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Indian Bank

BSE: 532814|NSE: INDIANB|ISIN: INE562A01011|SECTOR: Banks - Public Sector
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Chairman's Speech (Indian Bank) Year : Mar '18

Chairman’s Message

Dear Shareholders,

On behalf of the Board of Directors, it gives me immense pleasure to place before you the highlights of your Bank''s performance during the Financial Year 2017-18.

Details of the achievements and initiatives taken by your Bank are provided in the enclosed Annual Report for the year.

Given the challenging circumstances during 2017-18 and the Banking industry undergoing a radical transformation, I am grateful to our valued customers who have continued to repose their trust in us. I am very happy to report that, your Bank has emerged as one of the very few profitable Public Sector Banks in the year gone by and has been continuously performing better than its peers in various parameters and has improved its market share in both the deposits and Advances. I once again acknowledge your continued support in our journey towards being the best Public Sector Bank in the country.

Economic Overview - Global

Global economy is experiencing a most broad-based recovery since 2010. In 2017, roughly three-quarters of countries experienced improvements in their growth rates, the highest share since 2010. The latest World Economic Outlook (WEO) of the IMF shows global GDP growth accelerated to around 3.6 percent in 2017 from 3.2 percent in 2016. The stronger momentum experienced in 2017 is expected to carry into 2018 and 2019, with global growth revised up to 3.9 percent for both years (0.2 percentage point higher relative to the fall forecasts).

The growth forecast for the United States has been revised up given stronger than expected activity in 2017, higher projected external demand, and the expected macroeconomic impact of the tax reform, in particular the reduction in corporate tax rates and the temporary allowance for full expensing of investment. Growth rates for many of the euro area economies have been marked up, especially for Germany, Italy, and the Netherlands, reflecting the stronger momentum in domestic demand and higher external demand. The growth forecast for 2018 and 2019 has also been revised up for other advanced economies, reflecting in particular stronger growth in advanced Asian economies, which are especially sensitive to the outlook for global trade and investment.

Protectionist policy adopted by USA and China and rising crude oil prices to the global economy pose a major challenge to the growth forecast including India. Renewed fears of protectionism, retaliatory actions and trade wars pose a major challenge to the global economy, with implications for emerging market economies (EMEs), including India, that are participating in open international trade and relying on foreign capital flows to realize their developmental aspirations.

Economic Overview-Domestic

Introduction of GST, significant steps being undertaken towards resolution of problems associated with nonperforming assets of the banks, further liberalization of FDI, etc., strengthens the momentum of reforms. India jumped thirty places to break into the top 100 for the first time in the World Bank''s Ease of Doing Business Report (EODB), 2018. The rankings reflect the Government''s reform measures on a wide range of indicators.

As per the provisional estimates of Annual National Income 2017-18, released by Central Statistics Office, the growth in GDP (constant prices) for 2017-18 is 6.7 per cent as compared to the growth rateof7.1 percentin2016-17.

The outlook for 2018-19 will be determined by economic policy in the run-up to the next national election. Controlling macroeconomic stability and stabilization of ongoing reforms, speedy Resolution of stressed assets and recapitalization process and impact of rising crude oil prices will be the key factors which will shape the economic development in the forthcoming year.

Performance of the Banking sector:

The Indian banking industry continued to face challenging times during the year due to the rising NPAs in balance sheets of Public Sector Banks. Decisive action was taken to tackle the Twin Balance Sheet (TBS) challenges. The new Indian Bankruptcy Code (IBC) has provided a resolution framework that will help Corporate clean up their balance sheets and reduce their debts.

The Government of India announced a large recapitalization package (about 1.2 per cent of GDP) to strengthen the balance sheets of the public sector banks (PSBs). Large distressed borrowers are being referenced for resolution under the Insolvency and Bankruptcy Code (IBC). This is expected to improve credit flows further and create demand for fresh investment.

Asset quality pressures have remained elevated during FY 2017-18 due to tepid growth in the economy and low capex demand.

Your Bank was the only Public Sector Bank which has not been recapitalized and has been acknowledged as a sound Public sector Bank by the Hon''ble Finance Minister of India.

Bank was able to grow its Advances sizeably and in turn the Market share of both Deposits and Advances consequently.

Specialized branches catering to the need of Home loans, MSME etc., were opened to extend focused attention for end to end solution with reduced turnaround time.

Bank was also able to surpass all National goals set under Priority sector lending for each category viz, Level of 47.08 per cent (Mandatory 40 per cent) under Priority Sector Advances, 20.91 per cent (18 per cent) in Agriculture, 12.58 per cent (10 per cent) for Advances to weaker sections and 7.87 per cent (7.50 per cent) in lending to Micro Enterprises under MSME.

Bank''s Business and Financial Achievements:

Against this backdrop, I would like to give an overview of the Bank''s performance in important parameters.

- Bank''s Business grew by 17.91 per cent to Rs, 3,71,020/-crore as on 31st March 2018. While Deposits grew by Rs, 25,785 crore or 14.13 per cent to Rs, 2,08,294 crore, Advances grew by 23.14 per cent and stood at Rs, 1,62,726/-crore.

- Operating Profit of the Bank for FY 2017-18 was at Rs,5000.99 crore, while Net Profit stood at Rs,1258.99 crore.

- Net worth of the Bank increased to Rs,15826.98 crore as on 31stMarch2018.

- Earnings per share for FY 2017-18 and Book value per share were at Rs,26.21 and Rs,329.53 respectively. Return on Equity was at 8.27 percent for FY 2017-18.

- Bank''s financial soundness as reflected by the CRAR (Capital to Risk Weighted Assets Ratio) was strong at 12.55 percent under Basel III as on 31st March 2018.

Way Forward:

As per RBI''s Annual Policy statement, economic activity is expected to gather pace in 2018-19, benefitting from a conducive domestic and global environment.

The teething troubles relating to implementation of the GST are receding and credit off-take has improved in the recent period and is becoming increasingly broad based, which augurs well for the manufacturing sector and new investment activity.

With the formalization of GST, recapitalization of public sector banks and resolution of distressed assets under the Insolvency and Bankruptcy Code (IBC), the business and investment environment is expected to improve. With the Government of India''s thrust on rural and infrastructure sectors, the demand is expected to increase in rural areas and also boost the private investment.

Acknowledgements:

I would like to place on record, the unstinted support and guidance from our valued customers without which our sustained quest for excellence would not have yielded the results which Bank achieved. I would also like to acknowledge the support of all other stakeholders and I am grateful to each one of them for their continued cooperation. I wish to sincerely thank all, our valuable shareholders once again for their continued confidence in your Bank.

I would also like to take this opportunity to express my sincere appreciation forthe dedicated and commendable efforts of the entire work force of the Bank considering the challenging external environment in which your Bank operated.

We look forward to your continued support and patronage as your Bank embarks on its journey of making the Bank from Good to Great.

With best wishes

Yours sincerely

T C VENKAT SUBRAMANIAN N

ON-EXECUTIVE CHAIRMAN

Source : Dion Global Solutions Limited
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