It gives me great pleasure in welcoming you all to the 18th Annual GeneralMeeting of your bank and presenting the highlights of your Bank's performance for the yearended 31st March 2017. On this occasion I would like to thank each one of youfor your continued support and loyalty which enabled the bank to perform better &turnaround with the net profit of Rs. 359 crore during the FY 2016-17 by focusing onreduction in costs increase in noninterest income increase in advances under RetailAgriculture and MSME segments containing fresh slippages and recovery of nonperformingassets. Before I proceed to present the performance highlights of your bank I would liketo place before you the general macroeconomic & banking environment under which yourbank has performed in FY 2016-17.
Macroeconomic and Banking Overview
During FY 2016-17 the global economy continued to grow at a moderate and uneven paceconstrained by both the legacies of global financial crisis Brexit and a number of newchallenges. According to IMF's World Economic Outlook report global growth is expected at3.1 percent in 2016 and projected to pick up 3.5 percent in 2017 due to long awaitedcyclical recovery in investment manufacturing and trade.
However in the domestic front also operating environment remained a cause for concernwith the industrial trade and agriculture sector reeling under pressure. Privateinvestment climate continues to be weak with lower new projects being commissioned andslower completion of stalled projects. The country continued to reel under droughtsituation.
Despite this India has emerged as the fastest growing economy among large economies ofthe world due to its intrinsic strengths such as strong domestic consumption greatermacroeconomic fundamentals and a reform oriented government. As per CSO data published on28th February 2017 India's GDP growth rate for the third quarter (Q3) of FY2016-17 grew at 7 percent as compared to 7.5 percent in the corresponding period of lastyear.
Due to challenging operating environment the Indian banking industry faced relativelysubdued credit growth increasing stressed assets lowering profitability anddeteriorating capital positions during FY 2016-17. Deposits growth of Scheduled CommercialBanks increased by 11.76 percent y-o-y to Rs. 108051.52 billion and credit growth alsorose by only 5.08 percent to Rs. 78818.87 billion during FY 2016-17.
Friends the banking sector remains under pressure on its income and profitabilitylevel new challenges emerged from payment and small finance & universal banksprivate sector banks and deteriorating asset quality increasing NPA due to stress in coresectors and subdued investment and weak demand in domestic as well as global economy.
The challenges faced by the industries predominantly in iron & steelinfrastructure power mining and textiles led to deterioration in asset quality of thelarge borrowers. Therefore it adversely affected the bank's profit return on assets(RoA) and return on equity (RoE) due to higher provisioning for NPAs. However the Bankingindustry is going through a turnaround period with steps and measures from the regulatorand the government.
Your Bank's performance during 2016-17
During FY 2016-17 amidst the volatile operating environment the performance of yourBank demonstrated the fundamental strength & consistent growth in domestic businessthrough the network of 3933 Bank's branches to have competitive advantage in the evolvingbanking landscape of the country.
The global deposits of your Bank were at Rs. 260561 crore as on 31.03.2017 as againstRs. 261736 crore as at 31.03.2016. Whereas domestic deposits of your bank constitutesRs. 234543 crore as at 31.03.2017 in comparison with Rs. 235162 crore during31.03.2016. Term and CASA deposits constituted to Rs. 184696 crore and Rs. 75865 crorerespectively during FY 2016-17. Domestic CASA deposits increased by 11.58 percent to Rs.75792 crore in FY 2016-17 from Rs. 67925 crore in 2015-16. The share of domestic
CASA deposits to total domestic deposits was at 32.32 percent as at 31.03.2017.
The global advances of your Bank were at Rs. 207065 crore as at FY 2016-17 as againstRs. 206449 crore as at FY 2015-16. On the other hand domestic advances of the Bankreported a level of Rs. 171377 crore during FY 2016-17 as against Rs. 168152 croreduring FY 2015-16. Bank remained cautious in lending to large corporate SME segment andcore sectors during stressed period. Retail Agriculture and MSME credit portfolio of thebank were at Rs. 27664 crore Rs. 31878 crore and Rs. 26981 crore respectively as at FY2016-17.
Priority Sector Advances
The priority sector advances of your Bank contributes significantly to increase inoverall loan disbursements. Total priority sector advances of your Bank reached to Rs.67905 crore as on 31.03.2017 from Rs. 64413 crore as on 31.03.2016 and accounted for40.04 percent of ANBC against the required level of 40 percent. Within priority sectortotal agriculture credit reported a growth of 9.03 percent to Rs. 31878 crore during2016-17 as against Rs. 29237 crore during the similar period of last year forming 18.79percent of ANBC against the required level of 18 percent. Credit to MSME sector was at Rs.26981 crore during 2016-17 as against Rs. 27677 crore during 2015-16. Credit to weakersection has moved by 17.39 percent to Rs. 21144 crore as on 31.03.2017 (last year Rs.18012 crore) sharing 12 percent of ANBC (mandatory level 10 percent). Credit to minoritycommunities increased by 3.98 percent to Rs. 10611 crores as on 31.03.2017 (last year Rs.10205 crore) forming 16 percent of ANBC (mandatory level of 15 percent). On the otherhand retail loans registered growth of 4.28 percent to Rs. 27664 crore as on 31.03.2017from Rs. 26529 crore as on 31.03.2016.
Profitability of the bank during the financial year 2016-17 was under pressure due totwo reasons. Firstly reduction in the base rate and MCLR rate which impacted the interestincome of the Bank. Secondly additional provision made due to movement in NPAs inrespect of accounts identified earlier by RBI during their Asset Quality Review. The Bankposted operating profit of Rs. 4233 crore during FY 2016-17 (last year Rs. 3251 crore)an increase of 30.20 percent. Net Interest Income (NII) of the bank also increased by 4.86percent to Rs. 6276 crore during the FY 2016-17(last year
'5985 crores). Net profit of the bank was Rs. 359 crore as at 31st March2017 as against net loss of Rs. 1643 crore in the corresponding period of last year aquick turnaround made by the Bank. Although Net profit of the bank increased continuouslyquarter by quarter during the year. The total revenue increased by 2.93 percent to Rs.26461 crore during FY 2016-17 (last year Rs. 25707 crore). During the year interestincome of the bank marginally declined by 0.84 percent to Rs. 23004 crore (last year Rs.23198 crore). The non interest income (Other Income) of bank raised by 37.78 percent toRs. 3457 crore in FY 2016-17 from Rs. 2509 crore in FY 2015-16. The Bank continued tomaintain a healthy NIM of 2.37 percent as at 2016-17 as against 2.28 percent as at2015-16. The bank was able to maintain this margin because of 3.44 bps improvement in CASAratio to 32.32 percent.
The Gross NPA ratio was at 8.50 percent in FY 2016-17 as against 6.70 percent in FY2015-16. The net NPA ratio was at 5.21 percent in FY 2016-17 as against 4.48 percent FY2015-16. The provision coverage ratio improved to 56.37 percent during the year 2016-17.The bank has reported total cash recovery in NPAs (domestic) of Rs. 2709 crore during FY2016-17 (last year Rs. 2702 crore).
Other key financial ratios
Bank's Earning Per Share (EPS) has improved to Rs. 4.21 in FY 2016-17 as againstnegative of Rs. 24.82 in FY 2015-16. Return on Asset (RoA) improved to 0.12 percent in FY2016-17 (last year -0.56 percent). Capital Adequacy Ratio of the bank as per Basel IIIcontinues to be healthy at 12.03 percent as of March 2017 (last year 11.16%).
Considering the need for ploughing back profits for augmenting capital adequacy ratioyour Bank has decided not to declare dividend for the current year 2016-17.
With the opening of 169 new branches branch network of your Bank reached 3933 as on31.03.2017 including of 1268 branches in under banked district and 982 branches inminority concentration districts. In addition 56 new Ultra Small Branches (USBs) areopened in unbanked villages
with population of more than 5000 during FY 2016-17 leading to total 979 USBs as on31.03.2017.
Re-organization of Regions
With the aim of increase in business and better monitoring and control Bank has opened1 new Regional Office at "Kanpur" by carving out branches from existingAgra Lucknow and Varanasi Regions during the year 2016-17.
New Product Development
During the year Bank has come up with several new products for the benefit of itscustomers. On liability side Synd PDS (a current account to meet the PDS customers/distributors day to day business transactions) and Synd Pravasi Poonj an SB product forNRE customers. On asset side are Synd Swarna for non agricultural purposes with EMIfacility and Synd Vidya-Abroad to meet requirements of students who would like to pursuestudies abroad.
Your Bank embarked on several new business initiatives for improving CASA depositsRetail & Agriculture MSME credit alternate delivery channels & digital bankingcustomer service and other income. Your Bank has been adequately equipped for meeting thefuture challenges and constantly pursuing strategies to be ahead in race of its rivals.Some of them are outlined below:
In order to improve CASA growth Bank conducted CASA campaign to mobilize highvalue current and savings accounts.
To mobilize core term deposits Bank conducted campaign for RD plus accounts.
To increase credit under Retail sector Bank has conducted SyndCarnival campaignfor mobilizing retail loan and Home Loan Star Campaign for canvassing high value housingloans and bringing top builders to Bank's fold.
Bank has introduced scheme for empanelment of Home Loan Counselors (HLC) forcanvassing housing loans.
The Bank also integrated with "Vidyalakshmi Portal" an initiative bythe Ministry of Human Resources Development to facilitate students to apply for EducationLoans online.
In order to increase MSME credit Bank has entered into memorandum ofunderstanding (MOUs) with reputed commercial vehicle manufacturing companies to expandcredit to borrowers for purchase of commercial transport/passenger vehicles/commercialvehicles.
Bank has entered into tie up arrangements with collateral management agenciessugarcane factories farm machinery companies and tobacco boards for extending creditfacilities to farmers.
Bank has introduced hassle free term loan schemes under agriculture for Polyhouse Floriculture Dairy Development etc. for benefit of farming communities. Specialcampaign for term loan Agriculture lending was conducted throughout the country during01.02.2017 to 18.03.2017 and achieved commendable progress of Rs. 1492 crore during thecampaign.
Bank has procured KVP module in Government Business Module (GBM) to acceptrequests for Kisan Vikas Patra. It has made live on 01.06.2016 in 70 designated branches.
Bank has provided an application USSD based IMPS in Mobile Banking. The firstBank which provides USSD based IMPS facility using Aadhaar Number.
The first public sector Bank which has implemented CPPS (Centralized PositivePayment System) for CTS by sharing CPPS data with NPCI.
Bank has developed a mobile app "NPA Tracker" to assist the Bankbranches to keep track of and to prevent slippages of accounts to NPA category.
Bank has also developed "Geo tagging" to keep track of the securitiespertaining to loan accounts by linking the details of the securities to the collateral IDsof the loan accounts.
Bank has developed an Electronic "ATM Fence" to create a virtual GeoFence and alerts attempts on burglary through SMS etc. Bank has also developed innovativepayment service through Basic Mobile/Smart Phone dialing *99# Synd UPI Card to Cardtransfer facility for benefit of the customers.
Bank has developed Synd e-Passbook solution to get account details andstatements on Smartphone. It's a green initiative and one of the popular products of theBank and as on 31.03.2017 4.65 lakhs users have registered for the application.
Bank has provided e-Lounge facility to the customer. Three types of CustomerKiosks are provided (Passbook Printing Internet Banking facility and Cheque Depositfacility) in 40 identified locations to enable the customers to have access on 24 X 7basis. 30 synd e-Lounges are functional as on 31.03.2017.
Bank has provided Online Account Opening facility at the website and throughMicro ATMs for the benefit of customer by providing Aadhaar number or other Govt. approvedKYC documents like Voter ID PAN card and Driving License etc.
Bank has implemented Aadhaar Enabled Public Distribution System (AePDS) inAndhra Pradesh to build a cashless Public Distribution System where the ration cardholders can do Aadhaar based cashless transactions at Fair Price Shops to purchase monthlyration. Our bank has successfully on boarded 11009 Fair Price Shop merchants in to thisprocess in Andhra Pradesh. This project is implemented in our 5 lead districts of AndhraPradesh. Pilot project of cashless AePDS is also implemented by our bank in Ambaladistrict of Haryana state.
Bank implemented Aadhar based Merchant Payment Application (MAP) to facilitatecashless purchases for customers.
Bank Developed Synd Saheli a mobile app for women customers & staff onoccasion of International Women's Day.
Bank has embarked on a large scale transformation programme called "ProjectAnanya". The project is a flagship programme to provide customers with the "bestin class" services while improving and modernizing the whole Bank. "Ananya"project is aimed to achieve excellence in four key Business areas - Business ProcessRe-engineering Digital Banking Sales & CRM and HR Development.
Highlights of the project initiatives during the FY 2016-17
Bank has transformed 372 Branches under Project Ananya.
DigiZones created in Ananya Branches to encourage uptake self service machinessuch as ATM Cash Deposit Machines and PUM (Passbook Update Machine) to provide 24X7services to the customers.
Opened National Processing Center at Manipal a digitally enabled processingcenter to cater to the back office operations centrally facilitating the Branches ininstant account opening.
Instant Account Opening facility is introduced in 864 Branches with issue of SBWelcome Kits to the customers.
Opened loan processing centers at Bangalore and Mangalore for processing ofretail loans with reduced Turn Around Time (TAT) and better customer service.
Contact Centre at Hyderabad and Mohali are opened as a single point of help deskfor the customers.
"Sales Saathi" a Lead Management App is introduced to facilitate everySyndian to scout for the business.
Internet Banking and Mobile Banking Apps improvised further with options likeself user creation Reset/Forgot PIN options Green PIN Debit Card limits etc.
Going forward under project Ananya Bank envisages to
To extend Branch Transformation to 428 Branches with DigiZones under Phase II by31.03.2018.
To Launch Retail loan Centers and MSME Loan centers across all Metros and TierII cities to improve customer service and TAT.
To extend Instant Account facility to all the Branches.
The said initiatives are aimed to increase the business and sales to enhanceprofitability unfold the potential of the human resources and to reduce the overalltransaction costs of various products & services offered by the Bank.
Digitalization of Villages
In line with fulfilling Government's Digital India programme Bank has declared onevillage in Anantapuramu and Kadapa districts of Andhra Pradesh as 100 percent digitalizedvillages. Subsequently one village each in Siddipet Mathura Dakshina Kannada PrakasamDharawad Nellore Ballari districts and five villages in Kurnool district have been 100percent digitalized. As SLBC convener Bank organized 4 Digi-Dhan melas in coordinationwith state government in Karnataka and one mela in Lakshadweep by UTLBC.
Risk Management and Capital Planning
Your Bank is in the process of putting in place software based identificationmeasurement and mitigation of Market and Operation Risk by way of Integrated TreasuryManagement Solution (ITMS) and Operational Risk Management Solution (ORMS) apart from ascientific Funds Transfer Pricing Mechanism(FTP).
Your Bank is taking all measures to meet the capital requirement as per Basel III normsand maintaining key ratios CET1 CRAR and Leverage Ratio above the regulatoryrequirements. Bank is also using various options available to raise the capital to meetits day to day growing business needs. As against challenges faced during the financialyear the earning power of your Bank continued to be improving on strong pan Indiapresence of branches which your bank enjoys with its customers and stakeholders. Your bankis confident that it would be able to meet credit growth requirements of its customers.
During the year 2016-17 Bank has raised total capital funds of Rs. 2706 crore inwhich Government of India has infused an amount of Rs. 776 crore through Equity Capital.The Bank has also raised an amount of Rs. 1930 crore from unsecured perpetually fullypaid-up non-convertible Basel III compliant additional Tier I bonds.
Training and Development
Your bank continued to invest in developing employee's competence. Considering thelarge scale retirements and developing skills your Bank has undertaken process ofrevamping its training for skill building which will groom the officers/executives invarious specialized activities as well as motivate them to assume role of Branch/RegionalHeads. For the identified executives handling sensitive regions and branches Bank hasarranged special executive development programmes consisting of mainly on soft skills. Tobridge the skill gap Bank conducted special training programmes on core credit MSME andpriority sector lending.
During the year 2016-17 the training system has conducted 496 internal trainingprogrammes covering 9008 officers and 5742 workmen employees. In addition 1305officers/executives were deputed to external training programmes conducted by traininginstitutes of repute in India on finer leadership skills. Further 5 executives/officerswere also deputed to overseas training programmes.
Your Bank has been taking measures towards conducive working atmosphere to ensure thatits human power is well-equipped motivated and actively participates in the growth of thebusiness of the bank. Industrial Relations in the Bank has been cordial and harmoniousfacilitating all-round growth in the Business of the Bank. The Unions/ Associations havealso been responsive and proactive to
the corporate goals. Your Bank celebrates Women's Day to recognize and appreciate thecontribution of women staff members.
Recognition and Awards/Accolades
I am proud to share with you the details of various awards and accolades received byyour Bank during the year 2016-17 which have been mentioned below:
Rajbhasha Kirti Puraskar for 2015-16 First Prize in the public sectorbank category for its outstanding performance in official language implementation in Rs.C' region consecutively for second time by the Government of India.
First Prize for Best Official Language Implementation and BestPublication ("Jagriti" house journal) & Best Reference Book (letus speak in Regional Langauage) awards for 201516 from Rajbhasha Seva Sansthan andParivartan Jan Kalyan Samiti New Delhi.
Bank's quarterly Hindi magazine "Jagriti" received third prize inHindi House Journal Competition for 2015-16 conducted by Reserve Bank of India.
Certificate of Commendation from Ministry of New and Renewable EnergyGovernment of India for Collateral Free Farmers Friendly Initiatives for financing ofRenewable Energy Projects (during Feb-2015 to Mar 2016).
FIEO Export Excellence -"Gold Trophy" award for the exportexcellence of the top financial institution of Northern Region for the year 201415 by theFederation of India Export Organization (FIEO).
Skoch Order of Merit Award June 2016 for online payment solution to DGLL(Directorate General of Light Houses & Light Ships GOI).
Skoch Order of Merit Award December 2016
for developing and implementing NPA Tracker Geo Tagging On line Fee CollectionFacility to Small Institutions & ATM Fence for amongst top 100-projects in India.
Skoch Smart Technology Silver Award 2016 for
developing and implementing NPA Tracker Geo Tagging & Online Fee CollectionFacility to Small Institutions applications.
NPCI - National Payments Excellence Award 2016 in recognition of excellentperformance in select parameters of various NPCI products.
Surya Mitra Award for Bank's initiatives and performance under solarfinancing by SELCO foundation.
Corporate Social Responsibility (CSR)
As a sincere Corporate Citizen the Bank has been fulfilling its socialresponsibilities by actively participating in activities aimed at socio-economictransformation of various facets of society and upliftment of the down trodden.
Some of the major contributions under Corporate Social Responsibility during thefinancial year 2016-17 are Donation of ambulance construction of toilets under SwachhBharat Abhiyan contribution to National Sports Development Fund (NSDF) Paralympic SportsAcademy of India and Disabled War Veterans. Financial assistance towards study expenses ofchildren providing Modern Educational Aids education of tribal children SeniorCitizens' Home supporting education of disadvantaged group of children poor studentsstudying in low income schools providing uniforms books stationery items etc.supporting physically challenged blind and poor patients in various hospitals etc.
Moving forward in FY 2017-18 enhanced spending on infrastructure speedy implementationof projects and continuation of reforms are expected to provide further impetus to growthsuggesting that there will be robust need for credit. In the above background your Bankhas adopted the theme for FY 2017-18 as "Year of Profitability". The Bankadopted Business Strategy for FY 2017-18 to improve operational efficiency recovery ofSMAs/NPAs to achieve healthy growth in retail MSME & agricultural advances andincreasing non interest/fee based income.
During FY 2017-18 Bank plans to reorganize 20 regional offices and open 9 new regionaloffices at Bhubaneswar Chennai Raipur Ranchi Noida Nizamabad Tirupati Siliguri andUdaipur for better monitoring and business development.
Today technological innovations and initiatives play a pre-dominant role in reducingcosts improving efficiency and canvassing business by providing excellent customerservice. Therefore your Bank will continue to invest in technological innovations andinitiatives to build on a strong foundation in order to accelerate growth across keybusiness verticals.
With your continued support and patronage I am confident that your Bank would reachgreater heights during the FY 2017-18.
I thank all our shareholders for their continued faith in our strength andcapabilities Members of Board Government of India and Reserve Bank of India for theirvaluable support and guidance customers for their continued support and trust and ourSyndians for their tireless efforts and hard work towards achieving our goals.
Finally I thank one and all of you for attending this meeting.
With Best Wishes
| ||Yours sincerely |
|Place : Manipal ||(Arun Shrivastava) |
|Date : 25.05.2017 ||Managing Director & CEO |