Experience Next Generation Banking DIRECTORS’ REPORT TO THE SHAREHOLDERS To the Members, The Bank during the year focused on Retail advances and CASA. nd The Board of Directors is pleased to place before you, the 92 CASA has grown from `19,467.15 crore as on March 31, 2019 Annual Report of the Bank along with the Audited Balance to `20,759.61 crore as on March 31, 2020, with a growth of Sheet as at March 31, 2020, the Profit and Loss Account and 6.64%. The Savings bank deposits grew by 8.78% on a year the Cash Flow Statement for the year ended March 31, 2020. on year basis. PERFORMANCE OF THE BANK The Bank has accorded priority to meaningful financial inclusion The performance highlights of the Bank for the financial year during the period under reporting while opening new banking ended March 31, 2020 are as follows: relationships. (` in crore) Advances Key Parameters 2019-20 2018-19 During the year, the gross advance of the Bank registered a Deposits 83,033.89 80,420.12 growth of 2.97%, to touch `65,524.02 crore. The subdued growth was on account of a conscious decision to reduce the Gross Advances 65,524.02 63,635.92 corporate loan book and to concentrate on agriculture, SME Total Gross Business 148,557.91 144,056.04 and retail banking. The same is well evident from the y-o-y Operating Profit 1,645.64 1,238.98 growth of 15% registered in these segments. Net Profit 104.59 247.53 The increased thrust on the retail lending segment has resulted Capital & Reserves 5,474.80 5,335.33 in good off take of various products like MSME loans, Housing Loans, Vehicle Loans, Gold Loans etc. which renders a wider Capital Adequacy (%) - Basel-III 13.41 12.61 spectrum of deserving customers. Earnings Per Share (EPS) : During the year, which can largely be seen as a year of (a) Basic EPS (in `) 0.58 1.37 consolidation, the Bank enforced higher standards for credit [face value ` 1/-] underwriting and has put in place enhanced administration (b) Diluted EPS (in `) standards. The balanced growth has resulted in achievement of 0.58 1.37 [face value ` 1/-] the regulatory prescriptions with respect to major priority sector categorization and agricultural lending. Book Value per Share (in `) 30.25 29.48 [face value ` 1/-] % of Target % of Achievement Gross NPA as % of Gross Advances 4.98 4.92 Overall PSL 40.00% 41.86% Net NPA as % of Net Advances 3.34 3.45 Agriculture 18.00% 18.49% Return on Average Assets (%) 0.11 0.29 Small & Marginal Farmers 8.00% 9.47% BUSINESS ACHIEVEMENTS Non-Corporate Farmers 12.1% 12.31% Micro Enterprises 7.50% 7.62% The Bank has achieved a Total Business of `1,48,557.91 crore, consisting of Deposits of `83,033.89 crore and Gross Advances Weaker Sections 10.00% 12.01% of `65,524.02 crore as on March 31, 2020. Break-up of exposure under Priority Sector as on March 31, Deposits 2020 is furnished below: The Total Deposits of the Bank increased from `80,420.12 crore Amount to `83,033.89 crore as on March 31, 2020, registering a growth (` in crore) of 3.25%. Agriculture & Allied activities (Net of PSLC) 11412.20 The break-up of the deposits as on March 31, 2020 is as under: MSME 18742.69 Other Priority Sector 2420.04 Amount % to total Total Priority Sector 32574.93 (` in crore) Deposits PSLC (General PS) 6737.50 Current Deposits 3,207.93 3.86 TOTAL PS (Net PSLC) 25837.43 Savings Deposits 17,551.68 21.14 The excess lending presented an opportunity in generating Term Deposits 62,274.28 75.00 additional source of revenue of `45.43 crore during the year, by Total 83,033.89 100.00 selling off the excess priority sector advances. 9 Experience Next Generation Banking DIRECTORS’ REPORT FINANCIAL PERFORMANCE payouts from profits pertaining to the financial year ended March Profit 31, 2020 until further instructions, this is with a view that the banks must conserve capital in an environment of heightened The Net Operating Income (Net Interest Income and other uncertainty caused by COVID-19 pandemic. Accordingly, the income) of the Bank increased by `617.34 crore (22.48%) Board of Directors of the Bank have not recommended any from `2,745.91 crore to `3,363.25 crore. The increase in Non- dividend for the year 2019-20 (Previous Year, the Bank had Interest Income was `319.54 crore (44.00%) during the year. declared dividend @ 25% i.e. `0.25/- per Equity Share). The increase was on account of improved performance from Treasury operations. CAPITAL & RESERVES The Operating Profit for the year under review was` 1,645.64 The Bank’s issued and paid-up capital stood at `180.97 crore as crore (before taxes and provisions) as against `1,238.98 crore on March 31, 2020. for the year 2018-19. The Net Profit for the year was` 104.59 crore as compared to a net profit of` 247.53 crore during During the Financial Year 2019-20, 40,000 employee stock the previous year and the profit available for appropriation is options were exercised under the Employee Stock Option `381.32 crore as per details given below: Scheme. The Bank has successfully issued Non-convertible, Fully Paid- (` in crore) Up, Unsecured, Perpetual, Basel III compliant Tier 1 Bonds Profit before depreciation, taxes and 1,645.64 worth `500.00 crore during Q4 of FY 2019-20. At the time of provisions issue, India Ratings & Research had assigned a rating of ‘IND A’ Less: Provision for NPI 34.91 (Outlook: Negative). Provisions for Non-Performing Assets 995.97 The capital plus reserves of the Bank has moved up from Provision for FITL 36.95 `5,335.33 crore to `5,474.80 crore on account of exercise of Provision for Depreciation on Investments 283.19 options and plough back of profits during the current financial Provision for Income Tax 44.96 year. Provision for Standard Assets 114.36 THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)- Provision for Restructured Assets 0.02 Basel III Provision for Other Impaired Assets (1.32) The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank Provision for Unhedged Forex Exposure (0.11) according to Basel III guidelines is 13.41 as on March 31, 2020 as Provision for Non-Banking Assets 32.12 1,541.05 against the statutory requirement of 10.875 (including Capital Conservation Buffer). Tier I CRAR constitutes 10.79 while Tier II Net profit 104.59 CRAR works out to 2.62. Brought forward from previous year 276.73 The Bank follows Standardized Approach, Standardized Duration Profit available for appropriation 381.32 Approach and Basic Indicator Approach for measurement Appropriations: of capital charge in respect of credit risk, market risk and Transfer to Statutory Reserves 26.15 operational risk, respectively. Transfer to Capital Reserves 174.68 LISTING AGREEMENT WITH STOCK EXCHANGES Transfer to Investment Fluctuation Reserve - The Bank’s shares continue to be listed on BSE Ltd. and The Transfer to Special Reserve - National Stock Exchange of India Ltd. The Bank confirms that it Transfer to Special Reserve u/s 36(1)(viii) of has paid the listing fees to all the Stock Exchanges for the year Income Tax Act pertaining to earlier years - 2020-21. including corresponding DTL Dividend Paid for FY 18-19 45.24 EXPANSION PROGRAMME Tax on Dividend Paid for FY 18-19 9.30 The Bank has been successful in widening its network across Balance carried over to Balance Sheet 125.95 India with 935 banking outlets (875 Branches, 54 Extension Total Appropriation 381.32 Counters, 3 satellite branches and 3 Ultra small branches) and 1,424 ATMs/CRMs. The Bank opened 7 new outlets (5 Branches Dividend and 2 Extension counters) and 37 ATMs/CRMs across the The Reserve Bank of India, vide its circular dated April 17, 2020, country during the financial year 2019-20. The branch network has directed that banks shall not make any further dividend now covers 27 States and 3 Union Territories. 10 Experience Next Generation Banking DIRECTORS’ REPORT The Bank plans to open 10 more banking outlets and 25 ATMs/ Going ahead, Indian financial markets would take cues from CRMs during the financial year 2020-21. COVID-19 impact, vaccine discovery, Governments measures to support the economy, economic recovery in India and across the The Bank has also initiated steps to open currency chests at globe and the RBI’s monetary and prudential policies. Ernakulam, Kannur and Kolkata. PRODUCTS NON-PERFORMING ASSETS (NPA) During the FY 2019-20, the Bank introduced a bouquet of During the FY 2019-20, as a result of focused and sustained new loan products to provide focused thrust on MSME and efforts, through prompt and effective measures under the Agricultural Sectors. Funding against Electronic Negotiable SARFAESI Act, follow up of recovery cases pending before DRTs Warehouse Receipt (e-NWR), SIB Store Plus etc. are classic and Civil Courts, one time compromise settlements of accounts, examples. asset sale to ARC, etc., the Bank could recover `529.66 crore (Including ARC sale of `74.71 crore) in NPA accounts. Special In addition to the above, the Bank has initiated the process thrust was given to selection and underwriting of credit, of digitisation of MSME loans and has introduced a platform effective due diligence and improvement in credit administration for online verification of documents submitted by the loan to ensure improvement in the quality of assets.