 
 Your Bank did well in the financial year 2010-2011. Before we go into
 the bigger details, here''s a quick glance through the highlights of the
 year.
 
                                                              Rs. In Cr
 
                                               For the year ended
 Financial Parameters
                                              31.03.11        31.03.10
 
 Net Interest Income                           1746.58         1410.83
 
 Fee and Other Income                           516.81          530.91
 
 Net Revenue                                   2263.39         1941.74
 
 Operating Expenses                             836.14          676.89
 
 Operating Profit                               1427.25         1264.85
 
 Net Profit                                      587.08          464.55
 
 Profit Brought Forward                           23.14           21.93
 
 Total Profit Available for Appropriation        610.22          486.48
 
 Appropriations:
 
 Transfer to Statutory Reserves                 146.80          116.14
 
 Transfer to Revenue Reserves                   232.11          208.27
 
 Transfer to Capital Reserves                     0.00            8.20
 
 Transfer to Special Reserves                    36.56           31.00
 
 Proposed Dividend                              145.39           85.52
 
 Provision for Dividend Tax                      23.58           14.21
 
 Balance Carried Over to Balance Sheet           25.78           23.14
 
 Financial Position:
 
 Deposits                                     43014.78        36057.95
 
 Advances                                     31953.23        26950.11
 
 Total Business (Deposits   Advances)         74968.01        63008.06
 
 Other Borrowings                              1888.36         1546.76
 
 Investments                                  14537.68        13054.65
 
 Total Assets (Balance Sheet Size)            51456.36        43675.61
 
 Capital                                        171.05          171.03
 
 Ratios:
 
 Return on Total Assets (%)                       1.34            1.15
 
 Return on Equity (%)                            11.98           10.30
 
 Earnings Per Share (Rs.)                          34.32           27.16
 
 Book Value Per Share (Rs.)                       298.67          274.24
 
 Operating Cost to Income (%)                    36.94           34.86
 
 Capital Adequacy Ratio (%)(BaseII)             15.39           17.27
 
 (Basel II)                                      16.79           18.36
 
 We achieved a commendable net profit figure of Rs. 587.08 crore. In the
 light of the year''s many challenges, including the stif competition
 within the financial sector, the economy''s inflationary conditions and
 the tight money policy reflected in the RBI''s monetary policy, this
 performance is indeed noteworthy. We recommend a dividend of Rs. 8.5 per
 share.
 
 Operating Profit
 
 The operating profit for the year saw a 12.84% increase - from Rs.
 1264.85 crore in FY2010 to Rs. 1427.25 crore in FY 2011.
 
 The operating profit excluding trading gains increased by 19.39% from Rs.
 1157.14 crore to Rs. 1381.49 crore.
 
 Trading profit decreased to Rs. 45.76 crore from Rs. 107.71 crore.
 
 The Profit margin for the year increased to 12.85% from 11.05%.
 
 The net interest income increased from Rs. 1,410.83 crore to Rs. 1746.58
 crore but the fall in trading Profit led to a decrease in the
 non-interest income from Rs. 530.91crore to Rs. 516.81 crore.
 
 Net Profit
 
 The year ended 31 March 2011 saw a 26.38% increase in the net Profit.
 From Rs. 464.55 crore in FY 2010 to Rs. 587.08 crore, we could display a
 substantial improvement in net Profit and the Profit margin also
 increased to 12.85% from 11.05% This net Profit was after taking into
 account a total provision of Rs. 840.17 crore out of which the provision
 for income tax is Rs. 314.73 crore.
 
 With increased Profits, return on average equity and return on average
 total assets followed suit, from 10.30% to 11.98% and 1.15 % to 1.34%
 respectively.
 
 Income Growth
 
 In the year ended 31 March 2011, your Bank registered an 8.67% increase
 in total income generated, growing from Rs. 4204.14 crore (FY2010) to Rs.
 4568.84 crore (FY2011). This growth was primarily facilitated by the
 increase in interest income, which rose by 10.31% from Rs. 3673.23 crores
 to Rs. 4052.03 Crores.
 
 The need to offer competitive rates towards maintaining/improving
 market share combined with increase in impaired assets, led to a fall
 in the yield on advances to 11.09% as against the 11.30% recorded on 31
 March 2010.
 
 Income from advances (Interest & exchange) as a percentage to total
 income increased to 69.36% as on 31 March 2011 from 67.78% for the year
 ended 31 March 2010. The rate of return on advances (net of provisions)
 decreased to 9.37% from last year''s 9.66%.  The reduction in yield is
 partially contributed by the de-recognition of interest in fresh NPA
 accounts and increased provisions. Yield on investments (excluding
 trading income) increased to 6.95% as on 31 March 2011 from 6.84% as on
 31 March 2010.
 
 Income from investments increased by 10.80%.
 
 The volatility of the financial markets brought down the trading Profit
 from last year''s Rs. 107.71 crore to Rs. 45.76 crore, therefore leading to
 the decrease in other income.
 
 The net interest margin for the year increased to 4.22% from 3.82% in
 FY 2010.
 
 We could improve the interest margin, which is a major performance
 yardstick, by bringing down the cost of deposit.
 
 Expenditure
 
 Total expenses for the year ended 31 March 2011 increased by 6.88% from
 Rs. 2939.29 crore to Rs. 3141.59 crore. Interest expenses increased to Rs.
 2305.45 crore in FY 11 from Rs. 2,262.40 crore in FY 10. Rs. 2161.98 crore
 was the interest paid on deposits. We were able to bring the cost of
 deposits down to 5.99 % from last year''s 6.55%.
 
 Cost of all funds (Deposits   Borrowings   Bonds) decreased to 6.11%
 from 6.62% as on March 2010.  We could increase our low cost retail
 deposits and reduce the high cost bulk deposits.
 
 Average savings deposits have gone up to Rs. 8392.99 crore from Rs. 6915.20
 crore last year. 32.19% of our total deposits are low cost deposits.
 Interest paid as percentage to total income decreased to 50.46% from
 53.81% in FY 2010.
 
 Operating expenses increased to Rs. 836.14 crore from Rs. 676.89 crore.
 
 Staf related expenses stands at Rs. 480.41 crore. The staf cost increased
 by 31.24% and we grew by 374 employees during the year. Wage revision,
 increase in Dearness Allowance and additional contribution towards
 pension liability of second optees of pension led to the increase in
 staf expense.
 
 The net liability arising on exercise of second option for Pension by
 employees (other than separated/ retired employees) is fully reckoned
 and disclosed as liability in the Balance Sheet. 1/5th of the said
 liability amounting to Rs. 33.71 crore, is charged to the Profit and Loss
 Account of the year and the balance unamortized amount of Rs. 134.72
 crore is carried forward to be amortized equally over the succeeding
 four years. Employee and other costs as a percentage of average
 advances plus average investments increased to 2.03% as on 31 March
 2011 from 1.84% as on 31 March 2010. The staf cost as percentage to
 total income increased to 10.51% from 8.71%.
 
 The cost to income ratio stands at 36.94% as against 34.86% in March
 2010.
 
 Spread
 
 Spread on advances to cost of deposits increased to 5.10% from 4.75% in
 FY 2010. Spread on investments (gross) increased from 1.23% to 1.33%
 this year. The spread (net of provisions) on advances grew from last
 year''s 3.11% to 3.38%.
 
 Dividend
 
 We have recommended a dividend of Rs. 8.5 per share as compared to Rs. 5
 per share declared for the last financial year. While recommending the
 dividend, we have taken into account the Profit that has to be retained
 for the future expansion and growth of the Bank and capital adequacy
 requirement. Retained earnings add to the net worth and is a benchmark
 of rating your Bank and gets refected in the share price, which
 translate into benefits for our investors in terms of capital
 appreciation on the shares held by them.
 
 Investor Education and Protection Fund
 
 As per the Companies Act 1956, dividend unpaid for
 
 more than 7 years from the date of issue is to be transferred to
 Investor Education And Protection Fund. On 15.09.2010, we transferred Rs.
 2053825.00 to the Fund.
 
 Growth in Core Business
 
 Total business (deposits plus advances) increased from Rs. 63008.06 crore
 to Rs. 74968.01 crore as on 31 March 2011.
 
 Our deposits increased to Rs. 43014.78 crore registering a YoY growth of
 19.29%. Advances touched Rs. 31953.23 crore, registering a YoY increase
 by 18.56%. But this growth is not refected in the case of average
 deposits and advances, as the spurt in the business was mainly during
 the second half of the financial year. We are taking measures to ensure
 your Bank''s consistent and sustainable growth across the year.  We
 avoided bulk deposits and gave thrust to retail deposits to bring down
 the cost.
 
 The mix of average core deposits of SB, CD and Term Deposits improved
 to 23:5:72 from 21:4:75 during FY 2010.
 
 Your Bank''s investments portfolio increased to Rs. 14537.68 crore showing
 a 11.36% increase on YoY compared to 7.72% in FY 2010. The growth of
 average investments on YoY registered only 8.99% compared to 20.75% in
 FY2010. The volatility in the financial markets forced us to be cautious
 in terms of expanding the investment portfolio.
 
 Loan Asset quality
 
 Gross NPA as on March 31, 2011 stood at Rs. 1148.33 crore as against Rs.
 820.97 crore in the previous year. Gross NPAs as percentage to Gross
 Advance stands at 3.49% as against 2.97% in the previous year. Net NPAs
 stood at Rs. 190.69 crore (0.60% of Net Advances) as against Rs. 128.79
 crore (0.48% of Net advances) in the previous financial year. Fresh
 accretion to NPAs during the period is the major reason behind the
 rise. We have taken several measures to contain impaired assets,
 including utilising SARFAESI proceedings more efectively to improve the
 recovery of Non Performing Assets and engaging recovery agents after
 complying with RBI guidelines, in respect of their codes of conduct. In
 adherence to RBI guidelines, negotiated settlement is permitted in
 deserving cases. To prevent the accretion to the Non Performing Asset
 system, we''ve implemented stricter monitoring of credit and in the case
 of viable units, restructuring is permitted to overcome temporary
 difculties faced by them.
 
 Provision coverage
 
 As on 31.03.2011, the Bank held a total provision of Rs. 942.34 crores.
 This includes a Floating Provision of Rs. 179.52 crores. The total
 provision coverage for NPAs as on March 31, 2011 is 82.06%. As per the
 extant RBI directive, Banks should hold minimum provision coverage of
 70% including technically written of accounts. As on 31st March 2011,
 Provision Coverage Ratio of our Bank, including technically written of
 accounts, is 89.77%. It indicates that the recovery of such assets will
 have a real favorable efect on our profitability as these provisions can
 be reversed to the Profit and loss account upon recovery of the non
 performing assets. Provisions as percentage of total income increased
 to 10.94% from 7.50%.
 
 Financial Inclusion
 
 The frst-ever Financial Inclusion Bank Branch in the state of Kerala,
 ''Grama Jeevan'' branch was opened at Thuruthy in Vengoor West village,
 Ernakulam District. Allotted to the Bank for Financial Inclusion, the
 branch ofers full-fedged Banking facilities to the public, including
 round-the-clock ATM facility.  Dr. D Subbarao, Hon''ble Governor of
 Reserve Bank of India visited the Grama Jeevan branch on the inaugural
 day itself.
 
 “Federal Ashwas Trust” was established by the Bank with the primary
 objective of establishment and running of “Federal Ashwas Financial
 Literacy and Credit Counseling Centers” (FAFLCCs) to provide financial
 education and credit counseling to the public. The branchless Banking
 model of Financial Inclusion is implemented through individual Business
 Facilitators (BFs). In this model, Customer Service Points (CSPs) are
 manned by trained BF agents.
 
 Capital adequacy
 
 CRAR of the bank is 15.39% as per Basel I and as per BASEL II it is
 16.79% as on 31.03.2011 which is far in excess of the 9% stipulated by
 RBI and it adds to the strength of our balance sheet.
 
 Employee productivity
 
 Business per employee increased to Rs. 9.23 crore from Rs. 8.13 crore in FY
 2010.
 
 Profit per employee increased to Rs. 7.26 lakh from Rs. 6.01 lakh as in the
 previous year.
 
 Share value dimensions
 
 Increase in net Profit brought about more earnings per share, from Rs.
 27.16 in FY 2010 to Rs. 34.32 and return on equity increased to 11.98%
 (10.30% in FY 2010). The bookvalue increased to Rs. 298.67 as on 31 March
 2011 from Rs. 274.24 as on 31 March 2010.
 
 Expansion of Network
 
 During the period, we grew by 71 branches and 73 ATMs. As on March 31,
 2011, the total number of branches and ATMs of the Bank increased to
 743 and 805 respectively, as against 672 and 732 in the last financial
 year.
 
 To enhance the reach and geographical spread, your Bank seeks to add
 around 200 branches, subject to approval from RBI based on the cluster
 based model.  With this approach, rather than one or two branches, we
 will open a cluster of branches in a potential locality and thereby
 enhance visibility and build on the Bank''s brand image.
 
 Restructuring of the bank
 
 We have constituted a Marketing Department to promote our products
 better and to enhance the brand image of them. We now have Credit Hubs
 to improve the quality of our credit portfolio and for better credit
 risk management. The present regional set up has been given a facelift
 with the introduction of zonal set up and modifed role of regions, to
 give focused attention on business development.
 
 Challenges ahead of us
 
 RBI is evaluating to deregulate interest rates on Savings Bank
 accounts. They have already hiked the regulated interest rate on
 savings deposits from 3.5% to 4%. This would result in higher interest
 expenses and maintaining the present level of interest spread,
 
 which is ahead of industry levels, will prove to be a challenge given
 the competitive scenario, where we have to ofer best interest rates for
 quality advance customers.
 
 Reserve Bank of India has been continuously raising the policy rate in
 order to contain the inflationary pressures of the economy and
 maintaining the present level of net interest margin will be a real
 challenge.
 
 Introduction of Basel III is under consideration by RBI. This may
 result in higher capital adequacy requirements. As we currently have a
 ratio of 16.79%, it wouldn''t immediately pose a challenge to us. But
 eventually, we may have to increase our capital for business growth.
 Working Group constituted by RBI has recommended Financial Holding
 Company structure for Banks and other financial institutions.  Once the
 recommendations get implemented, we will have to comply with the
 regulations.
 
 Corporate governance
 
 The Bank has adopted a Code of Corporate Governance, which
 simultaneously takes care of the interest of shareholders and other
 stakeholders, and provides for good management, adoption of prudent
 risk management techniques and compliance with required standards of
 capital adequacy. The code also aims at identifying and recognizing the
 Board of Directors and the Management of the Bank as the principal
 instruments, through which good corporate governance principles are
 articulated and implemented. This gives utmost importance towards
 identifying and recognizing transparency, accountability and equality
 of treatment amongst all the stakeholders, thus being in tune with
 statutory and regulatory structures. A copy of the Code is available
 upon request.
 
 The corporate governance practices followed by the Bank are given in
 the annexure.
 
 Board of Directors
 
 The composition of the Board of Directors is governed by the Banking
 Regulation Act, 1949, the Companies Act, 1956, Listing Agreement, and
 the Code of Corporate Governance adopted by the Bank. The Board
 consists of 8 persons with rich experience and specialized knowledge in
 various areas of relevance to the Bank, including banking, accountancy,
 finance, industry, agriculture, and information technology.
 
 Shri. Shyam Srinivasan MD & CEO joined the Bank on 23/09/2010 on
 retirement of Shri. M. Venugopalan, MD & CEO who retired on July 31,
 2010 after his tenure of appointment of 5 years and 3 months.
 
 Shri. P. C. John, Executive Director, is whole time Director of the
 Bank. Excluding the MD & CEO and the ED all other members of the Board
 are Non-Executive and Independent Directors.
 
 Shri. P. R. Kalyanaraman, Executive Director, retired on 1st January
 2011 after his tenure of appointment of 3 years.
 
 Mr. Abraham Chacko has joined the Bank as Executive Director efective
 21st of May 2011.
 
 Shri. P. C. Cyriac, Shri. Abraham Koshy and Dr. T. C.  Nair were
 re-elected/ appointed as Directors of the Bank at its last Annual
 General Meeting held on 13th September 2010.
 
 The Directors who are retiring at this AGM are Shri.  P. H. Ravikumar
 and Shri.Suresh Kumar. Shri. P. H.  Ravikumar will be retiring after
 rendering 7 years of valuable service to the Bank. Shri. Suresh Kumar
 being eligible have ofered himself for reappointment. Shri.  Nilesh. S.
 Vikamsey was appointed as a Director of the Bank, as an Additional
 Director in the place of Shri. P. H. Ravikumar. A proposal moved by a
 member to appoint Shri. Nilesh S. Vikamsey as Director in this vacancy
 is placed before this AGM.
 
 Shri. Suresh Kumar is an Independent Director on our Board. He holds a
 Bachelor''s degree in Commerce (Hons.) from the University of Bombay and
 has completed advanced general and investment management programmes at
 London, Wharton and Columbia Schools of Business. He has been part of
 the Senior Management of Emirates Bank group since 1989. Prior to that
 he had held senior treasury and general management positions in
 Government of Dubai projects and the banking sector in India. He is a
 fellow of the Indian Institute of Bankers and the founder/ past
 President of the Indian Business and Professional Council in Dubai. He
 is also a member of the Regional Chief Executive Forum of the Institute
 of International Finance (IIF). He is currently the CEO of Emirates
 Financial Services PSC .
 
 He is also the Chairman of the Board of Directors of Fedbank Financial
 Services Ltd.
 
 Shri. Nilesh S. Vikamsey is a Chartered Accountant with over 16 years
 experience, and is partner of Khimji Kunverji & Co., Chartered
 Accountants. At present he is a member of many Committees of ICAI,
 including those noted below:
 
 a) IFRS Implementation Committee
 
 b) Disciplinary Committee (under Section 21B) C) Accounting Standards
 Board
 
 d) Auditing & Assurance Standards Board
 
 e) Expert Advisory Committee
 
 f) Professional Development Committee
 
 g) Internal Audit Standards Board
 
 Currently he is an Independent Director in the following Companies:
 Listed Companies:
 
 1) India Infoline Limited
 
 2) Rodium Realty Limited Private Companies:
 
 1) HLB Ofces & Services Pvt Limited
 
 2) TruNil Properties Pvt Limited
 
 3) BarKat Properties Pvt Limited
 
 Subsidiary
 
 FedBank Financial Services Ltd. is a fully owned subsidiary of the
 Bank. As required under Section 212 of the Companies Act, 1956, the
 financial statements relating to this company, the sole subsidiary of
 the Bank, for FY11 are attached.
 
 Annual Financial Statements and Audit Report
 
 As required by section 212 of the Companies Act, 1956, the Bank''s
 Balance Sheet as on 31 March 2011, its Profit and loss account for FY11,
 and the statutory auditors'' report and statements required under the
 section, are attached.
 
 Statutory Audit
 
 M/s. Varma & Varma, Chartered Accountants, Kochi,
 
 and M/s. Price Patt & Co., Chartered Accountants, Chennai, jointly
 carried out the statutory central audit of the Bank. The statutory
 central/branch auditors audited all the branches and other ofces of the
 Bank.
 
 Special Reserve created under section 36(1)(viii) of the Income Tax Act
 1961.
 
 As per section 36(1)(viii) of the Income tax Act, 1961, deduction is
 available for any Special Reserve created and maintained to the extent
 of 20% of the Profit derived from the business of providing long term
 fnance for industrial or agricultural development or development of
 infrastructure facility or housing in India. With the Bank''s term
 lending for housing, power, bridges, roads and other segments of
 infrastructure in the last year and the availability of the tax benefit
 under the section 36(1)(viii) of the Income tax Act, the Bank has
 created a Special Reserve of Rs. 36.56 crore during this year (previous
 year Rs. 31 Crore), being the eligible amount of deduction available
 under the said section.
 
 Joint Venture in Life Insurance Business
 
 The Bank''s joint venture Life Insurance Company, in association with
 IDBI Bank Limited and Fortis Insurance International N.V. (now Ageas),
 namely IDBI Fortis Life Insurance Company Limited, renamed as IDBI
 Federal Life Insurance Company Limited, commenced operations in March
 2008. Currently the Bank has a total stake of Rs. 182 cr in the equity of
 the company holding 26% of the equity capital.
 
 Statutory Disclosure
 
 Stock Exchange Information
 
 The Bank''s equity shares are listed on:
 
 1. Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers Dalal
 Street, Mumbai - 400 001.
 
 2.  National Stock Exchange Ltd.  “Exchange Plaza”
 
 Bandra – Kurla Complex Bandra East, Mumbai - 400 051.
 
 3. Cochin Stock Exchange Ltd.  MES, Dr P K Abdul Gafoor Memorial
 Cultural Complex 4th Fl, 36/1565, Judges Avenue, Kaloor, Kochi – 682
 017.
 
 The GDRs issued by the Bank are listed on the London Stock Exchange.
 
 The annual listing fees have been paid to all the Stock Exchanges
 listed above.
 
 The requirement of disclosure of steps taken for conservation of energy
 and technology absorption does not apply to the Bank.
 
 Through its export-fnancing operations, the Bank supports and
 encourages the country''s export eforts.
 
 The requirement of disclosure under section 217 (2A) of the Companies
 Act, 1956, is given as a separate annexure.
 
 Personnel
 
 As required by the provisions of Section 217 (2A) of the Companies Act,
 1956, read with Companies (Particulars of Employees) Rules, 1975, as
 amended, the names and other particulars of the employees are set out
 in the Annexure to the Directors'' Report. (Annexure I).
 
 Directors'' Responsibility Statement
 
 As required by section 217 (2AA) of the Companies Act, 1956, the
 Directors state that:
 
 a) in the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 b) the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of afairs
 of the Bank at the end of the financial year and of the Profit of the
 Bank for that period;
 
 c) the Directors have taken proper and sufcient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Bank and for
 preventing and detecting fraud and other irregularities; and
 
 d) the Directors have prepared the annual accounts on a going-concern
 basis.
 
 Acknowledgement
 
 The Board of Directors places on record its sincere thanks to
 Government of India, Reserve Bank of India, various State Governments
 and regulatory authorities in India and overseas for their valuable
 guidance, support and co-operation. The Directors also place on record
 the gratitude to investment Banks, rating agencies and stock exchanges
 for their excellent support.
 
 The Directors record their sincere gratitude to the Bank''s
 shareholders, esteemed customers and all other well-wishers for their
 continued patronage. The Directors express their appreciation for the
 contribution made by every employee of the Bank.
 
                            For and on behalf of the Board of Directors
 
 Aluva                                                       P.C.Cyriac
 
 29 July 2011                                     Chairman of the Board