Corporation Bank Merged Directors Report

1. The Board of Directors has pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit and Loss Account of the Bank for the year ended 31^st March, 2020.

Performance at a Glance:

2.1 The total business stood at Rs 3,45,896 crore as on 31^st March 2020, over the business figure of Rs 3,19,616 crore as on 31.03.2019.

2.2 The total deposits of the Bank stood at Rs 2,05,355 crore as on 31.03.2020 whereas it stood at Rs 1,84,568 crore as on 31^st March, 2019.

2.3 CASA share in total deposit stood at 30.57% (31.03.2020) from 31.59% (31.03.2019). Average CASA has grown by Rs 557.60 crores (1.10%) y-o-y basis. It has reached to Rs 52,990.58 crores as on 31.03.2020 from Rs 51,081.19 crore as on 31.03.2019. Average SB has grown by 3.90% from Rs 39,913.26 crores as on 31.03.2019 to Rs 42,279.52 crores as on 31.03.2020. Average CA decreased by 7.76% from Rs 11,167.93 crores as on 31.03.2019 to Rs 10,711.06 crores as on 31.03.2020.

2.4 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management more cautiously. The Banks credit figure stood at Rs 1,27,399 crore as on 31.03.2020 as against Rs 1,21,251 crore as on 31^st March, 2019, increased by Rs 6,148 crore (5.07%).

2.5 Credit-Deposit Ratio stood at 62.04% as on 31.03.2020 as compared to 65.69% as on 31.03.2019.

2.6 The Bank continued its more and more focus on recovery of NPAs even through specified drive and by devoting more time. During the financial year, the Bank effected a cash recovery and upgradation of NPAs of Rs 5,661 crore as compared to Rs 4,509 crore in the previous financial year.

2.7 The bank posted a Net loss of Rs 2,392 crore as against a Net loss of Rs 6,333 crore in the previous year.

2.8 As on 31.03.2020, the Bank had 9972 functional units spread across India comprising of 2432 Branches, 3015 ATMs and 4525 Branchless banking units.

3. Income Analysis

3.1 Interest Income of the Bank increased by Rs 547.95 Crore (3.51%) from Rs 15,622.63 crore in the year 2018-19 to Rs 16170.58 Crore in the year

2019-20 and Interest expenses increased by Rs 827.93 crore from Rs 10,114.16 crore during the financial year 2018-19 to Rs 10,942.09 crore during the year 2019-20. The Net Interest Income has decreased from Rs 5,508.47 crore for the year 2018-19 to Rs 5,228.49 crore during the F.Y 2019-20 (-5.08%Y-o-Y).

( Rs in crore)

Particulars	2018-19	2019-20	Change in %
INCOME
Interest Income	15,622.63	16,170.58	3.51
Non-Interest Income	1,872.07	3,749.20	100.27
Total Income	17,494.70	19,919.78	13.86
EXPENDITURE
Interest Expenditure	10,114.16	10,942.09	8.19
Operating Expenses	3,486.06	5,175.18	48.45
Total Expenditure	13,600.22	16,117.27	18.51
Operating Profit	3,894.48	3,802.51	(2.36)
Provisions & Contingencies (Excl. Tax)	11,943.15	3,548.16	(70.29)
Profit before Tax	(8,048.68)	254.35	103.16
Provision for Tax	(1,715.70)	2,645.93	254.22
Net Profit	(6,332.98)	(2,391.58)	(62.24)

3.2 The total Income of the Bank [total of Interest Income and Non-Interest Income] stood at to Rs 19,919.78 crore as against Rs 17,494.70 crore in the previous financial year recording an increase of Rs 2,425.08 crore [13.86%].

3.3 Non-Interest Income from Core Areas decreased by Rs 47.40 crore [4.31%] from Rs 1,099.72 crore in the financial year 2018-19 to Rs 1,052.32 crore in the financial year 2019-20. The Total Non-Interest Income has increased to Rs 3,749.20 crore as on 31.03.2020 from Rs 1,872.07 crore as on 31.03.2019, thereby came up by 100.27%.

3.4 The Operating Expenses has shown an increase of 48.45% during the financial year 2019-20 and stood at Rs 5,175.18 crore as compared to Rs 3,486.06 crore in 2018-19.

3.5 Staff expenses increased from Rs 1,746.95 crore during FY 2018-19 to Rs 3,372.70 crore during FY 2019-20.

4. Spread Analysis

Particulars	2018-19	2019-20	Growth
			Absolute	%
Average Working Funds	2,01,824.92	2,11,704	9,879	4.89
Total Interest Income	15,622.63	16,170.58	547.95	3.51
Total Interest Expended	10,114.16	10,942.09	827.93	8.19
Interest Spread	5,508.47	5,228	(280)	(5.08)
Yield on Funds	7.74%	7.64%
Cost of Funds	5.01%	5.17%
Yield on Advances	9.43%	9.19%
Cost of Deposits	5.40%	5.62%
Net Interest Margin	3.05%	2.83%

5. Operating Profit

5.1 The Operating Profit stood at Rs 3,802.51 crore as at the end of March 2020, as compared to Rs 3,894.47 crore as on 31.03.2019.

5.2 Operating Profit during March 2020 Quarter stood at Rs (104) crore as against Rs 693.77 crore during March 2019.

5.3 NIM for the March 2020 Quarter stood at 2.83% as against 2.63% during March19 Quarter.

5.4 The Asset Utilisation Ratio [percentage of Operating Profit to Average Working Funds] stood at 1.80% for the financial year 2019-20 compared to 1.93% for the financial year 2018-19.

6. Provisions

6.1 The Provision for Bad and Doubtful Debts, Provision on Standard Assets, Taxation, Investment Depreciation and others aggregated to Rs 6,194.09 crore in the financial year 2019-20 as compared to Rs 10,227.45 crore in the financial year 2018-19.

7. Net Profit and Dividend

7.1 After considering the provisions of Rs 6,194.09 crore for loan losses to bring down the Net NPA below 6%, the Net loss of the Bank stood at Rs 2,391.58 crore for the financial year 2019-20 as against the net loss of Rs 6,332.98 crore for the year ended 31.03.2019.

7.2 The Board of Directors of the Bank has not recommended any Dividend for the financial year 2019-20.

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	-6,332.98	(+)56.22%
2019-20	-2391.58	(+)62.24%

8. Net Worth and CRAR

8.1 The Net Worth of the Bank stood at to Rs 13,750 crore as on 31st March, 2020 as compared to Rs 16,564.86 crore as on 31st March 2019.

8.2 During the year, Bank has raised capital through issue and allotment of Basel III compliant Tier II Bonds of Rs 1,000.00.

8.3 The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 11.54% (Basel III) as on 31^st March, 2020 as against 12.30% as on 31^st March, 2019.

Category	Basel III
	March 2019	March 2020
Tier-I Capital	10.52%	9.05%
Tier-II Capital	1.78%	2.49%
Total	12.30%	11.54%

8.4 The Return on Equity, Earnings Per Share and Book Value per Share for the Financial Year 2019-20 stood at (15.78) %, Rs (3.99) and Rs 22.94 respectively, as against (46.21%), (30.06) and Rs 27.63 respectively for the previous Financial year. The impact of raising of Equity Capital of the Bank given effect during Financial Year 2018-19, for this calculation.

9. Consolidated Accounts

9.1 As per RBI guidelines, the Bank has consolidated the financial accounts as at 31^st March, 2020 with those of its wholly owned Subsidiary viz., Corp Bank Securities Ltd. As per the consolidated statement as on 31^st March, 2020, the Net Worth of the Corp Bank group stood at Rs 16651.45 crore. The consolidated Operating Profit for the financial year 2019-20 stood at Rs 3,903.15 crore as against Rs 3,956.03 crore as on 31.03.2019. During the Financial Year 2019-20, consolidated Net loss of the Bank stood at Rs 6,325.30 crore, as against loss of Rs 4,049.93 crore for the year ended 31.03.2019. The Bank has complied with the RBI guidelines and the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

10. Banks Service Outlets

10.1 The Banks total service outlets at the year ended 31^st March 2020 comprising of 2432 branches and 2623 ATMs across the country. Out of the total 2432 branches, 588 branches are in Rural areas, 794 in Semi-urban centres, 518 in Urban areas and 532 in Metro centres.

10.2 The Bank has a total of 34 Zonal Offices spread across the country to have a better control, monitoring and follow up with the branches for business development. The Bank also has 4 Circle Offices headed by General Managers operating at Mumbai, Delhi, Bengaluru, and Chennai. The Circle offices function as an extended arm of the Corporate Office, better equipped to support and drive business development plans through the Zonal Offices in their Command area. The Corporate Office functions that are delegated to Circle offices are Planning, Development and Resource Mobilisation, Credit Sanctions, Credit Risk Management, Recovery and Legal, Human Resource Management, Support Services and Inspection and Audit.

11. Advertisement and Publicity

11.1 During the year, concerted efforts were made for enhancing the brand and image of the Bank. The Bank continued to disseminate messages on its products, services, interest rates and its performance, to the customers, shareholders and the general public through advertisements and publicity in Newspapers, Periodicals, TV Channels, FM Radio Stations, Hoardings, Translites, Website, ATMs, etc.

12. Government Business and Bancassurance

12.1 The total Direct/Indirect tax, Customs duty and State Tax collections of the Bank for the year ended 31 ^st March, 2020 reached Rs 28112 crore from 18.91 lakh challans as compared to Rs 49749 crore from 21.37 lakh challans collected during the corresponding period last year. The Bank has earned an aggregate income of Rs 8.26 crore from Govt. Business during the Financial Year 2019-20.

12.2 Under Life Insurance Business, Bank has canvassed 5,50,327 policies with premium of Rs 8,387.09 lakh and earned commission of Rs 543.54 lakh as on 31^st March, 2020, (this includes 5,45,772 enrollments made under Pradhan Mantri Jeevan Jyoti Bima Yojana with premium of Rs 1474.52 lakh and commission of Rs 209.88 lakh) as against 4,55,190 policies with premium of Rs 8,902.82 lakh and commission of Rs 536.04 lakh as on 31^st March, 2019.

12.3 Under Non-life Business, Bank has canvassed 16,50,069 policies with premium of Rs 2,116.92 lakh and commission of Rs 291.91 lakh as on 31st March, 2020, (this includes 16,00,681 enrollments made under Pradhan Mantri Suraksha Bima Yojana with premium of Rs 192.08 lakh and earned commission of Rs 32.01 lakh) as against 12,66,081 policies with premium of Rs 2,308.28 lakh and commission of Rs 294.25 lakh as on 31^st March, 2019.

12.4 Bank has earned a commission of Rs 214.96 lakh for the period ended 31^st March, 2020 under Health Insurance business as against Rs 155.33 lakhs as on 31^st March, 2019.

12.5 Bank has earned a commission of Rs 9.96 lakh for the period ended 31^st March 2020 under Mutual Fund Business as against Rs 14.70 lakhs as on 31^st March, 2019.

13. Corporate Social Responsibility

As a responsible Corporate citizen, the Bank initiated several welfare measures aiming at the under privileged section of the society in fulfillment of its commitment to social priorities during the financial year 2019-20.

13.1 Corporation Bank Economic Development Foundation [CBEDF]

The Corporation Bank Economic Development Foundation a non-profit economic outfit Trust has been pursuing its objectives of fulfilling social obligation in tune with corporate mission. All CSR activities of the Bank are conducted under the aegis of CBEDF. Financial grants to the extent of Rs 362.89 lakhs were disbursed for execution of various projects of social concerns during the year 2019-20 through CBEDF. Amongst others, CBEDF implemented following major CSR projects during FY 2019-20.

13.2 CSR Activities through “CorpKiran”- Association of Spouses of Bank Executives

For the welfare of underprivileged, through “CorpKiran”, Bank granted Rs 95.56 lakhs to various Institutions during 2019-20. The major activities included providing Bench, Desk, Cupboards, Computers, Water purifier, Almirah, Printers, Pedestral Fans etc., to poor school children and inmates of orphanages, old age homes, destitute homes, helping physically and mentally challenged people.

Some major CSR initiatives undertaken during FY 2019-20 are providing Desktop Computers & Water Cooler to Govt. Geetanjali Girls College, Bhopal, (MP), Construction of Toilets at Sri Konda Kota Reddy Government Junior College, Damarmadagu, Nellore Dist., Providing Sewing Machines to Health Oriented Project Establishment (HOPE) Kannur, Kerala-engaged in palliative treatment for patients who are suffering from the life threatening diseases like Cancer, Kidney failure etc. Three number of dialysis machines to Shimoga Institutes of Medical Sciences, Shimoga. Embroidery & sewing machines to Project “Life” Rajakot, Gujarat, Medical Aid facilities to Govt Medical College, Ernakulam. Bus to Chamaraja Nagar Institute of Medical Sciences, Chamaraja Nagar, (KA) to provide transport facilities for patients, students & staffs from college, hospital to remote rural areas. Sewing machines to 26 Tribal Women through COBSETI, Kodagu. Medical equipments & other Hospital furniture related to operation theatre for hospital (SAVMSJC) run by Sri Sringeri Sharada Peetam, Sringeri (KA), construction of sick room for the inmates of Orphanage Bhagini Samaja, Mangaluru (KA), Construction of School building to Gandhi Aided Primary School, Melpettai, Village, Tindivanam, Villipuram Dist, (TN).

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

The Corporation Bank Self Employment Training Institutes are operating in Chikmagalur and Kodagu Districts catering to the training needs of the rural un-employed youth hailing from both the districts, where the Bank has the Lead Bank responsibility. Both the Institutes put together trained 1637 unemployed youth in various skill development training programmes during the year 2019-20. Since inception, both the institutes have trained about 19561 unemployed youth with a cumulative settlement rate of 77.24%. The Bank has incurred an expenditure of Rs 50 lakhs during the year 201920, for conducting the training programmes & other recurring expenditures at both the Institutes & both the institutes have been graded as “AA” by the Ministry of Rural Development during the year for their excellence in training.

13.4 CSR through “Grameena Abhyudaya Financial Literacy Trust “[GAFL Trust]

The Bank has sponsored Grameena Abhyudaya Financial Literacy Trust for establishing “Financial Literacy Centers” [FLCs] at various locations. These Centers educate people about the usefulness of the Bank account for all their economic needs and empowerment. The Centers also provide counseling for the borrowers on the basis of financial aspects including insurance, savings and credit related products/services in the Bank etc. As on 31.03.2020, GAFLCC Trust has established 4 District level and 21 Block level FLC centers.

The Bank has provided Rs 35.00 Lakh for meeting the recurring cost of the Trust, during the year 2019-20. The Trust has conducted 1812 Financial Literacy Camps at villages, schools, colleges, other institutions, SHGs and others, covering about 105463 persons.

13.5 CSR through SHG formation

During the year, the Bank has spent Rs 145.93 Lakhs for promoting 14593 new SHGs in 6 districts of Karnataka. Through this major CSR initiative, Bank has helped about 145930 families of the members of SHG groups to become financially empowered. They now have access to banking facilities including deposits and loans. They also receive training in record maintenance and account keeping of their respective groups. Regular meetings of the groups 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, 1963, Official Languages Rules, 1976 and various directions with regard to Official Language issued from time to time by Department of Official Language, Ministry of Home Affairs, Department 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 language implementation during the year 2019-20 has been exemplary. Bank has been awarded with the following National Level Awards during the year for OL implementation :

a) Rajbhasha Excellence Award in “C” Region - First Prize by Ministry of Finance.

b) Rajbhasha Kirti Award - Second Prize in FI Category in “C” Region by Official Language Department, Ministry of Home Affairs, Government Of India.

c) Official Language Award by Regional Implementation Office, Southern Region.

Of Our Zonal offices - Kochi, Thane, Varanasi, Vadodara, Bangalore(South), Rajkot, Udupi, Mysore, Pune, Nellore & Coimbatore along with 10 other branches received prizes from their respective Town Official Language Implementation 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 every year for the benefit of staff members of member organisations/banks.

14.4 During the Financial Year, Dept. of Financial Services, Ministry of Finance inspected our Zonal Offices at Meerut, Delhi (North), Rajkot, Kolkata as well as Haridwar & Hrishikesh Branches. During various inspections the efforts being made by the Bank in Official Language Implementation has been appreciated.

14.5 Bank jointly organized the “Linguistic Harmony Day (Hindi Diwas)” on 19th October 2019 with Town Official Language Committee, Mangalore.

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

14.8 Besides the O.L. implementation work in the offices bank has conducted various programmes for the benefit of students and teachers of the colleges in and around Mangaluru in association with organizations such as Dakshin Kannada Hindi Shikshak Sangh, St. Philomina College, St.Agnes College & Hindi Sangh of St. Alosyus College, Mangaluru. Besides, Rajbhashaa Bharati Program was also broadcasted through Akashvaani, Mangalore.

15. Performance of Subsidiaries and other units sponsored by the Bank

15.1 Corp Bank Securities Limited: The Banks wholly owned subsidiary, Corp Bank Securities Limited (CBSL) has earned a total income of Rs 8.74 crore, posted Profit Before Tax of Rs 7.56 crore and Profit After Tax of Rs 3.21 crore (after accounting for tax provision of Rs 2.80 crore, tax on buy back of equity shares of Rs 1.56 crore, reversal of tax provision of Rs 0.01 crore for earlier years, deferred tax asset of Rs 0.004 crore) for Financial Year 2019-20, while the corresponding figures for FY 2018-19 were Rs 9.73 crore, Rs 8.69 crore and Rs 7.68 crore respectively (after accounting for tax provision of Rs 2.40 crore, reversal of tax provision of Rs 1.42 crore for earlier years, deferred tax asset of Rs 0.02 crore). The Paid up Equity Share Capital stood at Rs 56.25 crore comprising of 5,62,50,000 equity shares of face value of Rs 10/- each as on 31.03.2020 (post buy-back of 1,87,50,000 equity shares comprising of 25% paid up equity share capital @ 13.75 per share with total consideration aggregating to Rs 25.78 crore). Net worth stood at Rs 102.07 crore with the plough back of surplus. The Earning per Share for fiscal ended March, 2020 was Rs 0.46 while it was Rs 1.02 for the fiscal ended March, 2019. The Company had launched equity broking business for institutional clients in FY 2015-16 and proprietary trading in the subsequent year. The Company also continues to pursue its other activity of distribution of Mutual Fund Products and trading in approved Securities like Commercial Papers, Certificate of Deposits and Treasury Bills etc.

16. Constitution of Board of Directors

The following changes have taken place in the Board of Directors of the Bank during the financial year ended 31^st March, 2020.

16.1 Shri P K Panda was appointed as the Director on the Board of the Bank and assumed office on 26.04.2019.

16.2 Shri Alok Tiwari was appointed as the Director on the Board of the Bank representing the Central Government as Government Nominee Director with effect from 05.03.2020.

The following members retired from the Board of the Bank during the period-2019-20:

16.3 Shri Deverakonda Diptivilasa, Part-time Non-official Director of the Bank has ceased to be a Director of the Bank from 25th April 2019 on completion of his term on 24th April 2019.

16.4 Shri Gopal Murli Bhagat, Executive Director of the Bank has ceased to be Executive Director of the Bank from 24^th August, 2019 on completion of his term as Executive Director of the Bank on 23rd August, 2019.

16.5 Shri M. Bhagavantha Rao, Part-time Non-Official Director of the Bank has ceased to be a Director of the Bank from 1^st March 2020 on completion of his term on 29^th February 2020.

16.6 Smt. P V. Bharathi, Managing Director and Chief Executive Officer on the Board of the Bank ceased to be Managing Director and Chief Executive Officer of the Bank from 1^st April 2020 on completion of her term as Managing Director and Chief Executive Officer of the Bank on 31^st March 2020.

16.7 The Board places on record its appreciation for the guidance and counsel received from Smt. P. V. Bharathi, Shri Gopal Murli Bhagat, Shri Deverakonda Diptivilasa and Shri M. Bhagavantha Rao during deliberations of the Board / Committees of the Board and also in the conduct of the Banks business during their tenure of office as Director of the Bank.

17. Directors Responsibility Statements

The Directors confirm that in the preparation of the Annual Accounts for the year ended 31^st March, 2020

17.1 The applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any.

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

17.3 Proper and sufficient care was taken for the maintenance of adequate Accounting Records in accordance with the provisions of the relevant Acts for safeguarding the assets of 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 that such internal financial controls are adequate and were operating effectively.

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

18. Acknowledgements

18.1 The Directors thank the shareholders, valued customers, well-wishers, Share Transfer Agent and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

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

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

For and on behalf of the Board of Directors

(Rajkiran Rai G)

Managing Director & Chief Executive Officer

Place: Mumbai

Date : 31.07.2020