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| Chairman's Statement |
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Text of the speech delivered by Shri George Joseph, Executive Director of SyndicateBank at the Bank's 9th Annual General Meeting of Shareholders held at SyndicateBank Golden Jubilee Auditorium, Manipal on 23rd June 2008
The financial market turbulence emanating from US sub-prime mortgage crisis, global credit/liquidity crunch, volatility of the financial markets, weak investment sentiment, continued rise in oil and commodity prices, etc., have impacted the growth of the major economies of the world. This has resulted in slowdown of global GDP growth to 3.7 per cent in 2008, down from an estimated 4.9 per cent last year. The emerging market economy is expected to grow 6.9 per cent in 2008 as against 7.8 per cent in 2007. The euro zone growth is also likely to slowdown to 1.6 per cent in 2008 as against 2.6 per cent in 2007. Headline inflation and slower economic activity still remain as key risk factors for the world economy.
The During 2007-08, the Indian Economy continued to expand at a robust pace for the 6th consecutive year. Against the backdrop of decelerated growth in Global Economy, India's GDP grew at 9 per cent in 2007-08 driven also by a good show by agriculture sector. Agriculture and allied sectors grew by 4.5 per cent during 2007-08 against estimate of 2.6 per cent. The manufacturing sector grew at 8.8 per cent during 2007-08 against estimate of 9.4 per cent.
Inflation based on Wholesale Price Index (WPI) increased from 6.4 per cent at the beginning of 2007-08 to 7.4 per cent by March 29, 2008, mainly reflecting hardening of prices of primary articles and partly due to international commodity price pressures.
The RBI continued its policy of active management of liquidity during 2007-08 through appropriate use of CRR, Open market operations and other policy instruments at its disposal.
Monetary Liquidity Aggregates continued to expand at a strong pace during 2007-08 reflecting large and persistent capital flows. Money supply grew by 20.7 per cent and stood at Rs.39,98,887 crore as compared to the growth of 21.3 per cent registered during the corresponding period of the previous year. To curtail the growth in M3, the CRR was raised by 150 basis points in 4 phases by RBI during 2007-08.
India received a record foreign direct investment (FDI) worth USD 24.57 billion in 2007-08 as against USD 16 billion in 2006-07, a 56.25 per cent increase over the previous year.
Net foreign exchange assets of banking sector grew by 38.8 per cent to Rs.12,67,884 crore as on March 2008 as compared to the growth rate of 25.7% in the similar period of the previous fiscal.
The cumulative value of exports grew by 23.02 per cent from USD 126.41 billion in 2006-07 to USD 155.51 billion in 2007-08 whereas import grew at a faster rate of 27.01 per cent from USD 185.35 billion to USD 235.91 billion. Foreign Exchange Reserves have crossed USD 309.2 billion as at March 28, 2008.
The rupee appreciated by 9.1 per cent against the US Dollar and 7.5 per cent against Pound Sterling but depreciated by 7.7 per cent against the Japanese Yen and 7.8 per cent against the Euro during 2007-08.
The aggregate deposit of SCBs grew y-o-y by 22.2 per cent to Rs.31,92,141 crore whereas gross bank credit increased by 21.6 per cent to Rs.23,48,493 crore during the year 2007-08.
Highlights of Bank's Performance
Your Bank has performed extremely well by recording an impressive growth of 18.43 per cent in net profit from Rs.716 crore in 2006-07 to Rs.848 crore in 2007-08. I congratulate and compliment all of you for the Bank's spectacular performance. I am sure that with its inherent strength and resilience, your Bank would be able to further consolidate its growth in future too. Let me sum-up the key financial highlights for the year 2007-08.. Global Business The Global Business of the Bank grew by 21.98 per cent from Rs.1,31,473 crore as on 31st March 2007 to Rs.1,60,368 crore as at 31st March 2008. The Global deposits grew by 21.03 per cent from Rs.78,634 crore as on 31st March 2007 to Rs.95,171 crore as at 31st March 2008. Global advances rose by 23.39 per cent from Rs.52,839 crore as on 31st March 2007 to Rs.65,197 crore as at 31st March 2008. Domestic Business Domestic Business of the Bank grew by 23.39 per cent from Rs.1,21,602 crore as on 31st March 2007 to Rs.1,50,042 crore as at 31st March 2008. Domestic deposits grew by 22.17 per cent from Rs.74,369 crore as on 31st March 2007 to Rs.90,854 crore as at 31st March 2008. Domestic advances rose by 25.31 per cent from Rs.Rs.47,233 crore as on 31st March 2007 to Rs.59,188 crore as at 31st March 2008. Operating Profit Operating Profit of the Bank increased from Rs.1,383 crore in 2006-07 to Rs.1,468 crore in 2007-08.
Total Income
Total income of the Bank rose by 32 per cent from Rs.6,658 crore in 2006-07 to Rs.8,796 crore in 2007-08 Interest Income Interest income increased from Rs.6,040 crore in 2006-07 to Rs.7,906 crore in 2007-08 registering a growth of 30.89 per cent. Fee Based Income Fee Based income grew by 18.43 per cent from Rs.510 crore in 2006-07 to Rs.604 crore in 2007-08. Networth
The Net worth of the Bank increased from Rs.3, 185 crore as on 31st March 2007 to Rs.3862 crore as on 31st March 2008.
NPA Management
Gross NPA came down from 2.95 per cent as of 31st March 2007 to 2.71 per cent as of 31st March 2008. Net NPA increased marginally from 0.76 per cent as of 31st March 2007 to 0.97 per cent as of 31st March 2008. The Bank has maintained sufficient cushion towards provision requirement to cover up the unexpected defaults. The provision coverage was 63 per cent as of 31st March 2008. The Bank has floating provision to the extent of Rs.374 crore as on 31st March 2008.
Capital Adequacy Ratio Capital Adequacy Ratio stood at 11.22 per cent as at 31st March 2008, well above the regulatory prescription of 9 per cent. Other Important parameters
Book value per share of the Bank increased from Rs.69.41 as on 31st March 2007 to Rs.82.22 as on 31st March 2008.
Earning per share improved from Rs.13.72 as on 31st March 2007 to Rs.16.25 as on 31st March 2008.
Return on Assets was at 0.88% as against 0.91% as at 31.03.2007.
Business per employee improved from Rs.4.89 crore as on 31st March 2007 to Rs.5.86 crore as on 31st March 2008.
Yield on advances improved from 9.28 per cent in 2007 to 10.57 percent in 2008 whereas cost of deposits increased from 5.44 per cent in 2007 to 6.91 percent in 2008.
Foreign Exchange Turnover The total Forex Turnover of the Bank stood at Rs.4,94,837 crore as at March 2008 as compared to Rs.5,94,983 crore for the previous financial year. Reduction in arbitrage swaps is the main reason for the decline in forex turnover.
Treasury Operations
Income from domestic treasury operations improved from Rs.1954.47 crore in 2006-07 to Rs.2,432.79 crore in 2007-08. This includes trading profit, which increased from Rs.141 crore in 2006-07 to Rs.335 crore in 2007-08, showing an increase of 137.58 per cent.
Insurance Business
The Bank has launched SyndSuraksha a pure term group life insurance plan at a very nominal premium to cover Savings Bank account holders of the Bank in alliance with LIC of India during the year. Special tailor made products such as "SyndArogya", a Mediclaim-Cum-Personal Accident Cover for all customers and "Unihome Care Policy" for Housing Loan borrowers are also being marketed by the Bank. The commission earned under life and non-life insurance business was Rs.23 crore and Rs.3.71 crore respectively.
Card Operations
The Debit Cards are being issued without any entry or annual fees through all its 1785 CBS branches. The Bank had a Debit Card base of 22.10 lakh as on 31.03.2008. The Bank has issued 58,874 Credit Cards as on 31.03.2008.
National Priorities The Priority Sector Advances of the Bank reached a level of Rs.21,841 crore as at March 2008 constituting 46.60 per cent of adjusted net bank credit as against the mandatory requirement of 40 %. The Bank has more than 17.89 lakh borrowal accounts under Priority Sector. Lending to Micro & Small Enterprises and Tertiary Sector was at Rs.4,432 crore and Rs.8,077 crore, accounting for 9.46 % and 17.23 % of adjusted net bank credit respectively. Agriculture credit reached a level of Rs.9,332 crore forming 19.91 per cent of adjusted net bank credit against the mandatory requirement of 18 per cent. The advances to SC/ST under Priority Sector rose from Rs.729 crore as at 31.03.2007 to Rs.1,028 crore as at 31.03.2008, registering a growth of 41.05 per cent during the year 2007-08. The advances to Minorities rose from Rs.2,293 crore as at 31.03.2007 to Rs.2,578 crore as at 31.03.2008, registering a growth of 12.43 per cent during the year 2007-08. The advances to women beneficiaries increased from Rs.2,860 crore as on 31.03.07 to Rs.3,770 crore forming 8.04% of ANBC against the mandatory requirement of 5%.
Rural Development Initiatives The Bank has Lead Bank responsibility in 25 districts across the Country. The Bank is also the Convener of the State Level Banker's Committee (SLBC) in Karnataka and the Union Territory of Lakshadweep and has discharged satisfactorily the responsibility cast on it as the Convener of SLBC. There are 5 Regional Rural Banks (RRBs) sponsored by our Bank covering 30 districts in 5 States with a network of 1,244 branches. The RRBs sponsored by the Bank occupy top league among 92 RRBs in the Country in respect of Key Business Parameters.
The Bank is imparting training to unemployed youth through eight Syndicate Institutes of Rural Entrepreneurship Development (SIRDs). These institutes have conducted 206 training programmes during the year 2007-08, upgrading the skills of 7,095 persons. The Bank has co-sponsored 23 "Rural Development Self Employment Training Institutes" (RUDSETIs) across the country, which has trained 16,059 youth during 2007-08.
Implementation of Government Sponsored Schemes The Bank continued to participate in implementing poverty alleviation and employment generation schemes sponsored by the Government. Special emphasis was made in selecting SC/ST and women beneficiaries under these schemes. The Bank has actively involved in implementing the schemes for financing Solar Water Heating Systems and Solar Lighting Systems, in co-ordination with IRDA implementing MNRE's (Ministry of New & Renewal Energy) schemes for extending loans for installation of Solar Water Heating systems at concessional rates to domestic / institutional / industrial users. The Bank financed for installation of 4,038 Solar Water Heating Systems and 978 Solar Lighting Systems during the year.
In tune with the guidelines issued by the Government of India and RBI, the Bank has taken steps to increase flow of credit to Small & Medium Enterprises (SMEs). Advances to SMEs reached a level of Rs.5,419 crores as at 31.03.2008 recording a growth of 30.96% over previous year.
Financial Inclusion
The Bank has achieved 100 per cent financial inclusion in all its 25 Lead Districts in 5 States & one UT, for extending all types of banking services. The bank also achieved 100 per cent financial inclusion in 4,502 service area villages through its 1,136 rural and semi-urban branches. The Bank has set up "Financial Literacy-cum-Counseling Centers" at Bijapur in Bijapur district, Chikodi in Belgaum district and Kadapa in Kadapa district. A Bio-Metric ATM has been installed on a pilot basis at our Terdal Branch in Bagalkot district, a 100 per cent financially included district.
As a step towards comprehensive and wholesale financial inclusion, the Bank has launched an innovative product "SyndSmallCredit", a doorstep banking facility to encourage entrepreneurs of small means. The product enables a Pigmy Depositor to avail easy finance and the repayment linked to the contributions made towards Pigmy Deposit.
Branch Expansion
During the Financial year 2007-08, Bank opened 46 new branches including 1 Asset Recovery Management Branch. The total branch network of the Bank stood at 2,169 (including a branch in London) comprising of 644 Rural, 492 Semi urban, 508 Urban and 524 Metro branches (including port town branches). The Bank opened its first branch in the State of Tripura at Agarthala during the fiscal. The Bank also made its entry into 14 new districts during the fiscal.
Customer Base
In order to increase the customer base, the Bank launched several innovative Campaigns across the Country targeting niche segments of the public. The response received from the customers during the Campaign was overwhelming and the customer base of the Bank swelled to over 21 million in 2007-08 as against 19 million plus in 2006-07. The total number of accounts under flagship "Pigmy Deposit Scheme" of the Bank stood at 10.50 lakhs having a balance of Rs.1,712 crores as at 31.03.2008
Information Technology
The Bank has always been in the forefront among Public Sector Banks in deploying the State of Art Technology to offer customer centric products and services and assimilating global best practices. The Bank is first among Public Sector Banks to implement Core Banking Solutions (CBS). During the current fiscal CBS coverage was further consolidated. Overall CBS network of the Bank increased to 1829 branches / offices spread across 1,033 centres and accounted for about 96% of the Bank's business. With the introduction of CBS, the Bank is aiming to convert the Branch customers to Bank customers thereby achieving signification in customer preferences from brick and mortar channel to 24x7 delivery channels.
The number of ATMs of the Bank also increased from 701 in 2007 to 1,000 in 2008 spread across 519 centres. The CBS project has enabled the Bank to deliver banking products / services in middle delivery channels like networked ATMs, Tele-banking, Internet Banking and SMS Banking, so as to provide Anywhere Anytime Anyhow (AAA) Banking services to customers.
The Disaster Recovery Site has been set up at Bangalore to ensure business continuity. In order to ensure near zero data loss, the Bank has set up a Near Site at Mumbai.
The Bank has implemented online Tax Accounting System at 324 designated branches to handle Direct Taxes.
The Bank has installed a High Tech Video Conferencing facility at around 40 locations across the Country. This facility is used extensively for interaction of Top Management with the operation Heads for propagating strategies, review of business development and also for distant learning.
New Initiatives
In the year 2007-08, the Bank has undertaken several new initiatives to further consolidate its growth and development. The Bank has launched online submission of loan requests. SMS Banking is another useful facility provided by the Bank for the benefit of its tech savvy customers. In SMS Banking, customers can get SMS enquiry facility and SMS Alert facility online and real time basis. The facility is available 24x7. The campaign to add new accounts of women has been unveiled by the Bank for a period of 2 months beginning from 16.05.2008. More than 5 lakh women are expected to come to the Bank's fold during the Campaign period.
Product Development
The Bank has been keeping a close watch on the market dynamics and introduction of new products and services are tailored and customized to suit the customers' requirements. During the year 2007-08, the Bank has launched innovative new products and services such as SyndSmallCredit (financial assistance to entrepreneurs of small means), SyndSona (sale of gold coins), SyndSuraksha (a unique Life Insurance cover for Savings Bank Account Holders), SyndFlexi Current account schemes, etc. Risk Management The Bank has been continuously upgrading and fine-tuning the Risk Management Systems in tune with international best practices and directions issued by Reserve Bank of India. The bank has implemented Basel-II as on March 2008 and has complied with the requirements. The Bank has procured Capital Assessment Model (CAM) from CRISIL to compute capital for credit risk as per Basel II requirement. The bank has also appointed M/S Ernst & Young as consultants for operational risk management.
Asset Liability Management
The Bank has put in place a robust Asset Liability Management (ALM) system. ALM is implemented mainly to measure, monitor and manage market risks, which ultimately results in increased Net Interest Income of the bank. The Bank is having a high level Asset Liability Committee (ALCO) to measure, monitor and manage risks such as Liquidity, Interest rate, Market, Forex etc
Human Resource Policies
The HR Policies of the Bank are geared to meet the corporate objectives of sound and profitable growth. Taking into consideration the existing manpower, its age profile, likely attrition, the emerging scenario, need for additional manpower to support the growth and diversification of business, need for skilled staff to work in the networked banking environment and also the priorities attached to agricultural sector under the National policy, the Bank has undertaken direct recruitment of General Banking Officers, Specialist Officers in the area of Agricultural Finance, Information Technology, Accounts and Financial Management, Security, Law, etc.
Corporate Social Responsibility The Bank has pioneered in social change and development of the nation. The Bank has recognized promoting social and economic transformation through direct humanitarian action and sustainable development. The Bank undertook pond cleaning work for making available drinking water for villagers, organised painting competition to motivate the children and to nurture their artistic talents, sponsored Mobile Mammography Project for early detection of Breast Cancer, displayed Road direction boards, messages, parking boards, traffic umbrella, solar reflector, etc., for public convenience.
Corporate Governance
The Bank has an effective and transparent system of Corporate Governance driven by a professional Board. As part of the corporate governance, the Bank strives to adopt the best business practices that can enable the Institution to retain its competitive edge through innovation of customer centric banking products and services. The Bank maintains high ethical standards in accounting the general governance to stay in tune with its tradition of high quality and proud history. For this purpose, the Bank has put in place systems for assessment and management of risks through a process of continuous monitoring. As in the past the Bank has been proactive in conforming to statutory requirements and regulatory compliances.
Dividend
The Board of Directors has proposed a final dividend of 13 per cent for the year ended 31st March 2008. This is in addition to an interim dividend of 15 per cent.
Acknowledgements
I would like to take this opportunity to thank the members of the Board, the Government of India and the Reserve Bank of India for their valuable guidance and all our shareholders for the confidence and faith they have reposed in us. I also thank all our customers for their continued co-operation and support. I would also like to place on record the support and involvement of our staff members for their dedicated service and for their continued contribution in building a stronger and vibran |
