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. () - Director Report

Company director report

2018 – 19

1. The Board of Directors has pleasure in presenting the Annual Report together withAudited Balance Sheet and Profit and Loss Account of the Bank for the year ended 31stMarch 2019.

2. Performance at a Glance:

2.1 The total business stood at Rs.305819.05 crore as on 31st March 2019over the business figure of Rs.303184.79 crore as on 31.03.2018.

2.2 The total deposits of the Bank stood at Rs.184567.84 crore as on 31.03.2019whereas it stood at Rs.183315.95 crore as on 31st March 2018.

2.3 CASA share in total deposit has improved from 29.52% (31.03.2018) to 31.59%(31.03.2019). Average CASA has grown by Rs.557.60 crore (1.10%) y-o-y basis. It hasreached to Rs.51081.19 crore as on 31.03.2019 from Rs.50523.59 crore as on 31.03.2018.Average SB has grown by 3.90% from Rs.38416.71 crore as on 31.03.2018 to Rs.39913.26crore as on 31.03.2019. Average CA decreased by 7.76% from Rs.12106.88 crore as on31.03.2018 to Rs.11167.93 crore as on 31.03.2019.

2.4 The Bank continued its prudent approach in expanding quality credit assets in linewith its policy on Credit Risk Management more cautiously. The Bank's credit figure stoodat Rs.121251.21 crore as on 31.03.2019 as against Rs.119868.84 crore as on 31stMarch 2018 increased by Rs.1382.37 crore (1.15%).

2.5 Credit-Deposit Ratio stood at 65.69% as on 31.03.2019 as compared to 65.39% as on31.03.2018.

2.6 The Bank continued its more and more focus on recovery of NPAs even throughspecified drive and by devoting more time. During the financial year the Bank effected acash recovery and upgradation of NPAs of Rs.5192.76 crore as compared to Rs.4508.76 crorein the previous financial year.

2.7 The bank posted a Net loss of Rs.6332.98 crore as against a Net loss ofRs.4053.94 crore in the previous year.

2.8 As on 31.03.2019 the Bank had 9972 functional units spread across India comprisingof 2432 Branches 3015 ATMs and 4525 Branchless banking units.

3. Income Analysis

3.1 Interest Income of the Bank decreased by Rs.2005.70 crore (11.38%) fromRs.17628.33 crore in the year 2017-18 to Rs.15622.63 crore in the year 2018-19 andInterest expenses decreased by Rs.2675.95 crore from Rs. 12790.11 crore during thefinancial year 2017-18 to Rs.10114.16 crore during the year 2018-19. The Net InterestIncome recorded a growth of Rs.670.25 crore [13.85%] during the same period.

Particulars 2017-18 2018-19 Change in %
Interest Income 17628.33 15622.63 (11.38)
Non-Interest Income 2313.08 1872.07 (19.07)
Total Income 19941.41 17494.70 (12.27)
Interest Expenditure 12790.11 10114.16 (20.92)
Operating Expenses 3200.88 3486.06 8.91
Total Expenditure 15990.99 13600.22 (14.95)
Operating Profit 3950.42 3894.48 (1.42)
Provisions & Contingencies (Excl. Tax) 10631.28 11943.15 12.34
Profit before Tax (6680.86) (8048.68) 20.47
Provision for Tax (2626.92) (1715.70) (34.69)
Net Profit (4053.94) (6332.98) 56.22

3.2 The total Income of the Bank [total of Interest Income and Non-Interest Income]stood at to Rs.17494.70 crore as against Rs.19941.41 crore in the previous financialyear recording a fall of Rs.2446.71 crore [12.27%].

3.3 Non-Interest Income from Core Areas increased by Rs.43.57 crore [4.12%] fromRs.1057.66 crore in the financial year 2017-18 to Rs.1101.21crore in the financial year2018-19.

The Total Non-Interest Income has decreased to Rs.1872.07 crore as on 31.03.2019 fromRs.2313.08 crore as on 31.03.2018 thereby came down by 19.07%.

3.4 The Operating Expenses has shown a increase of 8.91% during the financial year2018-19 and stood at Rs.3486.06 crore as compared to Rs.3200.88 crore in 2017-18.

3.5 Staff expenses increased from Rs.1592.82 crore during FY 2017-18 to Rs.1746.95crore during FY 2018-19.

4. Spread Analysis:

Particulars 2017-18 2018-19 Absolute %
Average Working Funds 243337.00 201824.92 (41512.07) (17.06)
Total Interest Income 17628.33 15622.63 (2005.70) (11.38)
Total Interest Expended 12790.11 10114.16 (2675.65) (20.92)
Interest Spread 4838.22 5508.47 670.25 13.85


Particulars 2017-18 2018-19
Yield on Funds 7.24% 7.74%
Cost of Funds 5.26% 5.01%
Yield on Advances 8.91% 9.43%
Cost of Deposits 5.74% 5.40%
Net Interest Margin 2.32% 3.05%

5. Operating Profit:

5.1 The Operating Profit stood at Rs.3894.47 crore as at the end of March 2019 ascompared to Rs.3950.42 crore as on 31.03.2018.

5.2 Operating Profit during March 2019 Quarter stood at Rs.693.77 crore as againstRs.989.45 crore during March 2018.

5.3 NIM for the March 2019 Quarter stood at 2.63% as against 2.55% during March'18Quarter.

5.4 The Asset Utilisation Ratio [percentage of Operating Profit to Average WorkingFunds] stood at 1.93% for the financial year 2018-19 compared to 1.62% for the financialyear 2017-18.

6. Provisions:

6.1 The Provision for Bad and Doubtful Debts Provision on Standard Assets TaxationInvestment Depreciation and others aggregated to Rs.10227.45 crore in the financial year2018-19 as compared to Rs.8004.36 crore in the financial year 2017-18.

7. Net Profit and Dividend:

7.1 After considering the provisions the Net loss of the Bank stood at Rs.6332.98crore for the financial year 2018-19 as against the net loss of Rs.4053.94 crore for theyear ended 31.03.2018.

7.2 The Board of Directors of the Bank has not recommended any Dividend for thefinancial year 2018-19.

Year Net Profit/Loss [Rs. in crore] Growth %
2015-16 -506.48 (-)186.69%
2016-17 561.21 (+)210.81%
2017-18 -4053.94 (-)822.36%
2018-19 -6332.98 (+)56.22%

8. Net Worth and CRAR:

8.1 The Net Worth of the Bank improved to Rs.16564.86 crore as on 31stMarch 2019 from Rs.10845.85 crore as on 31st March 2018.

8.2 During the year Government of India has infused Rs.11641 crore towards equitycapital in the Bank. Accordingly the Bank raised equity capital by way of preferentialissue amounting upto Rs.11641 crore including premium. For this Bank has issued869047619 equity shares of Rs.2/- face value at a premium of Rs.27.40 per equity shareand allotted to Government of India on preferential basis on October 11 2018 and3405547226 equity shares of Rs.2/- face value at a premium of Rs.24.68 per equity shareand allotted to Government of India on preferential basis on March 29 2019.

8.3 Corporation Bank Employee Stock Purchase Scheme 2018: "Corporation BankEmployee Stock Purchase Scheme 2018" (CORPBANK ESPS 2018) was launched offering100000000 (Ten Crore) new equity shares of face value Rs.2/- each of the Bank for cashat an issue price of Rs.19.61 per equity share including a premium of Rs.17.61 per equityshare as determined by the Securities Allotment Committee of the Board of the Bank on ESPSto all the Eligible Employees of the Bank. The Bank was able to achieve 54.04% of totalsubscription offered as equity shares under ESPS and as many as 14489 staff subscribed tothe issue.

There was no material change in the said scheme and the scheme was in compliance withSEBI (Share Based Employee Benefits) Regulations 2014. The relevant disclosure under thisRegulation 14 of SEBI (SBEB) Regulation 2014 is made in the website of the Bank andavailable to read in the web link in the website of the Bank Further asper Regulation 13 of the SEBI (SBEB) Regulations 2014 a certificate from the StatutoryCentral Auditors of the Bank be placed before the shareholders in the Annual GeneralMeeting that the scheme has been implemented in accordance with the Special Resolutionpassed by the shareholders of the Bank in the Extraordinary General Meeting held on07.09.2018.

8.4 The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 12.30% (Basel III) as on31st March 2019 as against 9.23% as on 31st March 2018.

Category III Basel III
March 2018 March 2019
ITier I Capital 7.27% 10.52%
II Tier II Capital 1.96% 1.78%
Total 9.23% 12.30%

8.5 The Return on Equity Earnings Per Share and Book Value per Share for the FinancialYear 2018-19 stood at (46.21%) Rs.(30.06) and Rs.27.63 respectively as against (36.50%)(Rs.35.30) and Rs.65.12 respectively for the previous Financial year. The impact ofraising of Equity Capital of the Bank given effect during Financial Year 2018-19 for thiscalculation.

9. Consolidated Accounts:

9.1 As per RBI guidelines the Bank has consolidated the financial accounts as at 31stMarch 2019 with those of its wholly owned Subsidiary viz. Corp Bank Securities Ltd.

As per the consolidated statement as on 31st March 2019 the Net Worth ofthe Corp Bank group stood at Rs.16651.45 crore. The consolidated Operating Profit for thefinancial year 2018-19 stood at Rs.3903.15 crore as against Rs.3956.03 crore as at31.03.2018. During the Financial Year 2018-19 consolidated Net loss of the Bank stood atRs.6325.30 crore as against loss of Rs.4049.93 crore for the year ended 31.03.2018. 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 March 2019 are9972 comprising of 2432 branches 3015 ATMs and 4525 Branchless Banking Units across thecountry. Out of the total 2432 branches 588 branches are in Rural areas 794 inSemi-urban centres 518 in Urban areas and 532 in Metro centres.

10.2 The Bank now has a total of 34 zonal offices spread across the country to have abetter control monitoring and follow up with the branches for business development.

The Bank also has 6 Circle offices headed by General Managers operating at MumbaiDelhi Bengaluru Chennai Kolkata and Ahmedabad. The Circle offices function as anextended 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 enhancing the brand andimage of the Bank. The Bank continued to disseminate messages on its products servicesinterest rates and its performance to the customers shareholders and the general publicthrough advertisements and publicity in Newspapers Periodicals TV Channels FM RadioStations Hoardings Translites Website ATMs etc.

12. Government Business and Bancassurance:

The total Direct/Indirect tax Customs duty and State Tax collections of the Bank forthe year ended 31st March 2019 reached Rs.49749 crore from 22.29 lakh challansas compared to Rs.61993 crore from 25.97 lakh challans collected during the correspondingperiod last year. The Bank has earned an aggregate income of Rs.7.62 crore from Govt.Business during the Financial Year 2018-19.

Under Life Insurance Business Bank has canvassed 455190 policies with premium ofRs.8902.82 lakh and earned commission of Rs.536.04 lakh as at 31st March2019(this includes 452400 enrolments made under Pradhan Mantri Jeevan Jyoti Bima Yojanawith premium of Rs.1245.09 lakh and commission of Rs.176.92 lakh) as against 449448policies with premium of Rs.18422.31 lakh and commission of Rs.729.35 lakh as at 31stMarch 2018.

Under Non-life Business Bank has canvassed 1266081 policies with premium ofRs.2308.50 lakh and commission of Rs.223.18 lakh as at 31st March 2019 (thisincludes 1211913 enrolments made under Pradhan Mantri Suraksha Bima Yojana with premiumof Rs.145.43 lakh and earned commission of Rs.24.24 lakh) as against 1246518 policieswith premium of Rs.2601.52 lakh and commission of Rs.342.87 lakh as at 31stMarch 2018.

Bank has earned a commission of Rs.155.33 lakh for the period ended 31stMarch 2019 under Health Insurance business as against Rs.181.58 lakhs as at 31stMarch 2018.

Bank has earned a commission of Rs.17.35 lakh for the period ended 31stMarch 2019 under Mutual Fund Business as against Rs.22.12 lakhs as at 31stMarch 2018.

13. Corporate Social Responsibility

As a responsible Corporate citizen the Bank initiated several welfare measures aimingat the under privileged section of the society in fulfillment of its commitment to socialpriorities during the financial year 2018-19.

13.1 Corporation Bank Economic Development Foundation [CBEDF]

The Corporation Bank Economic Development Foundation a non-profit economic outfitTrust has been pursuing its objectives of fulfilling social obligation in tune withcorporate mission. All CSR activities of the Bank are conducted under the aegis of CBEDF.Financial grants to the extent of Rs.371.65 lakhs were disbursed for execution of variousprojects of social concerns during the year 2018-19 through CBEDF. Amongst others CBEDFimplemented following major CSR projects during FY 2018-19.

13.2 CSR Activities through "CorpKiran" – Association of Spouses of BankExecutives

For the welfare of underprivileged through "CorpKiran" Bank grantedRs.22.29 lakhs to various Institutions during 2018-19. The major activities includedproviding Bench Desk Cupboards Computers Water purifier Pedestral Fans etc. to poorschool children and inmates of orphanages old age homes destitute homes helpingphysically and mentally challenged people Ambulance to Kalyanam Karoti (NGO) Meerut.Three number of dialysis machines to Shimoga Institutes of Medical Sciences Shimoga.

13.3 CSR through Corporation Bank Self Employment Training Institutes [COBSETI]

The Corporation Bank Self Employment Training Institutes are operating in Chikmagalurand Kodagu Districts catering to the training needs of the rural unemployed youth hailingfrom both the districts where the Bank has the Lead Bank responsibility. Both theInstitutes put together trained 1517 unemployed youth in various skill developmenttraining programmes during the year 2018-19. Since inception both the institutes havetrained about 17924 unemployed youth with a cumulative settlement rate of 78%. The Bankhas incurred an expenditure of Rs.70 lakh during the year 2018-19 for conducting thetraining programmes at both the Institutes. Both the instiitues have been graded as"AA" by the Ministry of Rural Development for the year 2018.

13.4 CSR through "Grameena Abhyudaya Financial Literacy Trust "[GAFLTrust]

The Bank has sponsored Grameena Abhyudaya Financial Literacy Trust for establishing"Financial Literacy Centers" [FLCs] at various locations. These Centers educatepeople about the usefulness of the Bank account for all their economic needs andempowerment. The Centers also provide counseling for the borrowers on the basis offinancial aspects including insurance savings and credit related products/services in theBank etc. As on 31.03.2019 GAFLCC Trust has established 4 District level and 21 Blocklevel FLC centers.

The Bank has provided Rs.45.00 Lakh for meeting the recurring cost of the Trust duringthe year 2018-19. The Trust has conducted 1814 Financial Literacy Camps at villagesschools colleges other institutions SHGs and others covering about 88464 persons.

13.5 CSR through SHG formation

During the year the Bank has spent Rs.141.72 Lakhs for promoting 14172 new SHGs in 6districts of Karnataka. Through this major CSR initiative Bank has helped about 141720families of the members of SHG groups to become financially empowered. They now haveaccess to banking facilities including deposits and loans. They also receive training inrecord maintenance and account keeping of their respective groups. Regular meetings of thegroups 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 Languages Act 1963Official Languages Rules 1976 and various directions with regard to Official Languageissued from time to time by Department of Official Language Ministry of Home AffairsDepartment of Financial Services Ministry of Finance and the Reserve Bank of India.

14.2 The overall performance of the Bank in the field of official languageimplementation during the year 2018-19 has been very good. Bank has been awarded secondprize by Dept. of OL MHA Govt. of India as excellent co-ordinator of TOLIC Mangalore inSouth and South West region.

Our Kochi Vijayawada Kolkata Thane Rajkot Bangalore (South) Zonal offices andRaipur Main Branch received prizes from their respective Town Official LanguageImplementation Committee (TOLIC) for their excellent performance in O.L. implementation.

14.3 The Bank is the convener of Town Official Language Implementation Committee(TOLIC) Mangalore Belgaum Nellore and Madikeri. 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 the Committee of Parliamenton Official Language visited our Coimbatore Zonal office and Guwahati branch and Documentsand Evidence Committee of Committee of Parliament on Official Language has inspected ourZonal office Thane. During various inspections the efforts being made by the Bank inOfficial Language Implementation has been appreciated. During the Financial Year Dept. ofFinancial Services Ministry of Finance inspected Zonal Offices at Lucknow Delhi (South)Goa Chennai as well as Kunnur Branch and appreciated the efforts being made by the Bankin Official Language Implementation.

14.5 Bank jointly organized the "Linguistic Harmony Day (Hindi Diwas)" on 27thSept. 2018 with Town Official Language Committee Mangalore.

14.6 The Bank is bringing out various publications for popularizing Official LanguageHindi. These include "Mangala" – quarterly Hindi house-journal of the Bankand "Tridhara"- Hindi Journal published on behalf of TOLIC Mangalore. Apart ofthese publications bank has published study materials on Hindi Workshop and variousbrochures.

14.7 Hindi workshops and training programmes were conducted by Head Office and ZonalOffices on a regular basis for the benefit of staff members.

14.8 Besides the O.L. implementation work in the offices bank has conducted variousprogrammes for the benefit of students and teachers of the colleges in and aroundMangaluru in association with organizations such as Dakshin Kannada Hindi Shikshak SanghHindi Sangh of St. Alosyus College Mangaluru.

15. Performance of Subsidiaries and other units sponsored by the Bank 15.1 CorpBank Securities Limited: The Bank's wholly owned subsidiary Corp Bank SecuritiesLimited (CBSL) has earned a total income of Rs.9.73 crore posted Profit Before Tax ofRs.8.69 crore and Profit After Tax of Rs.7.68 crore (after accounting for tax provision ofRs.2.41 crore for current year reversal of tax provision of Rs.1.42 crore for earlieryears deferred tax asset of Rs.0.02 crore for Financial Year 2018-19 while thecorresponding figures for FY 2017-18 were Rs.6.77 crore Rs.5.61 crore and Rs.4.01 crorerespectively (after accounting of tax provision of Rs.1.12 crore for current year taxprovision of Rs.0.05 crore for earlier years reversal of deferred tax asset of Rs.0.006crore). The Paid up Equity Share Capital remained at Rs.75 crore as on 31.03.2019 whilethe Net worth stood at Rs.124.65 crore with the plough back of surplus. The Earning perShare for fiscal ended March 2019 was Rs.1.02 while it was Rs.0.53 for the fiscal endedMarch 2018. The Company had launched equity broking business for institutional clients inFY 2015-16. The Company also continues to pursue its other activity of distribution ofMutual Fund Products and trading in approved Securities like Commercial PapersCertificate of Deposits and Treasury Bills etc.

16. Constitution of Board of Director

16.1 The following changes have taken place in the Board of Directors of the Bankduring the financial year ended 31st March 2019.

16.2 Shri M. Bhagavantha Rao was nominated as part-time Non-official Director on theBoard of the Bank with effect from 1st March 2019.

16.3 Ms P. V. Bharathi was appointed as the Managing Director and Chief ExecutiveOfficer on the Board of the Bank and assumed office on 01.02.2019.

16.4 Shri Birupaksha Mishra was appointed as the Executive Director on the Board of theBank and assumed office on 26.12.2018.

16.5 The following members retired from the Board of the Bank during theperiod-2018-19:

Shri Jai Kumar Garg Managing Director and

Executive Officer of the Bank has ceased to be a Managing Director and Chief ExecutiveOfficer from 1st February 2019 on completion of his term on 31stJanuary 2019. 16.6 The Board places on record its appreciation for the guidance andcounsel received from Shri Jai Kumar Garg during deliberations of the Board/Committees ofthe Board and also in the conduct of the Bank's business during their tenure of office asDirector of the Bank.

17. Directors' Responsibility Statements

The Directors confirm that in the preparation of the Annual Accounts for the year ended31st March 2019 -17.1 The applicable Accounting Standards had been followedalong with proper explanation relating to material departures if any.

17.2 Accounting Policies had been selected and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Bank at the end of the financial year and of the profit andloss of the Bank for that period.

17.3 Proper and sufficient care was taken for the maintenance of adequate AccountingRecords in accordance with the provisions of the relevant Acts for safeguarding the assetsof the bank and for preventing and detecting fraud and other irregularities.

17.4 The Annual Accounts were prepared on a going concern basis.

17.5 Internal financial controls had been laid down to be followed by the Bank and thatsuch internal financial controls are adequate and were operating effectively.

17.6 Proper systems were in place to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

18. Acknowledgements

18.1 The Directors thank the shareholders valued customers well-wishers ShareTransfer Agent and correspondents of the Bank in India and abroad for their goodwillpatronage and support.

18.2 The Directors acknowledge with gratitude the valuable and timely advice guidanceand support received from Government of India Government of Karnataka Reserve Bank ofIndia Securities and Exchange Board of India (SEBI) BSE NSE NSDL CDSL various StateGovernments Financial Institutions and the Statutory Central Auditors of the Bank in thefunctioning of the Bank.

18.3 The Directors place on record their deep appreciation of the valuable contributionof the members of the staff at all levels for the progress of the Bank during the year andlook forward to their continued co-operation in realisation of the corporate goals of theBank in the years ahead.

For and on behalf of the Board of Directors

(P. V. Bharathi)
Place : Mangaluru Managing Director &
Date : 30.05.2019 Chief Executive Officer