Shri. Karnam Sekar Managing Director & Chief Executive Officer
I have pleasure in presenting your Bank's Annual Report and financial statements forthe year 2019-20. I would like to share with you the performance highlights of the Bankduring the year as well as the outlook for the Bank going forward .
India 's GDP growth for FY20 stood at 4.2% compared to 6.1% in FY19. Agriculture andAllied Activities grew at 4.0%in FY20 compared to last year's growth of 2.4%. Industryregistered a marginal growth of 0.9% in FY20 from 4.9% in FY19. Manufacturing andConstruction have contributed to low growth in the Industry. The contribution of servicesector to GDP declined to 5.5% in FY 20 compared to 7.7% in FY19. Our exports and importshave contracted in FY20 due to fall in external demand. Bank credit to agriculture &allied activities Industry and personal loan segment registered a growth of 4.2%0.7% and15% respectively.
Outlook for Banking Sector
The COVIO-19 pandemic has caused a significant slowdown in business. There is anadditional responsibility on the Banks to ensure a balance between business continuity andcustomer care. Banks may have to improve their digital channels and connectivity fordeepening customer relationships and re-align their business models for differentscenarios. The sovereign guarantee on loans to MSMEs and extended moratorium are expectedto drive credit growth in Banks.
Financial Performance - Highlights of your Bank - 2019-20
Bank was relentlessly striving to achieve Net profit at least in Q4 of FY 2019-20. asthe Bank could not accomplish the same continuously for several quarters. Bank couldaccelerate the growth under Capital light advances such as Housing and jewel loan in orderto protect the interest income under a falling interest regime. Bank could contain itsexpenditure despite making additional provision on employee wage settlement undernegotiation. As a result Bank could achieve operating profit to the extent of Rs 3534Crores for FY- 19-20.
Bank could reduce the gross NPA substantially from Rs 33398 Crores to Rs 19913Crores and thereby brought down the GNPA% from 21.97% to 14.78% through multi-pronged andfocused recovery initiatives.
NNPA has been brought down from Rs 14368 Crores to Rs 6603 Crores in absolute terms andfrom 10.81%to 5.44% in percentage terms. The NNPA% of the Bank as on 31.3.2020 is broughtdown below PCA threshold .
PCR of the Bank has improved substantially as on 31.3.2020 from 71.39% to 86.94%. oneof the highest in industry.
As a result Bank could register a Net profit to the tune of Rs.144 Crores for Q4 FY-19-20.
Bank concentrated in expansion of RAM segment advances especially housing loan andjewel loan which is evident in growth of RAM share to domestic advances from 67.19% as of31st March-2019 to 75.83% as of 31st March-2020. Rebalancing of Corporate portfolio hasresulted in reduction of overall advances. Overall interest income has recorded marginaldecline due to MCLR reduction and introduction of RLLR. Growth under low cost deposits andshedding of high cost deposits has kept the cost of deposit under control. CASA hasimproved from RS.85227 Crores as of 31st March-2019 to Rs.89751 Crores as of 31stMarch-2020 with a growth of 5.31%. CASA% has moved up from 38.30%as of 31st March -2019 to40.26%as of 31st March-2020. Bulk deposit has been brought down from Rs.28285 Crores as ofMarch-2019 to Rs.17092 Crores as of March-2020 with a reduction of 39.57%. Net interestincome has improved from Rs.5279 Crores in FY18-19 to Rs.5303 Crores in FY-19-20.
Operating expenses has gone up marginally from Rs.4452 Crores in FY-18-19 to Rs .5129Crores in FY- 19-20 due to onetime provision for employee wage arrears under negotiation.
Capital Infusion by Government of India
For the capital infusion by Government of India during 2019-20. the Bank issued a)3443750000 equity shares of Rs.10/- each for cash at issue price of Rs. 11.20 perequity share (including premium of Rs.l.20 per equity share) aggregating to Rs.3857 Croreto Government of India on Preferential Basis on 28.11.2019 for the capital infusionreceived from Government of India on 27.09.2019 and b) 3851590106 equity shares ofRs.10/- each for cash at issue price of 11.32 per equity share (including premium ofRs.1.32 per equity share) aggregating to Rs.4360 crore to Government of India onPreferential Basis on 27.02.2020 for the capital infusion received from Government ofIndia on 03.01.2020.
Raising of Tier II Bonds
During the quarter ended 30.09.2019. the Bank had raised
Basel III Compliant Tier II bonds aggregating Rs.500 Crore on private placement basisat a coupon rate of 9.0802% with tenor of 10 years from the date of allotment. M/s. CRISILand M/S. India Ratings have assigned ratings of CRISIL A+/Stable and IND AA- Negative forthe Tier II Bonds Issue of the Bank.
Authorized Capital of the Bank was Rs. 10.000 Crore as of the previous year and duringthe current year the authorized capital was increased to Rs.25000 Crore.
Awards and Accolades
I am pleased to inform you that lOB
Was ranked 5th position as on March 2019 under EASE 1.0 (FY 2018-19) with 75%score among PSBs.
Has been awarded "Winner-Reforms Excellence" and "WinnerDeepening Financial Inclusion and Digitalisation" out of 8 awards category of EASE1.0.
has got a special mention in "Examples of Best Practice among PSBs"for its Standardized Public Grievance Redressal System (SPGRS) .
was awarded for Outstanding Performance in POS deployment in Northeast for theFY2018-19 by Meity.
was shortlisted by Infosys under Client Innovation Award -2020 for inhousecustomization of Finacle on "Simplified Loan Account Opening".
was awarded ISO 27001 for Information Technology Department.
With the support of huge base of several loyal customers and a large base of youngstrong and energetic work force Brand lOB is sure to play an important role in theBanking Industry.
My stint of last 12 months in this Bank ends this month. We had made the Year 2019-20as the Year of Resurgence for our bank. We have attacked the NPAs in a big way andincreased the advances in capital-light assets and improved CASA significantly. Theseefforts have culminated into the profits posted in Q4 2019-20 after a gap of 18 quarters.
I take this opportunity to thank the members of the Board for their valuablesuggestions and support during the year and the Government of India and the Reserve Bankof India for their timely guidance and support. I thank the shareholders and customers fortheir continued patronage and trust in the organization I record my appreciation to thecommitted staff members for their hard work and contribution to the betterment of theBank.
|With warm regards |
|Yours sincerely |
|Karnam Sekar |
|Managing Director & Chief Executive Officer |