Punjab National Bank with a rich legacy spanning 117 years has emerged
as the second largest bank in the country. Today, PNB is a well
established brand with a strong technological base touching the lives
of millions of customers. The Bank has worked assiduously to build its
front line position, constantly reinventing itself to keep pace with
the changing banking landscape and customer preferences. While
successfully managing change, the Bank has remained deeply rooted in
the principles of good banking. Resultantly, the fundamentals of the
Bank have strengthened which augur well for a bright future.
A network of 5189 branches, 5050 ATMs and a customer base of over 60
million add considerably to the franchise value the Bank enjoys.
Technology has played an important role in expanding its franchise
value through customer acquisition and retention, carrying out faster
and efficient financial transactions in a secure manner and in
improving customer convenience.
The awards and recognitions received by the Bank bear testimony to the
efforts and initiatives to remain highly customer-focused, adoption of
good business practices and extending the reach to the unbanked. It is
also a reflection of how the Bank has been able to successfully pursue
business opportunities with acumen while continuing to fulfill its
social responsibilities.
Organization Structure
Pursuit of strategy requires that organization structure is closely
aligned with business goals. During the year, Bank took various
measures aimed at improving organization structure to support effective
execution of strategy. The Retail Banking Division was bifurcated into
Retail Assets Division and Resource Mobilization Division. Further, the
Retail Hubs were reorganized into Retail Asset Branches (RAB) to meet
the requirements of the retail borrowers and ensure faster delivery of
retail credit. Presently, 73 RABs are functioning successfully.
Budgeting process was further strengthened by linking with systems
growth in a particular area as well as available potential. To face the
HR challenges in a proactive manner, routine administrative functions
relating to human resource management were hived-off into a separate
Personnel Administration Division.
Your Directors take pleasure in placing the Banks Annual Report for
2010-11 along with its audited annual financial statements.
OUR PERFORMANCE
1. FINANCIAL HIGHLIGHTS
1.1 BALANCE SHEET
(Rs Crore)
2009-10 2010-11 Growth %
PARTICULARS
Capital & Reserves 17723 21509 21.36
Total Business 435931 555005 27.31
Deposits 249330 312899 25.50
Low cost Deposits (Savings and Current) 101850 120325 18.14
Advances 186601 242107 29.75
Retail Credit 19214 23621 22.94
Priority Sector Credit 63769 75652 18.63
-% of Adjusted Net Bank Credit (ANBC) 40.55 40.67 -
Agreecultural Credit 30207 35462 17.40
-% of Adjusted Net Bank Credit (ANBC) 19.53 19.3 -
1.2 PROFIT
(Rs Crore)
PARTICULARS FY 2009-2010 FY 2010-2011 Growth%
Operating profit 7326 9056 23.61
Provisions 3421 4622 35.11
Net profit 3905 4433 13.53
1.3 INCOME & EXPENDITURE
(Rs Crore)
PARTICULARS FY 2009-2010 FY 2010-2011 Growth%
Interest income 21422 26986 25.97
- Interest/discount on advances/bills 16677 21105 26.55
- Income on investments 4556 5638 23.75
Non-interest income 3610 3613 0.08
Commission, Exchange & Brokerage 1682 2045 21.58
Net Interest Income 8478 11807 39.27
Total Income 25032 30599 22.24
Interest expended 12944 15179 17.27
- Interest paid on deposits 11966 13795 15.28
Total Operating expenses 4762 6364 33.64
- Establishment expenses 3121 4461 42.93
Total Expenses 17706 21543 21.67
Operating profit 7326 9056 23.61
Provisions and contingencies 3421 4622 35.11
Net profit 3905 4433 13.53
Note: Difference in total is due to rounding off
1.4. KEY RATIOS
(Percent)
PARTICULARS 2009-10 2010-11
Average cost of funds 4.76 4.57
Average yield on funds 7.88 8.12
Return on Equity 24.59 22.13
Net Interest Margin 3.57 3.96
Return on Assets 1.44 1.34
Cost to Income Ratio 39.39 41.27
Operating expenses to average
Working Funds 1.70 1.91
Operating profit to average
Working Funds 2.62 2.72
Earnings per share (Rs.) 123.86 140.60
Book value per share (Rs.) 514.77 661.20
Ratio of Net NPAs to Net advances 0.53 0.85
NPA coverage ratio 81.17 73.21
CRAR - Basel II 14.16 12.42
2. OPERATIONAL HIGHLIGHTS
- Bank leveraged on its 5180 plus branch network to build deep,
enduring relationships with its 60 million plus customers across all
the segments.
- Bank’s network of 5050 ATMs along with alternate delivery channels
account for more than 28% of transactions.
- New set of products and services like PNB Uphaar, PNB Suvidha, World
Travel Card, etc were introduced during the year.
- In addition to international presence in 9 countries, Bank acquired
equity stake in Dana Bank of Kazakhstan and is in the process of
setting up presence in Australia and Canada.
- Under the performance management system, employee performance was
recognized and incentivized.
- Strengthened pool of management talent as part of succession planning
exercise with Team 2020 initiatives.
- Streamlined CSR activities to move forward and to make a positive
contribution towards community.
3. DIVIDEND
The Board of Directors has recommended a dividend of 220% for the year
2010-11.
4. CORPORATE GOVERNANCE
The Bank is committed to best practices in corporate governance and
recognizes that transparency, ethical behavior, integrity and
protection of interests of all stakeholders form the keystones of
governance. Being in the business of financial intermediation, the Bank
is fully aware of the risks involved. To address this, the Bank has put
in place elaborate system of risk identification, measurement and
mitigation. A Risk Management Committee at the Board level monitors the
risk management process in the Bank. The Board of Directors has
oversight on the Bank and ensures that there is right balance between
business and risk. Further through the Audit Committee, the Board
ensures strong system of internal control and corporate reporting
including financial reporting. As a listed entity, the Bank is
complying with various regulatory requirements. Disclosures are made in
the financial statements in compliance with Section 29 of Banking
Regulation Act, 1949, RBI guidelines, Section 49 of the Listing
Agreement and Accounting Standards and Guidelines issued by the
Institute of Chartered Accountants of India. These inter-alia, include
segment reporting, related party disclosures, lending to sensitive
sectors, restructured loan assets, key business ratios, risk
management, performance of Bank’s share price, etc.
PNB follows practices that provide its financial stakeholders a high
level of assurance on the quality of Corporate Governance. This is
reflected in the ICRA Ltd’s CGR 2 rating which is the highest rating
assigned to a financial institution in India.
5. BOARD OF DIRECTORS
As on 31.03.2011 there were 11 Directors on the Board of the Bank
including Chairman and Managing Director and two Executive Directors.
At the time of appointment/nomination of any Director, the guidelines
defining the roles and responsibilities of Directors as circulated by
Government of India/ Ministry of Finance from time to time are made
available to them. A declaration of “Model Code of Conduct” is being
obtained from all the Directors in April every year. Deeds of covenants
as recommended by Ganguly Committee are being entered into with the
elected directors on the Board of the Bank in terms of instructions of
Reserve Bank of India/ Government of India every year.
As per recommendations of Ganguly Committee, Directors are imparted
training to make them more responsive to the organization, the business
environment and emerging developments/challenges in the banking sector.
As part of their
training, Directors are nominated to training programmes in reputed
Institutions like Centre for Corporate Research and Training (CCRT),
Navi Mumbai, Institute of Company Secretaries of India, Institute of
Directors, etc.
During the Financial Year 2010-11, four Directors were nominated for
various training programmes viz. “Masterclass for Directors leading to
Certified Corporate Directorship”, “Conference on Corporate Compliance”
and “Role of Independent Directors - Issues & Solutions”.
6. CHANGES IN THE BOARD OF DIRECTORS
During the year 2010-11, the following changes took place in the
composition of Board of Directors of the Bank:
- Shri L.M. Fonseca, RBI Nominee Director ceased to be Director on
30.07.2010 on expiry of his term.
- Shri Jasbir Singh, RBI Nominee Director was appointed on the Board of
the Bank on 30.07.2010.
- Shri Nagesh Pydah, Executive Director, demitted the office on
31.12.2010 on his elevation as Chairman & Managing Director of Oriental
Bank of Commerce.
- Shri Rakesh Sethi was appointed as Executive Director of the Bank on
01.01.2011.
- Shri M.A. Antulay, part time non-official Director ceased to be
Director w.e.f 27.02.2011 on completion of his tenure.
- Shri G.P. Khandelwal, part time non-official Director ceased to be
Director w.e.f 27.02.2011 on completion of his tenure.
The Board welcomes Shri Rakesh Sethi, new Executive Director and Shri
Jasbir Singh, new Director and wishes to place on record the valuable
services rendered by Sh. Nagesh Pydah, Sh. L.M. Fonseca, Sh. M.A.
Antulay and Sh. G.P. Khandelwal.
BOARD COMMITTEES
(As on 31.03.2011)
No. NAME OF THE COMMITTEE
1. Management Committee
2. Audit Committee of Board
3. Risk Management Committee
4. Share Transfer Committee
5. Shareholders’ /Investors’ Grievance Committee
6. Customer Service Committee
7. I.T. Committee
8. PA Committee
9. Director’s Promotion Committee
10. Appellate Authority and Reviewing Authority
11. Special Committee of Board to monitor and follow up fraud cases
involving Rs.1.00 crore and above.
12. Committee of Directors to Review Vigilance and Non Vigilance cases
13. HRD Committee of Directors
14. Remuneration Committee
15. Nomination Committee
16. Steering Committee for Vision 2013
17. Insurance Joint Venture Committee
The details of various meetings held up to 31st March, 2011 are as
follows:
S. Meeting Number of
No Meetings
1 Board Meeting 15
2 Management Committee 22
3 Committee of Directors 4
to review vigilance &
non-vigilance cases
4 Audit Committee of Board 10
5 Risk Management Committee 4
6 Special Committee 6
of Board to Monitor
and Follow Fraud cases
of Rs. 1.00 crore and above
7 IT Committee of the Board 5
8 P.A. Committee 5
9 Customer Service 4
Committee
10 Share Transfer Committee 24
11 Shareholders/ Investors 6
Grievances Committee
12 Directors Promotion 2
Committee
13 Steering Committee 4
Vision 2013
14 Insurance Joint Venture 4
Committee
7. ACKNOWLEDGMENTS
The Board of Directors thank the Government of India, Reserve Bank of
India, Securities and Exchange Board of India, Stock Exchanges, Bank’s
customers, public and the shareholders for valuable support, continued
patronage and confidence reposed in the bank.
The Board also wishes to place on record its appreciation for the
valuable contribution of the members of the Bank’s staff at all levels
and look forward to their continued enthusiasm in meeting the future
goals.
For and on behalf of Board of Directors
CHAIRMAN AND MANAGING DIRECTOR
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