1. The Board of Directors has pleasure in presenting the AnnualReport together with Audited Balance Sheet and Profit and Loss Account of the Bank for theyear ended 31st March 2018.
2. Performance at a Glance:
2.1 The TOTAL business stood at `303184.79 crore as on 31st March2018 over the business figure of `360916.41 crore as on 31.03.2017.
2.2 The TOTAL deposits of the Bank stood at `183315.95 crore as on31.03.2018 whereas it stood at `220559.62 crore as on 31st March 2017.
2.3 CASA share in TOTAL deposit has improved from 26.47% (31.03.2017)to 29.52% (31.03.2018) Average CASA has grown by `5590.64 crore (12.44%) y-o-y basis. Ithas reached to `50523.59 crore as on 31.03.2018 from `44932.95 crore as on 31.03.2017.Average SB has grown by 12.85% from `34040.99 crore as on 31.03.2017 to `38416.71 croreas on 31.03.2018. Average CA has grown by 11.15% from `10891.96 crore as on 31.03.2017 to`12106.88 crore as on 31.03.2018. 2.4 The Bank continued its prudent approach inexpanding quality credit assets in line with its policy on Credit Risk Management morecautiously. The Bank's credit figure stood at `119868.84 crore as on 31.03.2018 asagainst `140356.79 crore as on 31st March 2017 decreased by `20487.95 crore (14.60%).2.5 Credit-Deposit Ratio stood at 65.39% as on 31.03.2018 as compared to 63.64% as on31.03.2017.
2.6 The Bank continued its more and more focus on recovery of NPAs eventhrough specified drive and by devoting more time. During the financial year the Bankeffected a cash recovery and upgradation of NPAs of `4508.76 crore as compared to`3350.87 crore in the previous financial year.
2.7 The bank posted a Net loss of `4053.94 crore as against a NetProfit of `561.21 crore in the previous year. 2.8 As on 31.03.2018 the Bank had 9955functional units spread across India comprising of 2440 Branches 3122 ATMs and 4393Branchless banking units. 2.9 The Reserve Bank of India has placed your Bank in December2017 under Prompt Corrective Action (PCA) Framework in view of NPA and requirement toraise capital of the Bank in this direction the bank has taken all efforts to come out ofthe PCA at the earliest.
3. Income Analysis
3.1 InterestIncomeoftheBankhascomedownto`17628.33 crore (9.47%)from`19471.47 crore in the year 2016-17 and Interest expenses decreased by `2230.35crore from `15020.46 crore during the financial year 2016-17 to `12790.11 croreduring the year 2017-18. The Net Interest Income recorded a growth of `387.21 crore[8.70%] during the same period.
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3.2 The TOTAL Income of the Bank [total of Interest Income andNon-Interest Income] stood at to `19941.11 crore as against `22561.78 crore in theprevious financial year recording a fall of `2620.37 crore [11.61%].
3.3 Non-Interest Income from Core Areas decreased by `287.38 crore[21.37%] from `1345.04 crore in the financial year 2016-17 to `1057.66 crore in thefinancial year 2017-18. The TOTAL Non-Interest Income has decreased to `2313.08 crore ason 31.03.2018 from `3090.31 crore as on 31.03.2017 there by come down by of 25.15%. 3.4The Operating Expenses has shown a increase of 3.19% during the financial year 2017-18 andstood at `3200.88 crore as compared to `3101.79 crore in 2016-17. 3.5 Staff expensesincreased from `1444.37 crore during FY2016-17 to `1592.82 crore during FY2017-18.
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5. Operating Profit:
5.1 The Operating Profit stood at `3950.42 crore as at the end ofMarch 2018 as compared to `4439.53 crore as on 31.03.2017.
5.2 Operating Profit during March 2018 Quarter stood at `989.45 croreas against `1054.54 crore during March 2017.
5.3 NIM for the March 2018 Quarter stood at 2.55% as against 1.72%during March'17 Quarter.
5.4 The Asset Utilisation Ratio [percentage of Operating Profit toAverage Working Funds] stood at 1.62% for the financial year 2017-18 compared to 1.85% forthe financial year 2016-17.
6.1 The Provision for Bad and Doubtful Debts Provision on StandardAssets Taxation Investment Depreciation and others aggregated to `8004.36 crore in thefinancial year 2017-18 as compared to ` 3878.32 crore in the financial year 2016-17.
7. Net Profit and Dividend:
7.1 After considering the provisions the Net Loss of the Bank stood at`4053.94 crore for the financial year 2017-18 as against the net profit of `561.21 crorefor the year ended 31.03.2017.
7.2 The Board of Directors of the Bank has not recommended any Dividendfor the financial year 2017-18.
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7.3 An amount of `106.82 crore withdrawn from Investment Reserve.
8. Net Worth and CRAR:
8.1 The Net Worth of the Bank has come down to `10846 crore as on 31stMarch 2018 from `12712 crore as on 31st March 2017.
8.2 During the year Government of India has infused `2187 croretowards equity capital in the Bank. Accordingly the Bank raised equity capital by way ofpreferential issue amounting to `2187 crore including premium. For this Bank has issued518492176 equity shares of `2/- face value at a premium of `40.18 per equity share andallotted to Government of India on preferential basis on March 31 2018. The Bank has alsoraised Basel III compliant Tier-2 Bond (Series I) of `500 crore and AdditionalTier-
1 Bond (Series III) of `800 crore on private placement basis andallotted to the respective bondholders on 14.11.2017.
8.3 The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 9.23%(Basel III) as on 31st March 2018 as against 11.32% as on 31st March 2017.
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III Basel III
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8.4 The Return on Equity Earnings Per Share and Book Value per Sharefor the Financial Year 2017-18 stood at (36.50)% `(35.30) and `65.12 respectively asagainst 4.66% `5.17 and `110.82 respectively for the previous Financial year. The impactof raising of Equity Capital of the Bank given effect during Financial Year 2017-18 forthis calculation.
9. Consolidated Accounts:
9.1 As per RBI guidelines the Bank has consolidated the financialaccounts as at 31st March 2018 with those of its wholly owned Subsidiary viz. Corp BankSecurities Ltd. As per the consolidated statement as on 31st March 2018 the Net Worth ofthe Corp Bank group stood at `10887.82 crore. The consolidated Operating Profit for thefinancial year 2017-18 stood at `3956.03 crore as against `4446.31 crore as at31.03.2017. During the Financial Year 2017-18 consolidated Net loss of the Bank stood at`4049.93 crore as against profit of `565.81 crore for the year ended 31.03.2017. TheBank has complied with the RBI guidelines and the Accounting Standards prescribed by theInstitute of Chartered Accountants of India.
10. Bank's Service Outlets:
10.1 The Bank's TOTAL service outlets at the year ended 31st March2018 are 9955 comprising of 2440 branches 3122 ATMs and 4393 Branchless Banking Unitsacross the country. The Bank has operationalized 7 new branches during the financial year2017-18. The Bank is also having its representative offices at Hong Kong and Dubai forcatering to the existing and prospective NRI customers. Out of the TOTAL 2440 branches588 branches are in Rural areas 795 in Semi-urban centres 520 in Urban areas and 537 inMetro centres.
10.2 The Bank now has a TOTAL of 34 zonal offices spread across thecountry to have a better control monitoring and follow up with the branches for businessdevelopment. The Bank also has 6 Circle offices headed by General Managers operating atMumbai Delhi Bengaluru Chennai Kolkata and Ahmedabad. The Circle offices function asan extended arm of the Corporate Office better equipped to support and drive businessdevelopment plans through the Zonal Offices in their Command area. The Corporate officefunctions that are delegated to Circle offices are Planning Development and ResourceMobilisation Credit Sanctions Credit Risk Management Recovery and Legal Human ResourceManagement Support Services and Inspection and Audit.
11. Advertisement and Publicity:
11.1 During the year concerted efforts were made for enhancingthe brand and image of the Bank. The Bank continued to disseminate messages on itsproducts services interest rates and its performance to the customers shareholders andthe general public through advertisements and publicity in Newspapers Periodicals TVChannels FM Radio Stations Hoardings Translites Website ATMs etc.
12. Government Business and Bancassurance:
The TOTAL Direct/Indirect tax Customs duty and State Taxcollections of the Bank for the year ended 31st
March 2018 reached `61993 crore from 25.97 lakh challans as comparedto `79622 crore from 28.43 lakh challans collected during the corresponding period lastyear. The Bank has earned an aggregate income of `8.48 crore from Govt. Business duringthe Financial Year 2017-18.
Under Life Insurance Business Bank has canvassed 607547policies with premium of `18879.21 lakh and earned commission of `794.16 lakh as at 31stMarch 2018(this includes 600386 enrolments made under Pradhan Mantri Jeevan Jyoti BimaYojana with premium of `1735.11 lakh and commission of `246.15 lakh) as against 5 98696policies with premium of `21534.49 lakh and commission of `1042.80 lakh as at 31st March2017.
Under Non-life Business Bank has canvassed 1353068 policies withpremium of `2614.30 lakh and commission of `345.00 lakh as at 31st March 2018 (thisincludes 1306081 enrolments made under Pradhan Mantri Suraksha Bima Yojana with premiumof `156.72 lakh and earned commission of `26.12 lakh) as against 1367682 policies withpremium of `3889.97 lakh and commission of `344.59 lakh as at 31st March 2017. Bankhas earned a commission of `181.59 lakh for the period ended 31st March 2018 under HealthInsurance business as against `19.84 lakhs as at 31st March 2017.
Bank has earned a commission of `22.12 lakh for the period ended31st March 2018 under Mutual Fund Business as against `16.99 lakh as at 31st March 2017.
13. Corporate Social Responsibility
As a responsible Corporate citizen the Bank initiated severalwelfare measures aiming at the under privileged section of the society in fulfilment ofits commitment to social priorities during the financial year 2017-2018.
13.1 Corporation Bank Economic Development Foundation [CBEDF]
The Corporation Bank Economic Development Foundation a non-profiteconomic outfit Trust has been pursuing its objectives of fulfilling social obligation intune with corporate mission. All CSR activities of the Bank are conducted under the aegisof CBEDF. Financial grants to the extent of `324.34 lakh were disbursed for execution ofvarious projects of social concerns during the year 2017-18 through CBEDF. Amongst othersCBEDF implemented following major CSR projects during FY 2017-18.
13.2 CSR Activities through "CorpKiran"- Association ofSpouses of Bank Executives
For the welfare of underprivileged through "CorpKiran" Bankgranted `17.09 lakh to various Institutions during 2017-18. The major activities includedproviding Bench Desk Cupboards computers water purifier etc. to poor school childrenand inmates of orphanages old age homes destitute homes helping physically and mentallychallenged people Hopper Tipper for Swachh Bharat Abhiyan.
13.3 CSR through Corporation Bank Self Employment Training Institutes[COBSETI]
The Corporation Bank Self Employment Training Institutes are operatingin Chikmagalur and Kodagu Districts catering to the training needs of the rural unemployedyouth hailing from both the districts where the Bank has the Lead Bank responsibility.Around 32000 candidates have been trained under regular and other programmes by both theinstitutes since inception. Under Entrepreneurship Development Programes (EDP) 16407candidates have been trained of which 12637 candidates have established their ownenterprise indicating a success rate of 77%. The Bank has incurred an expenditure of`50.18 lakh during the year 2017-18 for conducting the training programmes at both theInstitutes. COBSETI Chikmagalur has been graded as "AA" Training Institute andCOBSETI- Kudige is graded as "A" by the Ministry of Rural Development for yearthe year 2017.
13.4 CSR through "Grameena Abhyudaya Financial Literacy Trust"[GAFL Trust]
The Bank has sponsored Grameena Abhyudaya Financial Literacy Trust forestablishing "Financial Literacy Centers" [FLCs] at various locations. TheseCenters educate people about the usefulness of the Bank account for all their economicneeds and empowerment. The Centers also provide counseling for the borrowers on the basisof financial aspects including insurance savings and credit related products/services inthe Bank etc. As on 31.03.2018 GAFLCC Trust has established 4 District level and 21 Blocklevel FLC centers.
The Bank has provided `58.00 Lakh for meeting the recurring cost of theTrust during the year 2017-18. The Trust has conducted 1669 Financial Literacy Camps atvillages schools colleges other institutions SHGs and others covering about 66000persons.
13.5 CSR through SHG formation
During the year the Bank has spent `172.45 Lakhs for promoting 17245new SHGs in 6 districts of Karnataka. Through this major CSR initiative Bank has helpedabout 172450 families of the members of SHG groups to become financially empowered. Theynow have access to banking facilities including deposits and loans. They also receivetraining in record maintenance and account keeping of their respective groups. Regularmeetings of the groups encourage the members to freely interact and become more vocal.
14. Progressive use of Official Language:
14.1 The Bank ensures compliance of the provision of Official LanguagesAct 1963 Official Languages Rules 1976 and various directions with regard to OfficialLanguage issued from time to time by Department of Official Language Ministry of HomeAffairs Financial Services Department Ministry of Finance and the Reserve Bank of India.
14.2 The overall performance of the Bank in the field of officiallanguage implementation during the year 2017-18 has been very good. Bank has been awardedsecond prize under Rajbhasha Kirti Puraskar for Excellence in OL implementation amongnationalize Banks in "C" region. Our Kochi Bhubneshwar Vijayawada Zones andStaff Training College Bangalore received shield from their respective Town OfficialLanguage Implementation Committee (TOLIC) for their excellent performance in O.L.implementation.
14.3 The Bank is the convenor of Town Official Language ImplementationCommittee (TOLIC) Mangalore Belgaum and Nellore. Various activities are conducted everyyear for the benefit of staff members of member organisations/banks.
14.4 During the Financial Year the Third Sub-Committee of theCommittee of Parliament on Official Language visited our Ramnagar and Bikaner Branch andappreciated the efforts being made by the Bank in Official Language Implementation. Duringthe Financial Year Dept. of Financial Services Ministry of Finance inspected STC
Delhi Zonal Offices at Varanasi Jaipur Kolkata Udupi Vijayawada aswell as Gorakhpur and Padrauna Branches and appreciated the efforts being made by the Bankin Official Language Implementation.
14.5 Bank jointly organized the "Bhashayi Souhard Diwas (HindiDiwas)" on 15th Sept. 2017 with TOLIC Mangalore.
14.6 The Bank is bringing out various publications for popularizingOfficial Language Hindi. These include "Mangala" quarterly Hindihouse-journal of the Bank and "Tridhara"- Hindi Journal published on behalf ofTOLIC Mangalore. Apart of these publications bank has published a book on Hindi Workshopand various brochures.
14.7 Hindi workshops and training programmes were conducted on aregular basis for the benefit of staff members.
15. Performance of Subsidiaries and other units sponsored by the Bank 15.1Corp Bank Securities Limited: The Bank's wholly owned subsidiary Corp BankSecurities Limited (CBSL) has earned a TOTAL income of `6.77 crore posted Profit BeforeTax of `5.61 crore and Profit After Tax of `4.01 crore (after accounting for tax provisionof `1.12 crore for current year tax provision of `0.05 crore for earlier years reversalof deferred tax asset of `0.006 crore and MAT credit set off of `0.43 crore) for FinancialYear 2017-18 while the corresponding figures for Financial Year 2016-17 were `8.04 crore`6.78 crore and `4.60 crore respectively (after accounting of tax provision of `1.36 crorefor current year reversal of tax provision of `0.07 crore for earlier years reversal ofdeferred tax asset of `0.0038 crore and `0.90 crore being MAT credit set off). The Paid upEquity Share Capital remained at `75 crore as on 31.03.2018 while the Net worth stood at`116.97 crore with the plough back of surplus. The Earning per Share for fiscal endedMarch 2018 was `0.53 while it was `0.61 for the fiscal ended March 2017. The Company hadlaunched equity broking business for institutional clients in Financial Year 2015-16. TheCompany has started proprietary trading in Equity shares also. The Company continues topursue its other activity of distribution of Mutual Fund Products and trading in approvedSecurities like Commercial Papers Certificate of Deposits and Treasury Bills etc.
16. Constitution of Board of Director
16.1 The following changes have taken place in the Board of Directorsof the Bank during the financial year ended 31st March 2018.
16.2 Shri Sunil Mehta Executive Director of the Bank has ceased fromthe services of the Bank on 5th May 2017 upon his appointment as Managing Director andChief Executive Officer of Punjab National Bank.
16.3 Ms. Chitra Gouri Lal re-elected as shareholder director of theBank effective from 08.09.2017 for a period of three years till 07.09.2020.
16.4 Shri Pradeep Kumar Jain elected as shareholder director of theBank effective from 08.09.2017 for a period of three years till 07.09.2020.
16.5 The following members retired from the Board of the Bank duringthe period-2017-18:
Shri Sushobhan Sarker shareholder director on completion of his termon 25th August 2017.
Shri Ramesh Kumar Bhat shareholder director on completion of his termon 25th August 2017.
16.6 The Board places on record its appreciation for the guidance andcounsel received from Shri Sunil Mehta Shri Sushobhan Sarker and Shri Ramesh Kumar Bhatduring deliberations of the Board/Committees of the Board and also in the conduct of theBank's business during their tenure of office as Directors of the Bank.
17. Directors' Responsibility Statements
The Directors confirm that in the preparation of the Annual Accountsfor the year ended 31st March 2018 -
17.1 The applicable Accounting Standards had been followed along withproper explanation relating to material departures if any.
17.2 Accounting Policies had been selected and applied consistently bythe Bank and made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Bank at the end of the financial yearand of the profit and loss of the Bank for that period.
17.3 Proper and sufficient care was taken for the maintenance ofadequate Accounting Records in accordance with the provisions of the relevant Acts forsafeguarding the assets of the bank and for preventing and detecting fraud and otherirregularities.
17.4 The Annual Accounts were prepared on a going concern basis.
17.5 Internal financial controls had been laid down to be followed bythe Bank and that such internal financial controls are adequate and were operatingeffectively.
17.6 Proper systems were in place to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
18.1 The Directors thank the shareholders valued customerswell-wishers Share Transfer Agent and correspondents of the Bank in India and abroad fortheir goodwill patronage and support.
18.2 The Directors acknowledge with gratitude the valuable and timelyadvice guidance and support received from Government of India Government of KarnatakaReserve Bank of India Securities and Exchange Board of India (SEBI) BSE NSE NSDLCDSL various State Governments Financial Institutions and the Statutory Central Auditorsof the Bank in the functioning of the Bank.
18.3 The Directors place on record their deep appreciation of thevaluable contribution of the members of the staff at all levels for the progress of theBank during the year and look forward to their continued co-operation in realisation ofthe corporate goals of the Bank in the years ahead.
For and on behalf of the Board of Directors
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(Jai Kumar Garg)
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Managing Director &
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Chief Executive Officer