Your Directors take great pleasure in presenting the 24th Annual Report on the business and operations of your Bank, together with the audited accounts for the year ended March 31, 2018.
It has been a challenging but historic year for India''s economy, especially for the banking sector, with heightened asset quality stress levels and operating risks. While the effects of demonetization spilled over into the first quarter, the second quarter marked the rollout of the much awaited Goods and Services Tax (GST). The introduction of this composite tax saw many levies being done away with and marked a huge step towards transforming India into a giant common market. In the long run, GST is expected to give a fillip to the economy as a whole; in the short term, however, this led to initial growth pangs, particularly in the cash-dependent sectors of the industry such as Small and Medium Enterprises (SMEs).
In the year under review, your Bank:
- Witnessed consistent improvement in a majority of its key financial parameters
- Saw increased digitization
- Stepped up its social commitment activities
- Secured more awards and recognition
- Firmed up its fund raising plans Financial Parameters
Your Bank recorded an improvement in a majority of its key financial parameters. At Rs, 17,486.8 crore, Net Profit went up by 20.2 per cent. Similarly, at Rs, 40,094.9 crore, Net Interest Income rose by almost 21 per cent. Core Net Interest Margin remained stable at 4.3 per cent. Net Non-Performing Assets (NPAs) at 0.4 per cent is among the lowest in the industry. This was largely due to the Bank''s prudent credit evaluation of the targeted customer profile and having a diversified loan book spread across customer segments, products, sectors and managing risk-return decisions with discipline.
Your Bank today caters to more than 4.36 crore customers. Although it has 4,787 banking outlets, what is noteworthy is that an overwhelming 85 per cent of transactions are through digital channels. This has led to a larger distribution footprint and a superior customer experience resulting in higher market share at lower cost.
Greater Social Commitment
The Bank''s guiding force is the belief that businesses cannot prosper if the communities in which they operate fail. Towards this end, your Bank has chosen to bring about a holistic change in the lives of people. You will be happy to know that for the second consecutive year it met the mandatory 2 per cent Corporate Social Responsibility (CSR) expenditure with a spend of '' 374 crore. Parivartan, the new umbrella CSR brand, is expected to lend a sharper focus to these efforts. To put matters in perspective, the Bank''s social journey began about a decade ago through its board mandated Sustainable Livelihood Initiative (SLI) to make a difference to the lives of 1 crore households. SLI helps people improve their lives by upgrading their skillsets and, thus, enabling them to break out of the cycle of poverty. Under its Holistic Rural Development Programme (HRDP), the Bank transforms lives in rural India and thus helps bridge the gap with urban India.
Awards and Recognition
The Bank continues to be awarded and win laurels. Notably, it was named India''s most valuable brand for the fourth year in a row in the BrandZ survey of Top 50 Most Valuable Indian Brands. Forbes Asia said in an article that your Bank was among the five companies that shaped Asia and the world.
The Bank is awaiting the receipt of relevant approvals for raising of additional capital up to an aggregate sum of Rs, 24,000 crore, of which such number of equity shares of face value of Rs, 2/- each aggregating up to Rs, 8,500 crore are proposed to be allotted to Housing Development Finance Corporation Limited, the Bank''s promoter, on a preferential basis and the balance amount by issue of equity shares and / or convertible securities / depository receipts pursuant to a Qualified Institutions Placement / American Depository Receipts / Global Depository Receipts program. This additional capital proposed to be raised is intended to support growth over the next few years. Notably, your Bank has been diversifying its funding base. For example, it was the first bank in the country to issue Rs, 2,300 crore worth of masala bonds in the international markets. It also raised Additional Tier I capital by issuing Perpetual bonds of Rs, 8,000 crore and Tier II capital of Rs, 2,000 crore.
In another development in the year under review, the Reserve Bank of India (RBI) has identified your Bank as a Domestic Systemically Important Bank (D-SIB). This means that its continued functioning is critical for the uninterrupted availability of essential banking services to the economy. To sum up, your Bank is geared up for the next phase of growth, given the looming market opportunities and its strong positioning in each of its major franchises. This, of course, would not have been possible without the contribution of over 88,000 employees across the country, who represent the brand and take it forward every day.