Dear Shareholders,
 
 I am pleased to report the results which follow and which reflect an
 improved, solidly profitable 2011-12 at United Bank of India. Despite
 facing significant economic dilemmas, we reported sizeable growth in
 net income for the third consecutive year since listing, continue to
 recommend increased annual dividend to shareholders, and significantly
 strengthened our regulatory and tangible capital ratios. While the net
 income and earnings per share were higher than in the prior year, the
 gross business crossed Rs150,000 mark enabling us to graduate to a mid-
 sized bank.
 
 Our Performance
 
 Bank''s diluted earnings per share last year were Rs14.38 and net
 interest income was Rs2169.34 crore. In2010, diluted earnings per share
 were Rs10.18 and net interest income was Rs1391.22 crore.  The improved
 performance was the direct result of a Rs310 crore increase in net
 interest income, Rs100 crore increase in non- interest income, and Rs144
 crore decrease in the non performing assets through recovery and
 upgradation. The show would have been more colour ful had we been able
 to contain slippages.
 
 Like in previous years we continue to maintain high percentage of low
 cost deposits (40.8%) , reduce the share of high cost bulk deposits
 (from 23% to 18%), keep expenses on a tight leash (increase of 6.5%),
 raise and preserve capital (1.65 crore shares allotted to LIC) which
 all contributed to the improvement of the intrinsic strength of the
 Bank.
 
 Reflecting a plodding economy and tempered loan demand by creditworthy
 customers, the deposits increased only modestly, by 14.4% to Rs89116
 crore from Rs77845 crore in 2010-11. Loans, however, grew
 conventionally, up by 18.4%, to Rs63873 crore in 2011-12 from Rs53934
 crore in 2010-11. That growth was the result of paring of more
 expensive wholesale borrowings and led to better net interest income of
 Rs2479 crore in 2011-12 that was up 14% from Rs2169.34 crore in 2010-11.
 However, due to increase in slippages and consequent provisioning
 requirements, the net interest margin was marginally down by 2 basis
 points to 3.17% this year, from 3.19% last year.
 
 Though an industry phenomenon, yet the NPA position and slippages are
 matters of concern for us. When we tried to analyze the reasons, two
 factors came up - system driven NPA and a couple of large accounts
 slipping at the fag end of the financial year - together contributing
 more than Rs1000 crore during the year. However, we feel that the
 positive is that, having declared even the smallest of the sticky
 accounts and provided for the same, the Bank is intrinsically in a much
 sound position financially and from here the only direction we are
 going to move is up.
 
 Non-interest income rose to Rs733 crore last year, an increase of 15%
 from Rs637 crore in 2010-11. That improvement was attributable to the
 combination of higher revenues from income from exchange operations,
 commission, exchange & brokerage and miscellaneous other incomes.
 Reflected in noninterest income was subdued Treasury income due to
 rising interest rates and range bound stock markets. We are conscious
 that the share of non-interest income to total income is on the lower
 side and we are putting in extra efforts to improve the ratio by
 increasing the existing business-lines and introducing new products in
 the near future.
 
 The efficiency ratio, or noninterest operating expenses divided by the
 sum of taxable-equivalent net interest income and noninterest income
 exclusive of gains and losses from bank''s investment in securities
 measures how much the Bank spends to provide service to customers and
 to generate revenue. That ratio improved to 46.2% in 2012 from 49.8% in
 2011.
 
 As gratifying as it is, to report the earnings and other results cited
 above, it is relieving to keep in mind that such relative success came
 within a context of tumultuous economic conditions, high inflation,
 rising interest rates and subdued expansion of credit.  Indeed, the
 improvement in our performance as compared to the previous years does
 not mean that we are content; our aspirations for ourselves and,
 especially, the customers and regions we serve, are far from realized.
 We are mindful, specifically, that we have not sustained last year''s
 earnings per share and are yet to match on Return on Assets with our
 peers.
 
 Nonetheless, it would not be candid on our part not to recognise the
 accomplishments and hard-works of the past year, and cherish the
 achievements.
 
 Our earnings per share improved by more than 50% since 2010 and
 exceeded our annual dividend by more than two times, allowing us to
 build capital. As a result, we could augment our capital base,
 strengthen our CRAR position and with improved margins our return on
 the equity improved to 13.86%.
 
 In the simplest sense, the key to the performance of any traditional
 commercial bank such as ours is the profitability of the loans it
 makes. In our case, adherence to a number of long- held lending
 principles stands out as having played an important role. These
 include: our selective and sound approach to extending credit, our
 longstanding discipline regarding the management and allocation of our
 capital, and our commitment to maintaining an efficient operating model
 that allows us to remain competitive in the communities we serve. We
 maintain loan committees at various levels, each deeply familiar with
 their own backyards but always guided by our overall credit policies
 and standards. Each committee is comprised of senior credit executives,
 and experienced commercial bankers who meet at regular intervals. The
 value ofthis approach is reflected in the fact that we continued to
 extend credit to customers whom we felt comfortable with, consistently
 through the downturn of the economy.
 
 Our performance, in other words, is a validation of the veracity of few
 initiatives taken - consciously reducing the bulk deposit portfolio,
 religiously maintaining CASA above 40%, breaking the regions into
 smaller ones for ensuring better control over business, creating hubs
 across the regions for retail business, introducing the concept of
 centralized processing, strengthening our alternate delivery channels
 by continuous upgrading our website and introducing e-lounge banking
 concept and increasing share of branches outside East.
 
 The level of net income which we have reported depends not only on
 credit quality and net interest income, but also on our ongoing
 attention to the control of expenses. In this regard, our results
 reflected, too, an improvement in the measure of operating costs
 required to produce each Rs100 revenue, known as the efficiency ratio
 — which fell from 18.62% to 15.91%. In the aggregate, our increase in
 productivity allowed us to provide banking services more competitively
 and cushion our investors from the force of the economic uncertainty.
 
 Let me underscore that the results noted above — as regards credit
 quality, prudent capital allocation and management, and efficiency —
 should not be understood narrowly as the result of responses to the
 financial slackness and its consequences. Rather, they are the product
 of our long-established way of doing business — of a culture which
 has led to a consistently positive financial performance over the
 years. In turn, that culture is attributable to a organization that
 inspires the diligence of the experienced workforce which epitomizes
 our success. Typically, a UBI employee is a lifetime hardcore banker
 who has been with the Bank throughout his career
 
 We have always been sensitive about the community we serve and tried to
 contribute to the upliftment of the humanity at large.  Our commitment
 to improve the standards of living of those at lowest strand of the
 social pyramid is manifested by some of our initiatives like
 installation of water hand pumps in remote villages of Manipur,
 construction of concrete roof of the class rooms in the remotest parts
 of 24 Parganas (South) district and construction of Residential
 Farmers'' Training Centre in 24 Parganas (North) district in West
 Bengal. Our obligation towards protection of environmental hazards
 remain in our resolve in not taking exposure in any ozone depleting
 industry, providing credit to industrial units only after obtaining
 environmental clearance and our commitment to the green initiatives of
 government.
 
 Indian Banking Environment
 
 The Annual Monetary Policy for 2011-12 announced on May 3, 2011 was set
 in conditions significantly different from those a year ago. For
 2010-11, the goal for monetary policy was to nurture the recovery in
 the face of persistent global uncertainty, while trying to contain the
 spill-over of supply side inflation. The resurgence of inflation in the
 last quarter of2010-11 became a matter of concern. The overall stance
 of the monetary policy in 2011-12 was intended to:
 
 - Maintain an interest rate environment that moderates inflation and
 anchors inflation expectations.
 
 - Foster an environment of price stability that is conducive to
 sustaining growth in the medium-term, coupled with financial stability.
 
 - Manage liquidity to ensure that it remains broadly in balance, with
 neither a large surplus diluting monetary transmission nor a large
 deficit choking off fund flows.
 
 The repo rate under liquidity adjustment facility (LAF) was increased
 by 50 basis points from 6.75% to 7.25%. Accordingly, as per the new
 operating procedure, the reverse repo rate under LAF, determined with a
 100 basis points spread below repo rate, was adjusted at 6.25%. The
 Marginal Standing Facility (MSF) rate, determined with a spread of 100
 basis points above the repo rate, was calibrated at 8.25%. The Bank
 rate was kept unchanged at 6%. Similarly, the Cash Reserve Ratio (CRR)
 was also kept unchanged at 6% of net demand and time liabilities (NDTL)
 of scheduled banks.
 
 Some of the other measures included:
 
 - Reserve Bank of India decided to increase the savings bank deposit
 interest rate from 3.5% to 4.0% with effect from 3rd May, 2011.
 
 - Reserve Bank of India broadly accepted the framework of regulations
 of Micro Finance Institutions (MFIs) recommended by the Malegam
 Committee.
 
 - Bank loans to all MFIs, including NBFCs working as MFIs on or after
 April 1, 2011 were made eligible for classification as priority sector
 loans only if they conform to the regulations formulated by the Reserve
 Bank.
 
 - As recommended by the Malegam Committee, the Reserve Bank has also
 decided to appoint a Committee to review the priority sector lending
 classification.
 
 - A broad goal driving financial inclusion initiative was set to
 provide banking access to all villages with population over 2000 by
 March 2012. 72,800 villages were identified into this category. Banks
 were advised to ensure that at least 25% of the new branches being
 opened during the year 2011-12 are located in tier 5 and tier 6
 centres.
 
 - Period of short sale in government securities was extended from
 five days to amaximum of three months.
 
 - FIIs will be allowed to cancel and rebook up to 10% of the market
 value of the portfolio as at the beginning of the financial year.
 
 - Provisioning requirements on certain categories of non- performing
 advances and restructured advances will be enhanced.
 
 - Investments by banks in liquid schemes of debt oriented mutual
 funds will be subject to a prudential cap of 10% of their net worth as
 on March 31ofthepreviousyear.
 
 Credit off take by banks to companies offering various services showed a
 marked deceleration in 2011-12 compared with the previous financial
 year, the RBI''s sectoral data showed. Banks'' lending to the services
 sector grew by just 14.7% in 2011-12 compared with 23.9% in 2010-11.
 Within services, loans to companies offering financial services and
 commercial real estate grew the slowest. Credit to finance companies
 grew just 26.3% in 2011-12 after growing at a scorching pace of around
 54% the previous year. Reflecting the slowdown in the economic growth
 during 2011-12, bank credit to companies grew by 17.0%, down from 20.6%
 the previous year. Among manufacturing companies, credit off take to
 infrastructure was hit the most and loans to such projects grew by just
 17.6% during 2011-12 as against 38.6% in 2010-11.
 
 Conclusion
 
 As I end, this missive and my journey spanning almost 4 decades in this
 dynamic, vibrant, sensitive and colourful banking industry, it gives me
 a sense of satiety that today we are on an inexpugnable foundation with
 a psyche, ambitious enough to dream any growth, strong enough to
 achieve any dream, resilient enough to accept any challenge and nimble
 enough to acclimatize to any change. With all your good wishes,
 hard work of the entire team, and support and guidance of the Government
 and Reserve Bank of India, today we are a confident, efficient,
 knowledgeable, smart and innovative Bank - the Bank that begins with U!
 
 With warm wishes 
 
 Bhaskar Sen
 
 Chairman & Managing Director
 
 Date: May 5th 2012 
 
 Place: Kolkata.