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Karnataka Bank Ltd.

BSE: 532652 Sector: Financials
NSE: KTKBANK ISIN Code: INE614B01018
BSE LIVE 15:40 | 17 Nov 157.25 0.40
(0.26%)
OPEN

160.00

HIGH

160.55

LOW

156.20

NSE 15:59 | 17 Nov 157.25 0.45
(0.29%)
OPEN

159.50

HIGH

160.25

LOW

156.15

OPEN 160.00
PREVIOUS CLOSE 156.85
VOLUME 467957
52-Week high 181.15
52-Week low 100.20
P/E 10.24
Mkt Cap.(Rs cr) 4,444
Buy Price 0.00
Buy Qty 0.00
Sell Price 157.00
Sell Qty 500.00
OPEN 160.00
CLOSE 156.85
VOLUME 467957
52-Week high 181.15
52-Week low 100.20
P/E 10.24
Mkt Cap.(Rs cr) 4,444
Buy Price 0.00
Buy Qty 0.00
Sell Price 157.00
Sell Qty 500.00

Karnataka Bank Ltd. (KTKBANK) - Chairman Speech

Company chairman speech

KARNATAKA BANK LIMITED ANNUAL REPORT 2009-2010 CHAIRMAN'S REPORT LADIES AND GENTLEMEN'S, It gives me great pleasure to be amongst this august gathering of our shareholders in this 86th Annual General Meeting of your esteemed Bank and present to you the Annual Report of your bank your bank for the Financial Year 2009-10. On behalf of the Chairman and the Board of Directors and on my personal behalf, I have great pleasure in extending a warm welcome to each one of you. I trust you all have received a copy of the Banks Annual Report for the year 2009-10, comprising of the report of the Board of Directors and Audited Financial Statements of the Bank. Now let me present the economic environment in which your Bank had operated during the year. Economic Scenario: The global economy continues to recover amidst ongoing policy support and improving financial market conditions. The recovery process is led by the emerging market economies (EMEs), especially those in Asia, as growth remains weak in advanced economies. The global economy continued to face several challenges. As stronger signs of global recovery became visible, the risks- in the global financial markets declined for most part of the year. However, sovereign risk concerns dominated the financial markets. Core measures of inflation in major advanced economies are still moderating as the output gap persists and unemployment remains high. Inflation expectations also remain well anchored. In contrast, core measures of inflation in emerging market economies, especially in Asia have been rising. This has prompted central banks in some EMEs to begin phasing out their accommodative monetary policies. Indian Banking Scenario: Aggregate deposits of Scheduled Commercial Banks (SCBs) increased by 20.72 per cent (Rs. 7,94,583.03 crore) during, 2409-10 as compared with 19.8 per cent (Rs. 6,33,383 crore) in the previous year. Non-food credit extended by scheduled commercial banks (SCBs) increased by 20.05 per cent (Rs. 5,56,610 crore) as compared with 17.28 per cent (Rs. 4,08,098 crore) in the previous year. The Indian economy is firmly on the recovery path. Exports have been expanding since October 2009, a trend that is expected to continue. India's growth-inflation dynamics are in contrast to the overall global scenario. The economy is recovering rapidly from the growth slowdown but inflationary pressures, which were triggered by supply side factors, are now developing into a wider inflationary process. The developments on the inflation front are worrisome. WPI inflation is no longer driven by supply side factors alone. What was initially a process driven by food prices has now become more generalized. The Base Rate system of loan pricing which has replaced the BPLR system with effect from July 1,2010 is expected to facilitate better pricing of loans, enhance transparency in lending rates and improve the assessment of monetary policy transmission. Financial markets functioned normally through the year. Surplus liquidity that prevailed throughout the year declined towards the end of the year consistent with the monetary policy stance. The large market borrowing by the Government put upward pressure on the yields on government securities during 2009-10. However, this was contained by active liquidity management by the Reserve Bank of India. Lower credit demand by the private sector also cushioned the yield. Equity markets generally remained firm during the year with intermittent corrections in line with the global pattern. The Union Budget for 2010-11 has begun the process of fiscal consolidation by budgeting lower fiscal deficit (5.5 percent of GDP in 2010-11 as compared with 6.7 per cent in 2009-10) and revenue deficit (4.0 per cent of GDP in 2010-11 as compared with 5.3 per cent in 2009-10). As a result, the net market borrowing requirement of the Central Government in 2010-11 is budgeted lower at Rs. 3,45,010 crore as compared with that in the previous year. M3 growth for 2010-11 is placed at 17.0 percent, Consistent with this, aggregate deposits of Scheduled Commercial Banks (SCBs) are projected to grow by 18.0 per cent. The growth in non-food credit of SCBs is placed at 20.0 per cent. As always, these numbers are indicative projections and not targets. Looking ahead, the Union Budget for 2010-11: The agriculture sector occupies centre-stage in order to promote inclusive growth, enhance rural incomes and sustain food security. To spur growth in this sector, the Government intends to follow a four-pronged strategy covering (a) agricultural production; (b) reduction in wastage of produce; (c) credit support to farmers and (d) a thrust to the food-processing sector. During the year 2009-10, the flow of credit to the agriculture sector increased significantly and banks have surpassed the target by extending Rs. 3,67,000 crore worth of loan to farmers. In pursuance of the recommendation of the High Level Committee on the Lead Bank Scheme for the purpose of financial inclusion to react the benefits of banking services to the' Aam AadmP, it has been decided to provide appropriate Banking facilities to habitations having population in excess of 2000 by March, 2012. It is also proposed to extend insurance and other services to the targeted beneficiaries. These services will be provided using the Business Correspondent and other models with appropriate technology back up. By this arrangement, it is proposed to cover 60,000 habitations. Broadening of tax slabs will provide substantial relief to a large number of taxpayers. The deduction of an additional amount of Rs. 20,000 for investment in long-term infrastructure bonds as notified by the Central Government will put more money in the hands of individual tax-payers for both consumption and saving. With marginal relaxation in the tax structure and moderate boost to agriculture sector, the Budget projects a fiscal deficit of 5.5% of GDP which translates into a deficit of Rs. 3,81,408 crore. Fiscal deficit is Rs. 4,14,041 crore as per the 2009-10 revised estimates. The fiscal deficit of 6.8% appears to be slightly above the comfort level and this level of fiscal deficit, half of which is likely to be met through market borrowings may pose some sort of challenge to banking industry as, well. Monetary Policy: The Monetary Policy statement 2010-11 announced on July 27, 2010 by the RBI Governor intends to - Contain inflation and anchor inflationary expectations, while being prepared to respond to any further build-up of inflationary pressures. - Maintain an interest rate regime consistent with price, output and financial stability. - Actively manage liquidity to ensure that it remains broadly in balance so that excess liquidity does not dilute the effectiveness of policy rate actions. The following are the policy measures announced. - Bank rate has been retained at6.0percent. - Repo rate under the Liquidity Adjustment Facility (LAF) increased by 25 basis points from 5.5 percent to 5.75 per cent with immediate effect. - Reverse repo rate under the LAF increased by 50 basis points from 4.0 per cent to 4.50 per cent with immediate effect. - Cash reserve ratio (CRR) retainedat 6.0 per cent. Performance of your Bank during 2009-10: With the above background, I would proceed to brief you about the performance of your Bank during the financial year 2009-10. Your Bank has registered progress in important areas like deposits, advances, geographical presence with new branches and their networking, etc. I am pleased to report that your Bank's total business has stood at Rs.38,166 yore as at 31st March 2010. Deposits have increased to Rs. 23,730.65 crore at the end of March 2010 from Rs. 20,333.29 crore during the same period last year thus recording a growth of 16.71 %. Advances have touched Rs.14,435.68 core at the end of the year as against Rs.11,810.05 core as on 31.03.2009 indicating arise of 22.23%. The priority sector advances of the Bank increased from Rs. 4,372.16 crore to Rs. 5,252.96 crore. The agricultural advances increased from Rs. 993.36 crore to Rs. 1,609.16 crore. While priority sector advances stood at 45.800!0 of total advances, agricultural advances stood at 11.97%. The Net NPA of the Bank stood at 1.31 %. The net owned funds of the Bank grew by 16.96% and stood at Rs. 1,832.75 crore. The Bank had augmented Rs. 160.83 crore under its QIP issue during the year under report. The Bank posted operating profit of Rs. 260,84 crore and net profit of Rs.167.12 crore. The capital adequacy ratio as per Basel II norms stood at 12.37% well above the minimum of 9% prescribed by RBI. The CASA deposits of the Bank stood at Rs. 5,118 crore as against the target of Rs. 5,000 crore for March 2010, The same has increased by Rs. 1,360 crore showing a growth rate of 36.19% over March 2009. The share of CASA has increased to 21.62%. The number of accounts under CASA stood at 28,13,457 as compared to 21,77,537 as at March 2009. During the year, the Bank achieved foreign exchange business turnover of Rs. 8,605.93 crore as against Rs. 7,850.65 crore for the previous year. The advances to export sector stood at Rs.1, 369.12 Crore. I am happy to inform you that during the year under report your Bank opened 17 new branches at Patna, Kanakapura, Tambaram, Vellore, Dhanbad, Kolkata Bowanipore, Bangalore - Naganathapura, Gundlupet, New Delhi -Ashokvihar, Ujjain, Ghaziabad, Kancheepuram, Chennai - Annanagar (West), Brahmapur, Hyderabad - Serillingampally, Durg and Rajarhat-Kolkata. As on March 31, 2010, the Bank had 464 branches, 217 ATM outlets, 8 Regional Offices, One International Division, One Data Centre, One Customer Care Centre, 5 Service branches, 2 Currency Chests, 6 Extension Counters and 2 Central Processing Centres, spread across 20 States and 2 Union Territories. Further, for better ambience and improved customer service, the Bank shifted 16 branchesloffices to new premises, during the year 2009- 10. The Bank which is tech savvy launched a slew of new products operated on technology operated platform namely, student prepaid card, mobile banking (mobile payment solutions), online payment through debit card and free plant 8 international gold debit card. The Bank also launched a few technology backed products such as KBL-Kishore, KBL-Tarun, KBL- Salary Privilege, SB-Money Platinum, CA-Money Platinum etc. While KBL Kishore is for minor students between 12 and 18 years of age, KBLTarun is for students in the age group oil 825. KBL Salary Privilege is a zero balance any branch banking account for salaried persons. SB Money Platinum is the highest category under SB account schemes targeting the High Net worth Individuals. I take this opportunity to inform the august gathering that your Bankwhich had won the prestigious Sun and NDTV Green IT award instituted by Sun Microsystems and NDTV a year back, has bagged 'Special Award for use of IT for Internal effectiveness' for the year 2009, instituted by Institute for Development and Research in Banking Technology (IDRBT). Dr. K. C. Chakrabarty, Deputy Governor, RBI presented the award in the presence of Dr. D. Subbarao, Governor, Reserve Bank of India at a function held at IDRBT, Hyderabad on 18th June, 2010. Divided recommended: Bank proposes to pay a dividend of 40% for the year ended March 31, 2010. Risks and Internal Control System: Risk is inherent in all kinds of business activities and is an integral part of the banking business. In normal course of business, a bank is exposed to various risks namely Credit Risk, Market Risk and Operational Risk besides other residual risks such as Liquidity Risk, Concentration Risk, Strategic Risk, Reputation Risk etc. With a view to efficiently manage such risks, your Bank has put in place various risk management systems and practices. A separate Compliance Department has been set up. The Audit Committee of the Board of Directors also oversees the internal audit and compliance functions. The system of regular inspection, short inspection and EDP Audit (IS Audit) of all the branches/offices, Concurrent IS Audit of Data Centre and concurrent audit of select branches, Treasury Department and International Division etc., form part of the internal control mechanism. Besides, the Bank has been ensuring stock audit and credit audit of large borrowal accounts by professional audit firms to further strengthen the credit administration. The Risk-based Internal Audit System has already stabilized in the Bank and all the branches have been subjected to such Audit. The Bank introduced the on line marking of NPA's with effect from 30th September 2009 and has also initiated steps for offsite monitoring of all the borrowal accounts with limits above Rs. 25 lakh. Human Resources: The survival and prosperity of any industry depends largely on the quality of its human resources and it is true even in the case of banking industry which is service oriented. Efforts are being made to give appropriate training to the staff to improve their skills for efficient service to customers. The business per employee (excluding inter-bank deposits) has increased from Rs. 6.49 crore as on 31st March 2009.to Rs. 7.27 crore as on 31st March 2010. Tribute to Founders: On 18th February 2010 Bank celebrated its Founders' Day as a mark of respect to the founding fathers. 'Naadoja' Dr. Justice S. R. Nayak (Former Chief Justice of Chhattisgarh), Chairperson, Karnataka State Human Rights Commission graced the occasion and delivered the keynote address. The lecture was followed by an enthralling vocal recital by Padma Shri Smt. Aruna Sairam,Chennai. The Corporate Plan for 2010-11 envisages (I) Business Turnover of Rs. 45,000 crore with Deposits of Rs. 27,500 crore & Advances of Rs.17,500 sore and a turnover per employee of Rs. 7.76 crore (ii) 480 blanches (iii) 300 ATMs (iv) Introduction of a. Online trading b. Travel Card c. Gift Card d. Smart Card e. POS Terminal f. Special Zero Balance account for women. Acknowledgements: Before concluding, on behalf of the Bank and on my own behalf I would like to place on record our gratitude to our shareholders and customers for their sustained support and patronage which has immensely contributed towards the growth of the Bank. The Board of Directors has always been supportive and I thank the Chairman and members of the Board for their encouraging guidance. The contribution made by Auditors, Legal Advisers, Consultants and Correspondents is thankfully acknowledged. I am pleased to record my appreciation for the positive role played by the employees' and Officers' unions and the rich contribution made by the dedicated workforce in serving the customers to their satisfaction. I also gratefully acknowledge the continuous guidance and support of the Reserve Bank of India, Indian Banks' Association, SEBI, Stock Exchanges and IRDA. Conclusion: I am confident that your 86-year old Bank will continue to take strides on the profitable growth path and scale new heights in future with the continued support and patronage of the shareholders, customers, employees and well wishers. Thank You, Place : Mangalore P Jayarama Shat Date : 31.07.2010 Managing Director & CEO.