I am presenting your Bank''s Annual Report and financial statements for
the year 2014-15. I would like to share with you the performance
highlights and financial indicators of the Bank during the year.
Indian economy has been hailed as the ''bright spot in the global
landscape'', and a new era of optimism and confidence has dawned for
speedy revival in 2014-15. An escalation in growth figures and a
reduction in the global oil prices have helped our economy. India has
done well in few parameters like inflation-targeting, containing CPI
(5.17%) & WPI (-2.33%) based inflation in March 2015, shoring up
reserves, controlling the fiscal deficit at 4% of GDP in FY15.
With the slew of measures, Indian economy has the prospects of
witnessing a high and rising growth in the years to come, while
simultaneously maintaining macroeconomic stability. The economy has
achieved 7.5% growth in GDP during FY15 and is expected to pick up
further to 7.8% in FY 2016. However, the Index of Industrial Production
(IIP) suggests that the industrial sector is recovering slowly with a
2.1% growth in 2014-15 (y-o-y). Exports in the same period recorded a
growth of 0.9% as compared to 7.3 % in 2013-14. Agriculture is still
dependent on monsoon, farm productivity is abysmally low, large wastage
and infrastructure constraints prevent market from meeting shortages.
Delays in securing statutory project approvals, high finance costs and
slowing demand in the economy crimped corporate cash flows in recent
years and made it difficult for many borrowers to repay debt, leading a
pile up of bad loans in the banking system. Capital goods firms see
muted growth. Thus, the Indian economy is on a cyclical upswing and
forward-looking indicators suggest that the domestic demand is
gathering momentum and it would take two more quarters for the credit
demand to pick up.
Public Sector Banks oversee continued pressure on capital adequacy
norms and stressed assets leading to higher provisions. The rise in
NPAs in 2014-15 has been attributed to the effect of global recession
coupled with internal factors such as slowdown in the domestic economy.
This has adversely affected the corporate performance leading to a
negative impact on credit quality despite good fundamentals maintained
by the RBI and the Government for which your Bank was also a victim. As
the investment cycle gathers momentum, the credit demand is expected to
pick up with due thrust on MSME/Retail sector and early clearance of
stalled projects. We can expect the system to grow moderately at 13%
under deposits and 14% in advances for 2015-16. The reforms oriented by
Government are raising hopes for a faster pick up of the economy which
will help to curb the bad loans and improve credit demand. Your Bank
also expects to grow in tune with the banking system, with a major
thrust in SME and Retail sector.
Net investments of the Bank increased to Rs. 81,310 crore as on
31.03.2015 from Rs. 70,237 crore as on 31.03.2014. Total profit including
sale of securities & profit on exchange amounted to Rs. 772.23 Crores
during the year 2014-15 as against Rs. 752.65 Crores of 2013-14. 10-year
benchmark yield has gone down from 8.96% to 7.81% during the year. The
return on total investments before amortization for the year is 7.64%
as against 7.60% in 2013-14.
Advances: Gross Advances stood at Rs. 1,79,041 crore as on 31st March
2015 as against Rs. 1,81,081 crore as on 31st March 2014. As the Bank was
in consolidation mode, credit growth was contained consciously, in the
backdrop of low credit off-take.
NET PROFIT: The Bank turned around its performance during Q4 of 2014-15
registering net profit of Rs. 35.50 crore as against net loss of Rs. 516.03
crore in Q3 of 2014-15. Net loss for the year ended 31.03.2015 was Rs.
454.32 crore. Strategic initiatives taken in the fourth quarter towards
reduction in the cost of deposits, improved recovery performance and
stringent measures on cost control contributed to net profit of Rs. 35.50
Due to increased provisions of Rs. 3777 crore against operating profit of
Rs. 3322 crore on NPA, Restructured accounts, Taxes and fresh slippages
of accounts to NPA under prime sector of the economy, which resulted
the denial of income accrued thereon for our profit, resulted in net
loss for the year.
Besides, the Bank has 7 Zonal Offices, 59 Regional Offices, 4 Extension
Counters, 20 Satellite Offices, 40 City Back Offices, 41 Rapid Retail
centers (RLPCs), 18 MSME Processing Centres and 6 Inspectorates.
During the year under review, the Bank has opened 116 branches across
the country. Out of 116 branches opened during 2014- 15, 86 branches
(74.14%) are located in Rural and Semi Urban centres, of which 28
branches are located in Unbanked Rural Centres. These new branches have
enabled the Bank to enhance new relationship and spread Bank''s Network
covering all states.
Business per employee stood at Rs. 13.24 crore as on 31.03.2015.
Gross NPA as at 31st March 2015 was at Rs. 14922.45 crore with Gross NPA
ratio of 8.33% and Net NPA stood at 5.68%. For Q3 of 2014-15, Gross NPA
and Net NPA stood at 8.12% and 5.52% respectively. Focused efforts
towards recovery and upgradation helped efficient NPA management has
brought down the slippages from Q3 of 2014-15.
Provision Coverage Ratio stood at 50.92% as on 31.03.2015 Capital
The Bank''s Capital Adequacy Ratio as on 31.3.2015 stood at 10.11% as
per Basel III norms, which is well above the requirement of 9%
prescribed by RBI. Bank has incurred a net loss of Rs. 454.32 crore
during the financial year ended 31.03.2015. Hence the Board of
Directors has not recommended any dividend, as the Bank does not
confirm to eligibility criteria prescribed by GOI/ RBI.
IT INITIATIVES: Bank has embarked on Technology Upgrade and IT
Transformation, to improve the operational efficiency and customer
service. CBS migration project has been taken up on a fast track mode.
This will improve customer satisfaction level and facilitate the
customers to conduct their banking operations from home 24/7 in a
faster manner. Mobile banking solution with enquiry services and real
time funds transfer (IMPS) has been launched along with other new IT
In the area of Para-banking, Bank is concentrating on marketing of
insurance products and IT enabled products. The Bank continues with its
Corporate Agency arrangement entered into with Universal Sompo General
Insurance Company Limited (the Non-Life Insurance Joint Venture
Company) for distribution of non-life insurance products.
As per Insurance Regulatory Development Authority (IRDA) guidelines,
Corporate Agent can have tie up ONE STANDALONE INSURANCE apart from
Life and Non Life Insurance Companies. Apollo Munich Health Insurance
has uniquely designed a tailor made group insurance Health Insurance
Product with Sum Insured of Rs. 3,5,7.5 and 10 lakhs to meet the needs of
Middle Income and High Net worth Customer base. The scheme was launched
on 18.02.2015. As on 31.03.2015, our Bank has earned commission of Rs. 40
lakhs by selling around 5000 policies in the month of March 2015.
Steps to improve Profitability:-
As part of the efforts to improve profitability, bank lays renewed
emphasis on improving the CASA ratio, improve Net Interest Margin,
reduction of NPAs to a large extent through intensive recovery measures
like conducting frequent Lok Adalats / Recovery Camps, One-Time
Settlements and resorting to legal action under SARFAESI Act and sale
of financial assets in eligible accounts.
As regards our overseas operations, we have eight full-fledged overseas
branches - two in Hong Kong,Bangkok and Sri Lanka and one each in
Singapore and South Korea. We also have remittance Centers operating at
Boon Lay and Serangoon, Singapore. During August 2013, bank has
upgraded the Extension Counter at Sri Lanka into a branch with due
regulatory approvals increasing the number of branches at Sri Lanka to
two. During August 2014, Sukhumvit, Bangkok commenced operations
increasing the number of branches in Bangkok to two.
The Bank''s Representative Offices are located in Guangzhou (China), Ho
Chi Minh City (Vietnam) and Al Karama, (Dubai). Bank is taking up
for/awaiting RBI permission for upgrading its representative office at
Dubai, Vietnam and China into full fledged branches.
Ministry of Finance, Government of India has allocated the following
overseas centres for opening of overseas JV/WOS by the Bank. 1.
Thailand, 2. Vietnam, 3.Mongolia, 4. Srilanka and 5. Republic of
Our Bank has signed a joint venture agreement with Bank of Baroda and
Andhra Bank to open a Banking subsidiary in Malaysia. The Joint venture
has been duly incorporated at Malaysia on 13.08.2010 by name India
International Bank (Malaysia) Ltd. BHD and the banking Joint Venture
has started functioning from July 2012.
Pradhan Mantri Jan Dhan Yojana (PMJDY):
The Bank is implementing PMJDY as per the directives of Govt. of
India. The Scheme was launched by the Prime Minister of India on 15th
August 2014. The Bank has opened 30,46,389 BSBD Accounts and issued
29,73,230 RuPay Debit Cards as on 31st March 2015 under this scheme.
Awards won by IOB:-
Skoch Order of Merit for Financial Inclusion & Automated Data Flow/MIS
CNBC TV18 CFO Award for Exceptional Contribution to Banking Industry
Lokmat BFSI Award 2014 for Best Bank (Public Sector)
ASSOCHAM Social Banking Excellence Award 2014 for Runner- up among PSB
category for Commendable work in Social Banking
IOB In-House magazine ''VANI'' (Official Language) has been awarded
Third Prize from Reserve Bank of India for the year 2013-14.
The bank resolves to achieve continuous and meaningful growth by making
effective use of its human resources and leveraging its large network
of branches and technology amidst the competitive and challenging
environment in the industry in order to expand our market share and to
improve values and returns to all our stakeholders.
I take this opportunity to thank the members of the Board, the
Government of India and the Reserve bank of India for their valuable
support and guidance. I thank all our customers for their continued
patronage and the opportunity given to us to serve them and nurture
business relationship. I also place on record my appreciation for the
dedication and commitment put in by our staff members.
The valuable support of our stakeholders and the confidence they repose
on the bank will motivate us to work with renewed vigour to improve
business performance year after year.
With warm regards,
Managing Director & Chief Executive Officer