Punjab National Bank

Dear Shareholder,
 
 During the year 2008-2009, your Bank remained focussed and delivered a
 sterling performance despite the turbulent financial environment. It
 gives me great pride and pleasure to report to you that Punjab National
 Bank has once again emerged as the Number ONE Nationalised Bank in
 terms of various business parameters and profits.  
 
 The year 2008-2009 proved beyond doubt that the fate of nations are
 intrinsically interlinked with that of their financial systems. The
 future of our nation, our financial institutions and in turn the future
 of our people are safe and secure, thanks to the prudent and proactive
 approach of our financial regulator-Reserve Bank of India.  
 
 I have reiterated that your Bank is fundamentally sound and strong.
 Bank earned an Operating Profit of Rs.5,744 crore and Net Profit of Rs.
 3,091 crore.  PNB registered this impressive performance, after making
 an additional tax provision of Rs.85.27 crore relating to Income tax of
 previous years and Rs.500 crore towards wage revision [cumulative
 Rs.600 crore]. PNB is the first Nationalised Bank to book Rs. 1,000
 crore as net profit in a single quarter (Oct-Dec 2008).  I would like
 to re port major performance highlights of the Bank for the year
 2008-09:
 
 -  Bank has achieved ALL prescribed national goals under Priority
 Sector lending:-
 
 - Priority sector (PS) advances crossed the landmark of Rs.50,000
 crore, accounting for 41.53 percent of the Adjusted Net Bank Credit
 (ANBC) as against the national goal of 40 percent;
 
 - Despite the implementation of Debt Waiver, credit to direct
 agriculture increased by a robust 33.3 percent. Total agriculture
 credit as percent to ANBC was 19.72 percent as against the national
 goal of 18 percent;
 
 - Credit to weaker sections was 11.19 percent of ANBC as against the
 national goal of 10 percent.
 
 -  SME which is the thrust area of the Bank registered a growth of 30.2
 percent.  Bank has adopted a number of measures to facilitate credit
 delivery to the SME sector, as recommended by the RBI appointed Dr
 K.C.Chakrabarty Working Group on Rehabilitation of Sick SMEs;
 
 -  Education loan, a thrust area of the Bank increased by 50.6 percent;
 
 -  Despite the aggressive rate cuts, Net Interest Margin expanded to
 3.62 percent from 3.58 percent last year;
 
 - Return on Equity improved to 23.5 percent from 19.0 percent last year;
 
 -  Return on Assets improved to 1.39 percent from 1.15 percent last
 year;
 
 -  Earning Per Share (EPS) improved to Rs 98.03 from Rs 64.98 last
 year;
 
 - As per Basel II, CRAR of the Bank improved to 14.03 percent, as
 compared to 13.46 percent last year;
 
 -  Staff productivity measured in terms of business per employee
 increased to Rs 6.55 crore from Rs 5.05 crore last year.
 
 During the year, your Bank also crossed several other milestones of
 great significance including :-
 
 - PNB is the first Bank in India to introduce Core Banking Solution
 (CBS) on Finacle. During 2008-09, Bank achieved the landmark of
 becoming the first Nationalised Bank to bring ALL branches/extension
 counters into CBS;
 
 - Recording the highest total business of Rs 3,64,463 crore, highest
 deposits Rs 2,09,760 crore and the highest advances Rs 1,54,703 crore
 as at March 31,2009, amongst the Nationalised Banks.
 
 I am happy to inform you that the Board has recommended a record
 Dividend of 200 percent for the year 2008-09 up from the dividend of
 130 percent declared last year.
 
 One of the key contributors to this spectacular success was Building a
 Customer Experience through the delivery of financial products and
 solutions with an emotional fervour to ensure customer delight and
 engagement. Other noteworthy initiatives that helped our performance
 were our focussed programmes for the Retail, SMEs, Agriculture and
 Student segments. Our inclusive approach to banking, cost effective
 organisational structure, better asset-liability management, prudent
 risk management, strengthening recovery mechanism and various measures
 to control costs have played a significant role. Some of these
 initiatives include:
 
 - Branchless Banking - PNBs Business Facilitators and Correspondents
 use laptops equipped with web cameras (for taking photographs),
 biometric scanners (for fingerprints) and a pad (for capturing
 signatures) to open bank accounts for those who havent experienced
 banking services at all.  These bankers use POS (Point of Sale)
 terminals to record transactions on smart cards;
 
 - Identification of 35 sites for rolling out an IT enabled banking
 solution with PNBs Business Facilitators. Of these, 16 pilot projects
 have been launched formally;
 
 - Six pilot projects for financial inclusion of rickshaw pullers in
 Varanasi, Allahabad, Lucknow, Patna, Meerut and Surat as well as a
 project for construction workers in Bangalore;
 
 - Commissioning an initiative to professionalise 10,000 vegetable
 vendors and growers in Patna and Nalanda (in the state of Bihar) in
 association with Samriddhi - an intermediary that provides forward as
 well as backward integration;
 
 - A project to distribute 100,000 biometric smart cards in Mandi and
 Kullu for financial inclusion;
 
 - Association with Mother Dairy in an initiative to bring into the
 -anking fold, dairy farmers in 23 districts of UP beginning with
 Bulandshahar District;
 
 - Partnering with the Rajasthan Govt, in a scheme of empowerment of
 Women beneficiaries of 40 lakh rural families belonging to
 BPL/SF/MF/SC/ST category through financial inclusion;
 
 - Launching of e-governance in Bihar for Common Service Centre for
 Village Level Entrepreneurs (VLEs) for setting up kiosks and
 
 - Introduction of door-step banking in New Delhi.
 
 The financial challenge that the world faces is indeed unprecedented.
 Yet, for countries such as India, which have emerged relatively
 unscathed, there is a Once in 100 Years Opportunity to achieve both
 growth as well as national development.
 
 At Punjab National Bank, we see this as an opportunity in conjunction
 with our Vision and Mission of financially empowering millions of
 people who are presently unbanked by offering them innovative custom
 tailored products, which will positively impact their lives while
 contributing to the overall national growth and prosperity of our
 country. It is our commitment to support the underprivileged and to
 enable them to live a life of dignity and financial self sufficiency.
 PNB Vision 2013 is:
 
 To be a leading Global Bank with a Pan India footprint and become a
 household brand in the Indo-Gangetic Plain, providing entire range of
 financial products and services under one roof.
 
 PNBs Mission 2013 is: Banking For The Unbanked.
 
 Bank believes that delivering growth opportunities and enabling the
 common man to live life with dignity is a business opportunity and a
 means to rapidly emerge from this financial crisis.  Some of the other
 new initiatives include :-
 
 - Launching PNB Global Visa Credit Card. The card has one of the lowest
 charges and interest rates in the industry;
 
 - Associating with M/s SMC Global Securities Ltd and M/s Networth Stock
 Broking Ltd. to offer a unique 3-in-1 account, i.e Savings, Demat and
 Trading accounts;
 
 - Entering into tie up arrangements with major auto makers in India,
 viz., M/s Hyundai Motors Ltd; M/s Honda Motors Ltd; M/s Maruti Suzuki
 Ltd; M/s International Car & Motor Ltd. and M/s Tata Motor Ltd.
 
 We are confident that our robust risk management system will maintain
 the high quality of our assets. Our business processes, in tandem with
 the emerging market trends, cost effective organisational structure,
 advanced technological set up, strength to expand in an international
 arena, capability to provide entire range of financial products &
 services under one roof and our human assets coupled with our Vision
 Plan would help us to achieve an even higher performance.
 
 Our aim is to actualise our proposition: -
 
 - Inclusion is the precursor of growth;
 
 - Empowerment is the foundation of development and 
 
 - Financial prudence is the harbinger of sustained prosperity.
 
 Your continuous co-operation and patronage has enabled your Bank to
 achieve various milestones. We will continue to grow and succeed for
 the benefit of all our stakeholders. We seek to transform your Bank
 into a well entrenched brand in the Indo-Gangetic belt and a dominant
 Global player with substantial international presence. By orienting the
 financial system towards Inclusive Growth, we shall contribute
 significantly to the economic development of our great nation.
 
                                                    With Best Wishes,
                                                    (K.C. Chakrabarty) 
                                          Chairman & Managing Director