The Board of Directors has pleasure in presenting the Annual Report
together with Audited Balance Sheet and Profit & Loss Account of the
Bank for the year ended 31st March, 2015.
Global Business Performance
The Bank has improved its Business Mix quite significantly in the last
few years which has formed a strong base for future prospects. The
business level of the Bank has reached Rs. 4,25,090 crores by March 2015
as against Rs. 4,09,051 crores in March 2014 with Balance sheet total
size comprising of all assets mainly including Advances and Investments
to the tune of Rs. 2,85,637 crores during the year. The Bank has larger
scope in improving the potential with wide spread 3381 branches in all
the states of the country. The Bank has decided to migrate to a new CBS
model and be aligned with a common platform as being widely used in
other PSBs. The technological advancement will work as a morale booster
for the Bank to effectively deliver and enhance the customer service.
This is a remarkable & significant task which the Bank has scheduled to
achieve in a phased manner.
The year 2014-15 has been more challenging for the Bank as a whole.
There was a sluggish growth in the credit front. Accordingly, the
Bank''s total deposits increased from Rs. 2,27,976 crores in March 2014 to
Rs. 2,46,049 crores in March 2015 with a moderate growth of 8%. The
global advances stood at Rs. 1,79,041 crores as of 31st March 2015. The
domestic advances increased marginally from Rs. 1,61,992 crores in March
2014 to Rs. 1,62,838 crores in March 2015.
The global operating profit has stood at Rs. 3,322 crores in 2014-15
compared to Rs. 3,997 crores in 2013-14 mainly due to constraints on
interest spread during this financial year. However, the performance of
the Bank in Q4 is significant resulting into a positive turnaround by
achieving a net profit of Rs. 35.5 crores as against off-putting results
in the preceding two quarters. As the Bank has to make bottom line
provisions to the tune of Rs. 3,777 crores constituting 113% of total
operating profit. However, the net loss for the whole year 2014-15 has
come down to Rs. 454 crores as against Rs. 490 crores for the period
Income and Expenditure Analysis
The year 2014-15 has been more challenging as far as the Bank''s
profitability is concerned. Despite the constraints on interest spread
the Bank has made a successful turnaround during the fourth quarter
2014-15 registering a net profit of Rs. 35 crores in Q4. This is made
possible mainly on account of larger recoveries, containment of
operating expenses, more control on funding costs apart from
substantial treasury gains mainly in the fourth Quarter.
The Bank has taken serious measures in controlling the cost of domestic
deposits to 7.68% in Q4 as against 7.93% in Q1,7.94% in Q2 and 7.81% in
Q3 during the year. However, the overall domestic cost of deposits
ended with 7.84% for FY 2014-15 compared to 7.81% in 2013-14. The Bank
has been maintaining the card rates on term deposits in line with the
market trend. As RBI reduced the repo rates favorably by overall 50
basis points in the second half of the financial year to the present
level of 7.50%, the Bank is able to reduce Its domestic cost of
borrowings marginally to 9.64% for the year as a whole as against 9.65%
in 2013-14. As such, the domestic cost of funds ended favorably at
7.92% for the full year 2014-15 compared to 8.03% in Q1,8.02% in Q2,
7.88% in Q3 and 7.73% in Q4. This can be attributed to efficient ALM
techniques which resulted in substantial growth in Bank''s average
retail term deposits apart from reducing average bulk deposits
excluding high cost deposits.
Although, the Bank has opened around 52 lacs CASA accounts during the
year under review, the quantum of CASA deposit would stimulate only
over a period. As such, domestic average CASA% was marginally lower at
23.71% compared to last year level of 24.25%, in line with the market
Due to higher incremental NPAs during the year, the yield on domestic
advances has come down to 10.62% as against 10.95% in last year.
Despite volatile market conditions, the yield on investments was
maintained at 7.38% for the whole year 2014-15 compared to 7.39% in
2013-14. This has a major impact on Net Interest Income affecting the
profitability. However, the Bank has been able to maintain the global
Net interest margin reasonably at 2.06% in 2014-15. Also the Bank has
maintained a comfortable Provision Coverage Ratio of 50.92% in March
Capital Adequacy Ratio
The Bank''s Capital Adequacy Ratio as on 31st March 2015 has stood at
10.11% as per Basel III norms. The Bank has issued Unsecured, Non
Convertible, Additional Tier I, Basel III Compliant Perpetual Bonds to
the extent of Rs. 1,000 crores including the green shoe option of Rs. 300
crores to augment additional Tier-I capital and overall capital of the
Bank. The entire issue was fully subscribed by the investors.
During the year under review, the Bank has opened 116 branches across
the country. Out of these, 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.
Further, the Bank has opened 8 Rapid Retail Centres, one City Back
office and one extension counter during the year. As on 31st March
2015, the Bank has 3,381 domestic branches, as against 3,265 branches
as on 31st March 2014, comprising of 1028 rural branches (30.41%), 947
Semi Urban branches (28.00%), 747 Urban branches (22.09%) and 659
Metropolitan branches (19.49%). 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.
Corporate Governance reflects the built in value system of the Bank in
conducting its day to day affairs. The Bank lays emphasis on the need
for ensuring that structures and processes are put in place to help in
compliance of its government responsibilities.
During the year, SEBI has decided to review the provisions of the
Listing Agreement with the objectives to adopt best practices on
corporate governance and to make the corporate governance framework
more effective. Clause 35B and Clause 49 of the Listing agreements are
the main clauses amended. As per Clause 35B, the issuer agrees to
provide E-voting facility to its shareholders in respect of all
shareholders resolutions, to be passed at AGM/ EGM. Bank is in
preparedness to provide e-voting facility to its shareholders at the
time of AGM/EGM.
In compliance to the amendments of Clause 49 of the Listing Agreement,
the code of conduct has been put in place by the Bank which is
applicable to all members of the Board and the Senior Management (i.e
upto General Managers of the Bank). The Bank is also submitting a
quarterly compliance report on Corporate Governance to The Audit
Committee of the Board and to Stock Exchanges.
Ministry of Corporate Affairs (MCA), Government of India has amended
the Investor Education and Protection Fund (IEPF) Rules and advised the
Bank the process of transfer of unpaid dividend amount to the Central
Government. Accordingly, Unpaid Dividend amount pertaining to the years
from 2000-01 to 2006-07 has been transferred to IEPF by the Bank and
complied with the Government of India guidelines. The unpaid Dividend
data pertaining to the years 2007-08 to 2013-14 is ported in MCA
website and also available at www.iob.in.
Bank is complying with all guidelines/regulations laid down by
Regulatory authorities and Government of India. Bank regularly
redresses the shareholders grievances without any time delay.
With the changing dynamics in the competitive environment, the Bank has
reviewed its medium term Vision-Mission outlook for the period 2013 -
2020. The Bank has convened an exclusive meeting of the Board of
Directors to discuss the Strategic Business Plan for the next year
2015-16 covering all the key aspects. Frame work analysis has been laid
down in terms of growth in business, capital and profitability in the
years to come. The Bank expects that the targets be well achieved with
the support of migration to new CBS.
Board of Directors
Shri. M. Narendra, Chairman and Managing Director retired on
superannuation on 31st July 2014 followed by Shri. A.D.M. Chavali,
Executive Director on 31st October 2014. Shri. Niranjan Kumar Agarwal,
Director (nominated under Section 9 (3) (g) - Chartered Accountant
Category) had completed his 3 year term on 31st October 2014 and ceased
to be Director. Shri. Ajit Vasant Sardesai and Prof. S. Sadagopan,
Shareholder Directors had completed their 3 year term on 7th December
2014 and ceased to be Directors.
Shri. Niranjan Kumar Agarwal and Shri. Sanjay Rungta have been elected
as Shareholder Directors for a period of 3 years from 8th December 2014
to 7th December 2017. Shri. R. Koteeswaran has been appointed as
Managing Director and Chief Executive Officer of the Bank from 31st
December 2014 to 30th June 2016. Shri. Pawan Kumar Bajaj has been
appointed as Executive Director from 10th March 2015 to 30th September
The Board of Directors places on record their appreciation for the
valuable contributions made by the erstwhile Directors and welcomes the
The Board of Directors are grateful for the valuable guidance and
support received from the Government of India, Reserve Bank of India,
Securities and Exchange Board of India (SEBI), Stock Exchanges, State
Governments, Financial Institutions and all Overseas Regulators. The
Board of Directors acknowledge with thanks to the valued Customers,
Employees Union, Officers Association, domestic and international
banking group, the shareholders & other stake holders for their valued
support, continued patronage with the Bank.
The Board also wishes to place on record its profound appreciation for
the valuable contribution of the Bank''s Staff at all levels and look
forward to their continued involvement with commitment towards
achieving the future goals.
For and on behalf of the Board of Directors
Chennai (R. KOTEESWARAN)
May 8, 2015 Managing Director & Chief Executive Officer