Analysis of Financial Results September 2013
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Analysis of Financial Results September 2013 Table of Contents Company Overview Financial Performance Business Strategy Annexure Corporate Goal for 2013-14 2 Company Overview 1. Over 89 years of banking history 2. Pan-India footprint 3. Robust technology and risk management systems 4. Strong productivity, capital adequacy ratios 5. Experienced management team 6. Highest Standard of Corporate Governance 7. Business Process Reengineering [BPR] in progress 3 History & Evolution • Incorporated in 1924, Karnataka Bank 2013 • Secured ISO 27001 : 2005 Certificate from NQA • BPR implementation under the guidance of M/s KPMG Advisory Services Pvt Ltd. commenced is one of the oldest time tested private • Business Turnover crossed the milestone of ` 50,000 crore 2012 sector Banks • No. of branches crossed 500 • Average turnover per branch crossed ` 100 crore • Launched ASBA facility • Offers wide variety of corporate and 2011 • Right issue of ` 457.03 crore in the ratio of 2:5. retail banking products and services • Launched Online Trading facility 2010 • Maiden QIP aggregate ` 160.83 crs. to over 7.4 million customers 2009 • Compliance with Basel-II norms • Completion of 100% core banking • Forayed into General Insurance 2007 • Floated general insurance JV along with Allahabad Bank, Indian Overseas Bank, Dabur business as a JV partner in Universal 2006 Investments and Sompo Japan Insurance • Launched CDSL-DP services at select branches Sompo General Insurance Company 2005 • Completed 2:1 rights issue to raise ` 160 crs Limited 2003 • Right issue in the ratio of 1:2 2002 • Bancassurance tie-up with MetLife • 1,130 service outlets with 558 • Maiden bonus issue in the ratio of 1:1 branches, 4 Extension Counters and 2000 • Implementation of “Finacle” CBS 568 ATMs in 361 centres across 1995 • Public issue of 45 lakh equity shares in October 1995 1977 • Became an authorised dealer of foreign exchange India as on September 30, 2013 1966 • Took over assets and liabilities of Bank of Karnataka, Hubli and opened 14 new branches • Business Turnover of ` 64,482 crore 1961 • Took over assets and liabilities of the Chitaldurg Bank as of September 2013 1960 • Took over assets and liabilities of Sringeri Sharada Bank Ltd • Incorporated on 18th February 1924 at Mangalore by Late B R Vyasarayachar & other 1924 leading members of the South Kanara Region 4 Awards & Accolades IN 2013 Bagged “STP Award” by Bank of New York Mellon Bagged IDRBT Banking Technology Excellence Awards for 2012-13 among “Small Banks” under the following categories: (i) Best Bank Award for Managing IT risks, (ii) Best Bank Award for use of IT for business innovation. Bagged Sunday Standard FINWIZ 2013 Best Bankers Awards under the following categories: (i) Best Bank for Customer Friendliness under the category of “Midsized Banks”, (ii) Best Bank for Customer Orientation under the category of “Private Sector Banks”. (iii) Best Bank for HR Practices under the category of “Private Sector Banks”. Bagged “Runner-up” of ASSOCHAM [Associated Chambers of Commerce & Industry of India] Social Banking Excellence Award for 2012 under the private sector banks category. IN 2012 Bagged “Operational Excellence Award” for ATMs Bagged “Best Banker in Customer Friendliness – Runner up” by The Sunday Standard Finwiz Bagged “Best Risk Mgmt & Security Initiative – 2nd runner up” Bagged “Best Financial Inclusion Initiative – 2nd runner up” by IBA Banking Technology Awards IN 2011 Bagged “Special Award for managing IT risks” instituted by IDRBT. Awards & Accolades Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Sri.Kamal Nath, Union Minister of Urban Development, Prime Minister, presenting the ASSOCHAM Social Banking Government of India, presenting the "Sunday Standard FINWIZ - Excellence Award to our MD & CEO Shri. P. Jayarama Bhat. 2013 Best Bankers Awards" to MD & CEO Shri. P. Jayarama Bhat. Shri P.Jayarama Bhat, MD & CEO receiving the ISO 27001:2005 Dr. D. Subba Rao, Ex Governor, RBI, presenting the IDRBT Banking certification, for its IT setup, from Shri Ganesh Shastri, CEO of Technology Excellence Award to MD & CEO Shri. P. Jayarama Bhat. NQA India. Pan-India footprint Pan-India Presence No of branches & ATMs Total 1,140 outlets – 10 regional offices, 558 branches, Branches ATMs 550 558 568 4 Extension Counters & 568 ATMs 600 510 504 500 Specialized branches for Forex, Industrial, Agriculture, 409 400 MSME & Corporate finance business 300 42 Financial Inclusion branches, 26 Ultra Small branches 200 Expanding network in northern India in the recent past 100 0 Sept'12 Mar '13 Sept'13 19 4 1 2 7 Area wise distribution of branches (Sept „13) 3 9 1 1 Metro 3 5 5 12 28% 4 7 Rural 36 Has the strongest presence in 19% 40 South India with 433 branches Urban 6 345 Top 5 States: Semi 29% Urban 1 Karnataka (345), Andhra Pradesh (40), 35 Maharashtra (36), Tamilnadu (35), 24% 12 Delhi (19) 7 Robust technology platform and risk management systems Strong technology platform Secured “ISO 27001:2005” certificate from NQA [National Quality Assurance] for its three I.T. set- ups, encompassing the Information Security Management System (ISMS) at Data Centre, Near line Site [NS] at Bangalore and Information Technology Department including the DR site [IT & DR] at Head Office, Mangalore Pioneer in implementing “Finacle” (CBS) amongst the old generation private sector banks 100% networking of branches using CBS State-of-art IT set up which has enabled Anytime Anywhere banking through alternate delivery channels such as ATMs, International Debit Card, Internet Banking, Mobile Banking, and also other products such as Online Trading, ASBA facility, Gift Card, Travel Card, Biometric Smart Card under Financial Inclusion, PoS Network, Online inward remittance facility to NRIs, etc. Effective risk management system Integrated Risk Management Committee develops policies and strategies for integrated risk management, monitors and reviews risk profile of the bank periodically Internal Credit Rating of all the borrowers: Credit exposure above INR 25 lakh are rated borrower- wise and credit facilities below INR 25 lakh & all schematic advances including agri-credit proposals are rated under „Pool based approach‟ Continuous offsite surveillance of borrower accounts Effective ALM/mid office set up to monitor Market risk/Liquidity risk on a continuous basis For effective Operational risk management: Bank is building up a database of internal Loss data, near- miss cases and other Operational risk events, since Sept 2007 Bank has taken all necessary steps for migration to „Basel II advanced approaches‟ under Credit, Market and Operational Risk and also implemented „Basel III‟ guidelines of RBI 8 Return and Capital Adequacy Ratios Return on Equity (%) (after tax) Return on Assets (%) (after tax) 20.0% 1.5% 14.87% 1.06% 15.0% 12.76% 1.0% 0.89% 8.44% 10.0% 0.58% 0.5% 5.0% 0.0% 0.0% Sept'12 Mar '13 Sept'13 Sept'12 Mar '13 Sept'13 Capital Adequacy (%) Basel II Tier I Tier II 14 13.22 13.47 12.17 12 2.66 1.81 2.71 10 8 6 10.36 10.51 10.81 4 2 0 Sept'12 Mar '13 Sept'13 9 Productivity ratios Operating Profit per employee (` lakh) * Operating Profit per branch (` lakh) * 18 200 12.7 153.8 15 128.5 10.7 10.0 150 12 115.5 9 100 6 50 3 0 0 Sept'12 Mar '13 Sept'13 Sept'12 Mar '13 Sept'13 * annualised Business per employee (` crs) Business per branch (` crs) 12 111.4 115.6 9.7 9.5 120 110.5 10 9.2 100 8 80 6 60 4 40 2 20 0 0 Sept'12 Mar '13 Sept'13 Sept'12 Mar '13 Sept'13 10 Financial Performance 11 Income & Profit Net Income (` crs) Operating and Net Profit (` crs) Other Income 1301 Net Interest Income Operating profit 700 635 1,200 Net profit 398 600 1,000 828 500 429 348 800 637 400 328 294 300 600 201 182 200 123 904 400 100 534 200 455 0 0 Sept'12 Mar '13 Sept'13 Sept'12 Mar '13 Sept'13 (6 months) (12 months) (6 months) (6 months) (12 months) (6 months) Net Interest Margins (%) Cost to Income Ratio (%) 3% 2.51% 75% 2.40% 2.31% 48.54% 51.18% 48.19% 2% 50% 1% 25% 0% 0% Sept'12 Mar '13 Sept'13 Sept'12 Mar '13 Sept'13 12 Deposits Deposits (` crs) 38,014 33,968 36,056 100% 820 1,155 717 90% 80% 70% 60% 25,179 25,919 28,258 50% 40% 30% 20% 10% 7,969 8,982 9,040 0% Sept'12 Mar '13 Sept'13 CASA Retail Purchase liability Deposits break up (Sept 2013) Savings Bank 17.7% Current Account 6.1% Retail Term Purchase Deposits liability 74.3% 1.9% 13 Advances Advances (` crs) 25,208 26,469 25,000 22,395 20,000 15,000 10,000 5,000 0 Sept'12 Mar '13 Sept'13 Restructured loans & related accounts (` crs) Restructured loans Related a/cs 1,485 1,500 1,224 1,364 1,000 770 479 530 500 0 Sept'12 Mar '13 Sept'13 14 Advances Segmentation of Advances (Sept 2013) Retail & Corporate Advances (%) Retail Advances Corporate Advances 75% * Agriculture 15.6% Small-Micro 52.5% 53.7% 51.8% Others 48.2% Ent. 50% 47.5% 46.3% 24.9% 15.9% 25% 0% Sept'12 Mar '13 Sept'13 Medium Ent. Other 5.3% Personal loans Housing 12.3% 10.0% Large Ent. 16.1% * However, this works out to 16.47% of the ANBC of 31.03.2013. 15 Advances Priority Sector Advances (` crs) Amount % 10,149 12,000 45.26% 43.31% 43.57% * 40.10% 39.93% 9,482 40% 7,711 8,401 Agriculture Advances (` crs) 8,000 6,389 Amount % 20% 4,000 5,000 3,903 4,186 18.0% 4,000 2,804 3,278 18.63% * 0 0% 3,000 2,002 16.47% 15.85% 15.65% 15.0% Mar '11 Mar '12 Sept'12 Mar '13 Sept'13 2,000 13.57% 12.0% 1,000 0 9.0% Mar '11 Mar '12 Sept'12 Mar '13 Sept'13 Advances to Weaker Section (` crs) Amount % 2,528 2,683 3,000 1,876 1,461 12.07% * 11.0% 2,000 10.56% 540 8.26% 8.95% 1,000 6.0% 3.66% 0 1.0% Mar '11 Mar '12 Sept'12 Mar '13 Sept'13 * Base figure for the calculation of % is ANBC as on March 31st of previous year.