ING Vysya Bank

The Board of Directors have pleasure in presenting the Seventy Seventh
 Annual Report of the Bank together with the Audited Statements of
 accounts for the year ended 31-Mar-2008, Auditors Report thereon and
 other documents and statements as are required.
 
 Financial and Business Performance
 
 For the year ended March 2008 the Bank posted a net profit of Rs. 157
 Crore compared to Rs. 89 Crore for 2006-07. The pre- tax profit
 improved to Rs. 251 Crore compared to Rs. 128 Crore during the previous
 year. The Net Interest Income for the year 2007-08 increased to Rs. 498
 Crore, registering an increase of 12%.
 
 The aggregate business of the Bank reached Rs. 35,148 Crore as at
 31-Mar-2008 compared to Rs. 27,395 Crore as at 31-Mar- 2007. The Total
 Deposits of the Bank increased to Rs. 20,498 Crore registering a growth
 of 33%. The Net Advances increased to Rs. 14,650 Crore by March 2008
 compared to Rs. 11,976 Crore at the end of the previous year. The Bank
 has exceeded the regulatory target of 40% of adjusted net bank credit
 for priority sector lending, having achieved a level of 42.68%
 (previous year 41%). Export advances increased to Rs. 1,300.67 Crore
 from Rs. 1,151 Crore at the end of the previous year. The export credit
 as a percentage of net bank credit stood at 8.85%. As of 31-Mar-2008,
 the outstanding credit to Scheduled Castes / Scheduled Tribes borrowers
 stood at Rs. 34.62 Crore and the percentage of recovery to demand as on
 31-Mar-2008 was 48.33% (previous year 46%) of the amounts fallen due.
 
 The Net NPAs have been reduced to 0.70% as of March 2008 from 0.95% as
 of March 2007.
 
 Capital Raising and Capital Adequacy Ratio
 
 During the year 2007-08, the Bank raised equity capital of Rs. 350
 Crore through a private placement of 6,209,375 equity shares to
 Qualified Institutional Buyers (QIBs) at Rs. 310/- per share including
 a premium of Rs. 300/- per share and a Preferential Allotment of
 3,950,175 equity shares to ING Mauritius Holdings and 1,130,772 equity
 shares to ING Mauritius Investments I, wholly owned subsidiaries of ING
 Group at Rs. 310/- per share including a premium of Rs. 300/- per
 share. The paid up capital stood at Rs.102.47 Crore as at 31-Mar-2008
 as compared to Rs. 90.90 Crore, as at 31-Mar-2007.
 
 The Capital Adequacy Ratio stood at 10.20% as at 31-Mar-2008 as against
 the stipulated minimum of 9% prescribed by the Reserve Bank of India.
 Of this, Tier I Capital accounted for 6.82% as against 6.38% as at
 31-Mar-2007 and Tier II capital was at 3.38% as compared to 4.18% as at
 31-Mar-2007.
 
 The detailed discussion on financials and business performance is
 presented in the Management Discussion and Analysis Report, forming
 part of this Annual Report.
 
 Appropriation of Profits and Dividend
 
 In compliance with the requirement under the Banking Regulation Act,
 1949 and the guidelines issued thereunder by the Reserve Bank of India,
 the Directors propose to transfer Rs. 39.23 Crore (previous year Rs.
 22.23 Crore) to Statutory Reserve, Rs. 3.15 Crore (previous year Rs.
 39.57 Crore) to Capital Reserve and Rs. 4.77 Crore (previous year Rs.
 3.05 Crore) to Investment Reserve, for the year ended March 2008.
 
 Taking into account the regulatory restrictions, the Board of Directors
 recommend the payment of dividend at 15% on the face value of fully
 paid-up shares increasing from 6.5% of the previous year. The outflow
 on account of the proposed dividend, including the dividend tax, would
 be Rs. 17.98 Crore.
 
 The dividend recommended, on approval would be paid to all those
 shareholders whose names appear as Beneficial Owners as at the end of
 2-Jun-2008 as per the list to be furnished by Depositories (viz., NSDL
 & CDSL) in respect of the shares held in electronic form and those
 shareholders whose names appear in the Register of Members of the Bank
 as members after giving effect to all valid transfers of shares in
 physical form which will be lodged with the Bank on or before
 2-Jun-2008.
 
 Consolidated Financial Statements
 
 As required under AS 21 issued by the Institute of Chartered
 Accountants of India, the Banks consolidated financial statements are
 included in this Annual Report incorporating the accounts of its wholly
 owned subsidiary company viz., IIMG Vysya Financial Services Limited
 (IVFSL) in line with the basis of consolidation as explained in the
 Notes to the said consolidated statements.
 
 Employee Stock Option Scheme
 
 The Shareholders of the Bank have approved Employee Stock Option Scheme
 by passing a special resolution through postal ballot to create, issue,
 offer and /or allot 78,00,000 stock options of the Bank, under an
 Employee Stock Option Scheme titled ESOS 2007, in one or more tranches.
 The scheme has been formulated and implemented and grants have been
 made during the financial year 2007-08.
 
 Employees who fulfilled the qualifying period of service of the Bank
 have been granted Loyalty Options, from the pool of un-utilized
 options of Employee Stock Option Scheme 2005 with the permission of the
 Compensation (Corporate Governance) Committee. This has increased their
 sense of pride and affiliation to the organization.
 
 The requisite particulars to be disclosed under the SEBI (Employee
 Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
 1999, in respect of the options granted etc., under the existing and
 new schemes are furnished in Annexure -1 to this report.
 
 Statutory Disclosures
 
 The particulars of employees required under Section 217(2A) of the
 Companies Act, 1956 and the rules made thereunder, are given in the
 annexure appended hereto (Annexure- 2) and forming part of this report.
 In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts
 are being sent to the shareholders excluding the aforesaid annexure.
 Any shareholder interested in obtaining a copy of the said annexure may
 write to the Corporate Secretary at the Registered Office of the Bank.
 
 The provisions of Section 217(1)(e) of the Act relating to conservation
 of energy and technology absorption do not apply to the Bank.  The Bank
 has, however, used information technology extensively in its
 operations.
 
 Subsidiaries
 
 ING Vysya Financial Services Limited (IVFSL) a wholly owned subsidiary
 of the Bank with the object of carrying on business as brokers and
 agents for marketing and distribution of insurance products and mutual
 funds on a commission basis, earned a net profit of Rs. 0.23 Crore for
 the year 2007-08, as against Rs. 5.88 Crore during the previous year.
 
 As required under Section 212 of the Companies Act, 1956 the Balance
 Sheet, Directors Report and other documents pertaining to IVFSL, along
 with a statement of interest of the Bank in the subsidiary, are
 attached to the financial statements of the Bank.
 
 Directors
 
 Mr. Peter Smyth and Mr. K R V Subrahmanian resigned as Directors on
 25-Oct-2007 (afternoon) and 6-Nov-2007 (afternoon) respectively. The
 Board places on record its appreciation and gratitude for the valuable
 contributions rendered by them during their tenure as Directors on the
 Board.
 
 Retirement of Directors by rotation
 
 Mr. Richard Cox and Mr. Ryan Padgett will retire by rotation in terms
 of Section 256 of the Companies Act, 1956 at the ensuing Annual General
 Meeting and being eligible, offer themselves for re-appointment. A
 brief resume of each of these Directors is furnished in the Annexure to
 the Notice convening the Annual General Meeting.
 
 Registrars and Share Transfer Agents
 
 Karvy Computershare Pvt. Limited, Hyderabad continues to be the R & T
 Agents for the shares of the Bank.
 
 Auditors
 
 The Statutory Auditors viz. M/s. S R Batliboi & Co., Chartered
 Accountants who were first appointed at the 76th Annual General Meeting
 held on 28-Jun-2007 are retiring at this AGM and being eligible for
 re-appointment under the guidelines of Reserve Bank of India (RBI),
 offer themselves for re-appointment.
 
 Reserve Bank of India vide its letter No.
 DBS.ARS.No.15805/08:27:005/2007-2008 dated 20-May-2008, conveyed its
 approval for the re-appointment of M/s. S R Batliboi & Co., Chartered
 Accountants, Kolkata as Statutory Auditors of the Bank for the
 financial year 2008-09. The shareholders are requested to appoint the
 above auditors and authorize the Board of Directors to determine their
 remuneration. Shareholders are also requested to authorize the Board of
 Directors to appoint Branch Auditors and determine their remuneration.
 
 Other Reports
 
 As required under Clause 49 of the Listing Agreement entered into with
 the Stock Exchanges, a detailed report on Corporate Governance is
 included in this Annual Report.
 
 Directors Responsibility Statement
 
 As required by Section 217(2AA) of the Companies Act, 1956, the
 Directors confirm:
 
 (i) that in the preparation of the annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 (ii) that they had selected such accounting policies and applied them
 consistently and made judgements and estimates that were reasonable and
 prudent 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 under review;
 
 (iii) that they had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Bank and for preventing and detecting fraud and other
 irregularities;
 
 (iv) that they had prepared the accounts for the financial year ended
 31-Mar-2008 on a going concern basis.
 
 Acknowledgements
 
 The Board places on record their gratitude for all the guidance and
 co-operation received from the Reserve Bank of India and other
 government and regulatory agencies. The Board expresses its
 appreciation for the hard work and dedicated efforts put in by the
 Banks employees and look forward to their continued contribution.
 Finally, the Directors express their gratitude to the Members for their
 trust and support.
 
                                     For and on behalf of the Board
 
 Place: Bangalore                          K R Ramamoorthy
 Date : 21-May-2008                           Chairman