The Directors have pleasure in presenting the Eighty Eighth Annual
Report together with the Audited Statement of Accounts for the year
ended, 31st March 2012, and the Auditors'' Report.
Your Directors are pleased to inform that during the year under report,
your Bank has been able to achieve three important milestones viz. (1)
the turnover of your Bank crossed Rs. 50,000 crore (2) number of branches
crossed 500 and (3) the client base has increased to over 50 lakh.
Performance highlights for the financial year in the key financial
areas are as under:
(Rs. in Crores)
Particulars As on / for the As on / for the
year ended year ended
Deposits 31608.32 27336.45
Advances 20720.70 17348.07
Investments 12841.23 11506.34
Gross Income 3447.27 2662.60
Operating Profit 510.21 355.29
Net Profit 246.07 204.61
The total business turnover of the Bank was Rs. 52329.02 crore as on 31st
March 2012, an increase of 17.11 per cent over the preceding year. The
total assets of the Bank increased from Rs. 31693.01 crore to Rs. 36321.57
crore recording a growth of 14.60 percent for the year 2011-12.
The total deposits of the Bank grew from Rs. 27336.45 crore as on 31st
March, 2011 to Rs. 31608.32 crore as on 31st March 2012, registering a
growth of 15.63 per cent. During the year, low cost deposits of the
Bank, viz. Savings and Current Account Deposits, have shown growth of
14.12 per cent due to the various measures undertaken by the Bank. The
market share of the Bank in deposits was 0.51 percent.
The total advances grew from Rs. 17348.07 crore as on 31st March, 2011 to
Rs. 20720.70 crore as on 31st March, 2012, an increase of 19.44 per cent.
While agricultural advances increased from Rs. 2031.23 crore to Rs. 2586.36
crore, the priority sector advances increased from Rs. 6238.36 crore to Rs.
7570.27 crore. Lending under various socio-economic schemes has shown
satisfactory progress. The market share of the Bank in loans and
advances was 0.43 per cent.
As on 31st March, 2012 the total investments of the Bank stood atRs.
12841.23 crore as against Rs. 11506.34 crore as on 31st March 2011, an
increase of 11.60 per cent.
Under the competitive and challenging business environment, the overall
performance of your Bank during the year 2011-12 was satisfactory. The
gross income of the Bank was Rs. 3447.27 crore and total expenditure
(excluding provisions and contingencies) was Rs. 2937.06 crore. The net
interest income was Rs. 744 crore.
Your Bank earned an operating profit of Rs. 510.21 crore for the year
2011-12 as against Rs. 355.29 crore for the previous year showing a
growth of 43.60 per cent. The net profit of the Bank increased from Rs.
204.61 crore to Rs. 246.07 crore.
The net profit of Rs. 246.07 crore which along with a sum of Rs. 0.03 Crore
brought forward from the previous year aggregating Rs. 246.10 crore, is
appropriated as under The corresponding figure for the previous year
was Rs. 204.63 crore
Appropriation Rs. in Crore
Transfer to Statutory Reserve 110.00
Transfer to Revenue, General &
Special Reserves 59.48
Transfer to Investment Reserve Account 0
Transfer to Proposed Dividend (including tax) 76.59
Balance carried to Balance Sheet 0.03
Having regard to the overall performance of the Bank and the positive
outlook for the future, the Board of Directors recommended a dividend
of 35 per cent for the reporting year. The dividend payout ratio for
the year works out to 26.78 percent.
EARNING PER SHARE/BOOKVALUE
The earnings per share (basic) and the book value of the share as on
31st March, 2012 stood at Rs. 13.07 and Rs. 137.99 respectively.
NET OWNED FUNDS AND CAPITAL ADEQUACY RATIO
During the year under review the net owned funds of your Bank increased
from Rs. 2429.09 crore to Rs. 2598.21 crore, registering a growth of 6.96
per cent. The Capital Adequacy Ratio stood at 12.84 per cent as per
BASEL II norms (Previous year 13.33 per cent). The Bank has been
consistently maintaining the Ratio well above the minimum of 9 per cent
stipulated by the Reserve Bank of India. The market capitalisation as
on March 31, 2012 was Rs. 1800.94 crore.
During the year under report, your Bank achieved a turnover of Rs.9243.71
crore in foreign exchange business as against Rs. 9006.19 crore in the
previous year. The advances to export sector stood at Rs. 1454.41 crore.
NON-PERFORMING ASSETS AND PROVISION COVERAGE RATIO
Your Bank has been focusing on containing the non- performing assets
through better credit monitoring as well as intensified efforts to
recover the impaired assets. Bank''s Gross NPAs as on 31st March, 2012
have decreased from Rs.702.17 Crore (3.97percent) to Rs. 684.72 crore (3.27
percent) by the year end. The Net NPAs stood at Rs. 435.20 (2.11 per
cent) as against Rs. 280.34 crore (1.62per cent) as on 31st March 2011.
The Provision Coverage Ratio (PCR) computed in accordance with the RBI
guidelines works out to 47.18% as on March 31,2012 (Previous year
The credit rating agency ICRA Ltd. (ICRA) has accorded ''A1 '' rating to
the Bank''s Certificate of Deposit Programme. The rating symbol, ''A1 ''
indicates highest degree of safety for timely payment of principal and
Further, ICRA has revised the rating from ICRA A to ICRA A
(pronounced ICRA A) and Credit Analysis & Research Limited (CARE) has
re-affirmed CARE A (Single a Plus) ratings, (indicating adequate
degree of safety regarding timely servicing of financial obligations.
Such instruments carry low credit risk), in respect of Rs. 350 crore
raised by the Bank during the previous years, byway of Unsecured
Redeemable Non-Convertible Subordinated (lower Tier-II) debt
instruments. Your Bank would continue its efforts in improving upon the
During the year under report, your Bank opened its 500th branch at
Shirur in Karnataka State on 29.03.2012. A total 25 new branches were
opened viz at Tanuku, Karimnagar Miryalguda and L B Nagar in Andra
Pradesh, Toranagallu Siddalingapura, Yellapur, Bangalore-
Rajarajeshwarinagar Siruguppa, Bangalore – Metropolitan Magistrate
Court, Kunigal, T Narsipura, Kairangala, Horanadu, Kampli, Sira,
Shirur, Yadgir, Indi, Nippani in Karnataka, Gwalior, in Madhyapradesh,
Rourkela in Orissa, Chennai- Velachery in Tamilnadu, Baruipur and
Memari in West Bengal. Further, your Bank added 85 ATM outlets at
various locations during theyear2011-12.
As at 31 March, 2012, your Bank had 503 branches (including one
Corporate Finance branch at Fort Mumbai and Agricultural Development
branch at Chick magalore), 352 ATM outlets, 10 Regional Offices, an
International Division, a Data Centre, a Customer Care Centre, 5
Service branches, 2 Currency Chests, 3 Extension Counters, 2 Central
Processing Centers and 3 Asset Recovery management branches spread
across 20 States and 2 Union Territories. Further, for better ambience
and improved customer service, your Bank shifted 27
EMPLOYEES STOCKOPTION SCHEME
A total of 93468 equity shares were allotted to the employees of your
Bank, pursuant to the exercise of options vested under the Employees
Stock Option Scheme of the Bank. Disclosure in respect of Employee
Stock Options Scheme pursuant to SEBI (Employees Stock Options Scheme
and Employees Stock Purchase Scheme) Guidelines 1999 is given in Annexure
I to this report.
Messrs Ananthakrishna, D. Harshendra Kumar and Dr. H. Ramamohan are
retiring by rotation and are eligible for re-appointment at the forth
coming Annual General Meeting. Their brief resume and other details are
furnished in the notice of the meeting.
Your Bank is committed to following the best practices of corporate
governance to protect the interests of all the stakeholders of the
Bank, viz. shareholders, depositors, customers and employees and the
society in general and maintains transparency at all levels. A detailed
report on corporate governance practices is given as Annexure III to
DIRECTORS'' RESPONSIBILITY REPORT
As per Section 217(2AA) of Companies (Amendment) Act, 2000, your
Directors report that:
i. The Accounts for the year 2011-12 were prepared by following the
Accounting Standards in so far as they apply to banks.
ii. Accounting policies adopted and applied consistently by the Bank
are in tune with the RBI guidelines issued from time to time.
Reasonable prudent judgments and estimates have been made in the
accounts, so as to give a true and fair view of the state of affairs of
the Bank and of the profit of the Bank for the financial year ended
31st March 2012.
iii. The Bank had taken proper and sufficient care for maintaining
adequate records in accordance with the provisions of the Companies Act
1956, in so far as they apply to banks.
iv. The annual accounts for the year ended 31st March 2012 have been
prepared on a Going Concern basis.
Considering the nature of the Bank''s business, the provisions of
Section 217(1) (e) of the Companies Act, 1956 relating to conservation
of energy and technology absorption do not apply to your Bank. The Bank
has, however, used information technology extensively in its
There were no employees who were in receipt of remuneration during the
year ended March 31, 2012 requiring disclosure under section 217(2A) of
the Companies Act, 1956 read with Companies (Particulars of Employees)
Businesses are an integral part of society and have a critical active
role in the sustenance and improvement of a healthy ecosystem in
fostering social inclusiveness and equity and to uphold the ethical
practices and good governance. It is believed that integrating social,
environmental and ethical responsibilities into governance of business
ensures long term successes, competencies and sustainability With this
in mind your Bank continues to engage in accepting various social
responsibilities. The Corporate Social Responsibility initiatives of
the bank are designed to ensure that the bank adds social,
environmental and economic value in all its activities to make a
positive, sustainable impact on both society and business. In this
direction the bank has been responding well over the years through
various initiatives like participation in social, cultural, educational
activities etc., aimed at improving the knowledge, standard of living
and the quality of life of the people and society The Bank firmly
believes that being an integral part of society, it is the inclusive
growth of society which contributes ultimately to the growth of the
Financial Inclusion is making available the full range of banking
services at an affordable cost to the people who do not have access to
Banking Services. It mainly focuses on the section of society not
having formal financial institutional support.
Your Bank has taken up implementation of Financial Inclusion in 80
villages across Karnataka, Chattisgarah and Andhra Pradesh by utilizing
appropriate information and Communication Technology (ICT) based model
using Business Correspondents Model in 69 villages and Brick and
Mortar branch models in 11 villages, for extending banking services
in every village having a population of over 2000. Your bank has opened
its first Financial Inclusion Branch at Kairangala and the second
on eat Horanadu.
With a view to spread awareness on financial services available from
banks to the members of general public and to spread financial
education and financial literacyto the common man at the remotest
Village in the service area of the Bank, your Bank has implemented the
mobile van model of Financial Inclusion Resource Center (FIRC) and has
covered about 854 service area villages by 31.03.2012. Further, to
educate the people in rural and urban areas regarding various financial
products and services available from the financial sector, to provide
financial counseling services regarding responsible borrowing and debt
counseling and restructuring, your Bank has opened its first Financial
Literacy Credit Counseling Center (FLCC) at B. C Road, Bantwal by
joining hands with Syndicate Bank and Vijaya Bank, as an institutional
Further your Bank is a Trustee of the Karnataka Farmers Resource Center
(KFRC) set up by State Level Bankers Committee (SLBC), Karnataka at
Bagalkot, Karnataka. It serves as a resource center and provides
bridging services to the farmers to develop the managerial capacity of
farmers. It also coordinates the services of various service providers
to provide training, consultancy: counseling and reference services.
Your Bank is also participating in the pilot project of the Govt. of
Karnataka for Bio-Metric Smart Card based payment system (Electronic
Benefit Transfer) for National Rural Employment Guarantee Scheme
(NREGS) and Social Security Pension (SSP) beneficiaries covering
Chitradurga, Yadgir and Bellary Districts in Karnataka.
Your Directors would like to place on record their sincere gratitude to
the Reserve Bank of India, other government and regulatory authorities,
financial institutions and correspondent banks for their continued
guidance and support. Your Directors also place on record their
gratitude to the Bank''s shareholders, depositors and other customers
for their continued support, patronage and goodwill. Your Directors
express their deep sense of appreciation to the employees, for their
contribution in your Bank''s quest for sustained growth and
profitability and look forward to their continued contribution in
scaling greater heights.
For and on behalf of the Board of Directors
Place: Mangalore Ananthakrishna
Date : 18.05.2012 Chairman