Central Bank of India

2010-11

To the Members,

Your Directors have pleasure in presenting the Bank’s Annual Report of the Bankalong with the Audited statement of Accounts, the Profit and Loss accounts and the cashflow statement for the year ended March 31, 2011.

1. PERFORMANCE HIGHLIGHTS

• Total Business of the Bank increased by Rs. 41538 crore to Rs. 310763 crore,registering y-o-y growth of 15.43 per cent.

• Total Deposits increased by Rs. 17249 crore to Rs. 179356 crore, registeringy-o-y growth of 10.64 per cent.

• Gross Advance of the Bank grew by Rs. 24289 crore to Rs. 131407 crore,registering y-o-y growth of 22.67 per cent.

• Operating Profit increased by Rs. 533 crore to Rs. 2591 crore , registeringy-o-y growth of 25.90 per cent

• Net Profit increased by Rs. 194 crore to Rs. 1252 crore, registering y-o-ygrowth of 18.35 per cent.

• Capital Adequacy Ratio (as per Basel-II) reduced to 11.64 per cent from 12.23per cent in previous year.

• Net worth increased by Rs. 1181 crore to Rs. 6909.54 crore, registering y-o-y of20.68 per cent.

• Gross NPA of the Bank reduced by Rs. 64 crore to Rs. 2394 crore from Rs. 2458crore in previous year. In percentage term Gross NPA reduced to 1.82 per cent from 2.29per cent in last year.

• Net NPA increased from Rs. 727 crore to Rs. 847 crore in previous year. Net NPApercentage reduced to 0.65 per cent from 0.69 per cent in previous year.

• Net Interest Margin (NIM) stood at 3.31 per cent against 1.86 per cent in 2010.

• Average Business per Employee increased to Rs. 835 lakh from Rs. 712 lakh inprevious year.

• Net Profit per Employee increased to Rs. 3.96 lakh from Rs. 3.30 lakh in March2010.

• Credit to Priority Sector increased to Rs. 41949 crore from Rs. 35393 crore inprevious year, recording y-o-y growth of 18.52 per cent.

• Agriculture Advance of the Bank grew by 8.08 per cent, contributing a share of18.64 per cent in Net Bank Credit, which is above the RBI’s norms of 18 per cent.

• 7387 beneficiaries were issued Cent Janata Credit Cards during the year.

• 11877 Self Help Groups formed during the year out of which 11159 groups werecredit linked.

• Advances to MSE grew by 27.73 per cent from Rs. 9317 crore in year 2010 to Rs.11901 crore. Sixty branches have been identified for focus attention for MSE finance.

• 1776 villages with the population over 2000 have been brought under FinancialInclusion Plan.

• Retail loans of the Bank grew by 26.29 per cent from Rs. 11190 crore (2010) toRs. 14132 crore. The share of Retail Loan in Gross Advance was 10.75 per cent.

• Education Loan grew by 31.18 per cent during the year and the total loan reachedto Rs. 1548 crore.

• Housing Loan portfolio (up to Rs. 20 lakh) shown a growth of 14.41% and reachedto Rs. 7001 crore.

• E-stamping started in the states of Delhi, Karnataka and Tamil Nadu to providestamping facility.

• Electronic uploading of Central Civil Pension has been started.

• Bank has been appointed as Registrar by the Unique Identification Authority ofIndia for carrying out enrolment work for issuance of Unique ID on pan India basis.

• Corporate Credit increased from Rs. 75616 crore to Rs. 93554 crore registering agrowth of 23.72 per cent during the year.

• Bank has opened 82 new branches during the year and having network of 3728branches as on 31^st March 2011.

• All branches have been brought under CBS platform.

• E-treasury of the Bank made fully operationalised.

• Bank has obtained license to open NRI branches in Anand, Margao, Hyderabad andBhuj .

• Bank has signed two MoU for establishing joint venture banks – one atMaputo, in the Republic of Mozambique and the other at Thimpu in Bhutan.

• The name of "Centbank Financial and Custodial services Ltd." has beenchanged as "Centbank Financial Services Limited".

• Bank has made cash recovery of Rs. 736 crore in NPA accounts.

• Bank has offered & successfully completed Right Issue of Rs. 2497 crores inMarch / April 2011. The Rights Issue ratio was 3:5 and was oversubscribed by 1.07 times.

• Bank own the Skoch Financial Inclusion Award 2011 for implementing the BiharRural Livelihood Project also known as JEEVIKA Project and My FM stars of the IndustryRetail Leadership Award in February 2011.

2. INCOME & EXPENDITURE

Details of income and expenditure for the period 2010-11 are given hereunder:

• Interest Income grew by 26.17 per cent during the year

• Net Interest Income registered a growth of 109.27 percent

• Interest expenses on Deposits reduced to Rs. 9063 in March 2011 from Rs. 9121crore in previous year, because of maturity of high cost deposits.

• Expenses on employees has gone up by 91.97% because of salary revision for staff& officers and provision of pension & gratuity.

3. PROVISIONS

Details of Total Provisions of Rs. 1339 crore charged to the Profit and Loss Accountduring the year 2010-11 vis-a-vis previous year are detailed as under:

4. SPREAD ANALYSIS

• Cost of Deposits decreased from 6.29 per cent in 2011 to 5.71 per cent in 2011.

• The yield on advances and yield on investments both increased to 10.29 per centand 7.14 per cent from 9.82 per cent and 6.74 per cent respectively in previous year.

• Net Interest Margin significantly increased from 1.86 (2010) to 3.31 per cent.

• Cost Income Ratio increased from 51.91 per cent in 2010 to 60.68 per cent, onaccount of increased establishment expenses

5. BANKING RATIOS

6. CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)

The components of Capital Adequacy Ratio were as under:

7. NET PROFIT & DIVIDEND

The Bank earned Net Profit of Rs. 1252 crore for the financial year 2010-11. The Boardof Directors are pleased to recommend a dividend @ 25 per cent.

8. CHANGES IN THE BOARD DURING THE YEAR

During the year under review, the following changes took place in the Board ofDirectors of the Bank:

• Shri Ramnath Pradeep has been appointed as CMD of Corporation Bank w.e.f.September 1, 2010.

• Shri Arun Kaul has been appointed as CMD of UCO Bank w.e.f. September 1,2010.

• Smt. V.R. Iyer has been appointed as Executive Director with effect fromSeptember 1, 2010.

• Shri R.K. Dubey has been appointed as Executive Director with effect fromSeptember 1, 2010.

• Shri M.K. Bhattacharya ceased to be a Director with effect from July 30,2010.

• Shri Salim Gangadharan has been appointed as RBI Nominee Director witheffect from July 30, 2010.

• Shri M.S. Johar retired on January 1, 2011.

9. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the yearended March 31, 2011;

• The applicable accounting standards have been followed along with properexplanation relating to material departure, if any;

• The accounting policies framed in accordance with the guidelines of the ReserveBank of India were consistently applied;

• Reasonable and prudent judgement and estimates were made so as to give a trueand fair view of the state of affairs of the Bank at the end of the financial year and ofthe profit of the Bank for the year ended March 31,2011;

• Proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of the applicable laws governing banks in India; and

• The accounts have been prepared on a going concern basis.

The Board of the Bank is committed to adapt Corporate Governance practices inletter and spirit. The Bank has adopted well documented system and practice on CorporateGovernance.

The Board of Directors places on record its gratitude to the Government of India,Reserve Bank of India and the Security Exchange Board of India for their valuable guidanceand support. The Board acknowledges with gratitude the unstinted support and faith of itscustomers and shareholders. The Board wishes to place on record its appreciation of thededicated services and contribution made by members of staff for the overall performanceof the Bank.