The Board of Directors is pleased to present the 99th Annual Report of theBank for the Financial Year 201718 together with the Audited Balance Sheet'Profit & Loss Account' Cash-Flow Statement' and the report onManagement Discussion & Analysis'. The Corporate Governance Report' andBusiness Responsibility Report' also form part of the Annual Report 2017-18.
1.1 Emerging from the demonetization banking industry witnessed a series of shifts andshocks starting with the Reserve Bank's directive on resolution of big ticketnon-performing assets (NPAs) through Insolvency & Bankruptcy Code (IBC) whichwarranted frontloaded stress recognition and building of provisions and followed by theGovernment's recapitalization & reform agenda for Public Sector Banks (PSBs) and thenrevised norms on resolution of stressed assets which promises to usher a superior creditculture in country. These developments have augured a virtuous cycle of reforms andreinvigoration of PSBs with all stakeholders making sincere efforts to restore trusttransparency & accountable decision-making.
1.2 Your Bank was able to anticipate and prepare for most of these shifts bybuilding-up provisions and raising growth capital thereby strengthening the balance-sheet.
1.3 Your Bank continued with transformational changes during the year for enhancedcustomer service by increasing centralized processing of loans for improved quality ofassets by pursuing specialization in monitoring & collections and by scaling-updigitalization for all-round business efficiencies. Several capability buildinginitiatives were undertaken to re-skill workforce for new realities of business. All thesechanges helped your Bank build competitive strengths vis-a-vis peers as well as new agechallengers.
1.4 Established in 1919 your Bank has 4297 domestic branches4 overseas branches and7642 ATMs across 29 States and 5 Union territories as on March 312018.
1.5 Your Bank achieved another milestone by crossing a business mix of Rs.7 trillionduring the year while building strengths in focus areas of business. Your Bank has aclient base of over 67 million customers and 37587 employees.
1.6 Your Bank has successfully raised equity capital of Rs.6524 crore in FY 2017-18.
2.1 Global business of the Bank increased to Rs.722362 crore as on March 312018 fromRs.680076 crore as on March 31 2017 reflecting an annual growth of 6.22 per cent.
2.2 Total deposit increased to Rs.408502 crore as on March 312018 from Rs.378392crore as on March 31 2017 noting a annual growth of 8.0 per cent. CASA (current accountand saving account) share in total deposit stood at 34.1 per cent as on March 312018.
2.3 Gross advances stood at Rs.313860 crore as on March 31 2018 compared toRs.301684 crore as on March 312017 recording an annual growth of 4.04 per cent. The RAM(Retail Agriculture and MSME) sector stood at Rs.158642 crore as on March 312018compared to Rs.146417 crore as on March 31 2017. RAM Sector grew as a whole at anannual rate of 8.3 per cent.
2.4 Overseas business of the Bank stood at Rs.30829 crore as on March 31 2018compared to Rs.36062 as on March 312017. Your Bank has four overseas branches at HongKong DIFC (Dubai) Antwerp (Belgium) and Sydney (Australia). In addition your Bank hasrepresentative offices in Shanghai Beijing and Abu Dhabi. Bank also operates in theUKthrough its wholly owned subsidiary Union Bank of India (UK) Ltd.
3. Income and Expenditure:
Table 1: Income and Expenditure Statement (Rs. crore)
|Sl. ||Parameter ||FY ||FY || |
|No. || ||2017-18 ||2016-17 ||Absolute ||(%) |
|1 ||Interest Earned ||32748 ||32660 ||88 ||0.3 |
|2 ||Other Income ||4990 ||4965 ||25 ||0.5 |
|3 ||Total Income (1+2) ||37738 ||37625 ||113 ||0.3 |
|4 ||Interest Expended ||23443 ||23757 ||-314 ||-1.3 |
|5 ||Net Interest Income (1-4) ||9305 ||8903 ||402 ||4.5 |
|6 ||Operating Expenses ||6755 ||6438 ||317 ||4.9 |
| ||w/w Establishment Expenses ||3255 ||3434 ||-179 ||-5.2 |
|7 ||Total Expenditure ||30198 ||30195 ||3.0 ||0.0 |
|8 ||Operating Profit (3-7) ||7540 ||7430 ||110 ||1.5 |
|9 ||Provisions ||12787 ||6874 ||5913 ||86.0 |
|10 ||Net Profit ||-5247 ||555 ||-5803 ||- |
|11 ||Earnings per share ||-69.45 ||8.08 ||-77.53 ||- |
4. Profitability and Efficiency:
4.1 Your Bank reported Operating Profit ofRs.7540 crore in FY 2017-18 as compared toRs.7430 crore in FY 201617. Operating Profit of the Bank increased by 1.48 per cent in FY2017-18.
4.2 Net loss of the bank stood at Rs.5247 crore in FY 201718 compared to profit ofRs.555 crore in FY 2016-17 on account of increased NPA provisions.
4.3 Cost-to-income ratio of your Bank was 47.26 per cent in FY 2017-18 compared to46.42 per cent in FY 2016-17.
4.4 During FY 2017-18 Return on Average Assets stood at (-) 1.07 per cent whereasReturn on Equity stood at (-) 28.53 per cent.
Table 2: Efficiency Ratios
|Parameter (%) ||FY 2017-18 ||FY 2016-17 |
|Return on Average Assets ||(-)1.07 ||0.12 |
|Return on Equity ||(-) 28.53 ||2.91 |
4.5 The following are the key productivity ratios of the Bank for FY 2017-18
Table 3: Productivity Ratios
|Parameter ||FY 2017-18 ||FY 2016-17 |
|Average Business per Employee (Rs. crore) ||17.8 ||16.4 |
|Average Business per Branch (Rs. crore) ||155.8 ||141.5 |
|Gross Profit per Employee ('lakh) ||20.06 ||20.2 |
Due to higher provisions for NPA your Bank has reported loss of Rs.5247 crore in FY2017-18. Accordingly the Board has not declared any dividend for the year.
6. Shareholders' Return:
The Bank's net worth stood at Rs.18395 crore as on March 31 2018 compared toRs.19094 crore as on March 312017.
7. Asset Quality:
7.1 Gross Non-Performing Assets (GNPA) of the Bank stood at Rs.49370 crore as on March31 2018 compared to Rs.33712 crore as on March 312017.GNPA as per cent to totaladvances increased to 15.73 per cent in March 2018 compared to 11.17 per cent in March2017.
7.2 Net NPA of the Bank remained at Rs.24326 crore as on March 312018 compared toRs.18833 crore as on March 312017.
8. Capital Adequacy Ratio:
The Capital Adequacy Ratio as per BASEL III norms stood at 11.50 per cent as on March31 2018. Common Equity Tier I (CET I) capital of the Bank stood at 7.60 per cent in March2018 which is about 22 basis point higher than the regulatory minimum.
Table 4: Capital Adequacy Ratios - Basel III
|Parameters ||RBI Minimum Benchmark March 31 2018 ||March 31 2018 ||March 31 2017 |
|Total Risk Weighted Assets || ||286344 ||291204 |
|Total Capital Funds ||NA ||32939 ||34334 |
|CET1 Capital || ||21764 ||22463 |
|Tier 1 Capital || ||25980 ||26280 |
|CRAR (%) ||10.875 ||11.50 ||11.79 |
|CET 1(%) ||7.375 ||7.60 ||7.71 |
|Tier 1(%) ||8.875 ||9.07 ||9.02 |
|Tier 2(%) ||NA ||2.43 ||2.77 |
Note: RBI minimum benchmarks are including CCB (Capital Conservation buffer) of 1.875per cent in CRAR CET 1 and Tier 1 ratios. There is no minimum for Tier II ratio.
8.1 Capital raised during FY 2017-18: During the FY 2017-18 your Bank raisedRs.7024 crore through the issuance of BASEL III compliant Additional Tier I Bonds (Rs.500 crore) and by raising equity capital through QIP of Rs.2000 crore and infusion ofRs.4524 crore by Government of India.
8.2 Capital infusion by Government of India: To revitalize capital position of theBank Government of India infused Rs.4524 crore in your Bank during the FY 2017-18.YourBank has allotted 31.28 crore shares at an issue price Rs.144.62 per share (includingpremium of Rs.134.62 per share).
8.3 Capital raised from the market: Your Bank has raised Rs.2000 crore via theQualified Institutional Placement (QIP) route by allotting 12.93 crore shares at Rs.154.65per share (including premium of Rs.144.65 per share). Your Bank received significantresponse of investors and QIP was oversubscribed.
9.1 Your Bank is spread across the country with 4297 branches as on March 31 2018.The Bank has four full fledged branches and three representative offices in foreigncountries.
9.2 Number of ATMs increased to 7642 as on March 31 2018 compared to 7518 as onMarch 31 2017. Your Bank has opened 50 new e-lobbies and 61 new cashless campuses atvarious locations in the country.
9.3 Your bank has total 5037 Business Correspondents (Bank Mitras) to serve theunbanked areas.
10. Social media presence:
10.1 In FY2016-17your Bank initiated its presence on Twitter and Facebook in order toconnect with its customers and other stakeholders. After the overwhelming response to ourofficial pages in Facebook and Twitter Bank had made official presence in other popularsocial media platforms like Instagram LinkedIn and YouTube.
10.2 Your Bank has explained its products/services on these social media platformswhich have helped in reaching out to the masses and enhancing brand visibility. Bank hasalso launched Chatbot Union Virtual Assistant (UVA) in facebook messenger.
11. Awards & Accolades:
During FY 2017-18 your Bank received various awards for its new initiatives taken inDigitalization Financial Inclusion HR management etc.
Table 5: Awards & Accolades received by the Bank during FY 2017-18
|Area ||Awards ||Awarded by ||Awarded For |
|Overall Performance ||Best Emerging Bank ||IDRBT ||Best Emerging Bank Award for the Year 2016-17. |
|Human Resource ||Golden Peacock ||Institute of Directors (IOD) ||Best HR practices and excelling in HR management for the year 2017 (4th time in a row). |
|Financial Inclusion ||Best Financial Inclusion Initiatives (Winner) ||Indian Banks Association (IBA) ||Excellent initiatives taken in financial inclusion programs. |
|Banking Technology ||Best Payment Initiative ||Indian Banks Association (IBA) ||Excellent initiatives taken in payment processing. |
|Customer Service ||Best Customer Service Innovation ||Infosys Ltd ||Customer Services |
The following changes took place in the Board of directors of your Bank during thefinancial year 2017-18.
12.1 Shri Arun Tiwari Chairman & Managing Director completed his term of office onJune 30 2017.
12.2 Shri Rajkiran Rai G. has been appointed as Managing Director & CEO of the Bankw.e.f. July 1 2017 vide Government of India notification no. F. No. 4/4/ (2)2017-BO.Idated May5 2017.
12.3 Shri Kewal Handa has been nominated on the Board as Non-Executive Chairman andPart-Time NonOfficial Director w.e.f. July 6 2017 vide Government of India notificationno. F. No. 4/7/2016-BO.I dated July 6 2017.
12.4 Dr. Madhura Swaminathan has been nominated on the Board as Part-Time Non-OfficialDirector w.e.f. December 27 2017 vide Government of India notification no. F. No.6/1/2015-BO.I dated December 27 2017.
12.5 Shri Rajiv Kumar Singh has been nominated on the Board as Chartered AccountantDirector w.e.f. February 62018 vide Government of India notification no. 6/24/2017-BO.Idated February 6 2018.
13. Directors' ResponsibilityStatement:
The Directors confirm that in the preparation of the annual accounts for the year endedMarch 312018.
13.1 The applicable accounting standards have been followed and there are no materialdepartures from prescribed accounting standards.
13.2 The accounting policies framed in accordance with the guidelines of the ReserveBank of India were consistently applied.
13.3 Reasonable and prudent judgment and estimates were made so as to give a true andfair view of the state of affairs of the Bank at the end of the financial year and of theprofit of Bank for the year ended on March 312018.
13.4 Proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of applicable laws governing Banks in India.
13.5 The accounts have been prepared on going concern basis.
14. Corporate Governance:
The Board of the Bank is committed to adopt good Corporate Governance practices inletter and spirit. A detailed report on Corporate Governance is given in a separatesection of the Annual Report. The Corporate Governance report for financial year 2017-18has no audit qualifications.
15. Corporate Social Responsibility (CSR):
15.1 Your Bank is committed to its Corporate Social Responsibility by contributing tothe society. In this endeavor Bank has set up the Union Bank Social FoundationTrust (UBSFT)' in the year 2006 for spearheading your Bank's CSR initiatives. Your Bankhas contributed Rs.467.06 lakhs as donation to UBSFT for CSR activities.
15.2 UBSFT undertook the responsibility of healthcare facilities provision throughBank's mobile vans to flood affected hilly and inaccessible areas of Uttarakhand therebyproviding relief to 23 villages.
The Board places on record its gratitude to the Government of India Reserve Bank ofIndia Securities & Exchange Board of India Insurance Regulatory and DevelopmentAuthority of India Central Vigilance Commission and other institutions for the valuableguidance and support received from them. The Board also acknowledges unstinted support ofthe financial institutions correspondent Banks valuable shareholders esteemed customersand all other stakeholders. The Board also expresses its deep appreciation for thededicated service and contribution made by members of staff in the overall performance ofthe Bank.
| ||For and on behalf of the Board of Directors |
|Place: Mumbai ||(Rajkiran Rai G.) |
|Dated: 10th May 2018 ||Managing Director & CEO |