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Investor Presentation August 2010 Income and Expenses

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Investor Presentation August 2010 Income and Expenses break up 8,443 857 801 6,785 March 10 ( in INR mn) 7,014 746 650 5,618 March 09 ( in INR mn) 20.4% 14 ... – PowerPoint PPT presentation

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Title: Investor Presentation August 2010 Income and Expenses


1
Investor Presentation August 2010
2
Disclaimer No representation or warranty, express
or implied is made as to, and no reliance should
be placed on the fairness, accuracy, completeness
or correctness of such information or opinions
contained herein. The information contained in
this presentation is only current as of its date.
Certain statements made in this presentation may
not be based on historical information or facts
and may be forward looking statements,
including those relating to the banks general
business plans and strategy, its future
financial condition and growth prospects and
future developments in the industry and
regulatory environment. Actual results may differ
materially from these forward-looking statements
due to a number of factors, including future
changes or developments in the banks business,
its competitive environment and political,
economic, legal and social conditions in India.
This communication is for general information
purpose only, without regard to specific
objectives, financial situations and needs of any
particular person. This presentation does not
constitute an offer or invitation to purchase or
subscribe for any shares in the bank and neither
any part of it shall form the basis of or be
relied upon in connection with any contract or
commitment whatsoever. The bank may alter, modify
or otherwise change in any manner the content of
this presentation, without obligation to notify
any person of such revisions or changes. This
presentation should not be copied and/or
disseminated in any manner.
3
Table of contents
4
1. City Union Bank Overview Growth Story
5
Showcasing steady performance on an ongoing basis

Long and consistent track record of profitability
Profit and dividend payout in all 100 years
of operations
Steady growth Business growing at a CAGR of 27
and Net Profit at a CAGR of 30 in last five years
RoA and RoE at 1.5 and 20.5 respectively, which
is considered healthy in the banking space
Best Corporate Practices All Independent
Professional directors Continuity in Management
only 6 CEOs so for
Rapid progress on the technology front with 100
business under CBS and State of the Art
Technology platform
Significant improvement in asset quality over the
years. Net NPA 0.58 and Provision Coverage
Ratio gt 70
Well capitalized CAR Basel II 13.46 as on
March 31, 2010
Future plans for expansion of branch network to
500 Branches in next 3 years
Rated as No.1 by Chartered Financial Analyst
Magazine
CUB is well positioned to capitalize on the huge
growth opportunities in the banking sector
6
Key milestones
2003
Obtained licenses to act as a agent for procuring
life insurance general insurance business
1998
2009
Initial Public Offering (IPO) Listing Banks
shares on the BSE, NSE MSE
Rights issue for equity shares _at_ 1 4 to
reward the existing shareholders
1965
2007
Amalgamation of The City Forward Bank Limited
and The Union Bank Limited with our Bank
Preferential allotment for equity shares
strengthening banks capital adequacy ratio
1904
2002
Entered into agreement with TCS for core banking
solution Quartz
Incorporation of the Bank
1957
Take over of Common Wealth Bank Limited
1945
Scheduled bank since 22.03.1945
7
Strong presence in the South
  • A network of 222 branches of which 193 branches
    are located in South India and 139 in Tamil Nadu
    alone

State wise branches
8
Branch Expansion
  • We have received License from Reserve Bank of
    India to open 62 more branches in various states
    within a Year. Out of which 40 branches are in
    Tier I and Tier II centres and 22 More branches
    planned to open under Tier III to VI centres.

State wise Branch Expansion planned
9
Providing a wide array of services (1/2)
Services facilities Domestic banking
  • Implementation of core banking at all the
    branches enabling customers to operate their
    accounts from any of the branches
  • 168 own inter connected ATMs nationwide as on
    August 15, 2010 Access to ATMs through Cashtree,
    NFS, VISA tie-ups
  • VISA debit card access worldwide
  • RTGS and NEFT available at all branches
  • Internet and mobile banking facility
  • SMS alert facility
  • Utility bill payments Telephone, electricity,
    credit card payments etc
  • E-Tax payment facility
  • E- payment of college term fees, mess fee
    examination fees for university students
  • Demat services in tie-up with NSDL

10
Providing a wide array of services (2/2)
Services facilities - International banking
  • Forex services to the importers exporters
  • Trade credit facility to importers
  • Handling overseas direct investments and foreign
    direct investments
  • International banking operations / cross border
    banking through correspondent banking
    relationships with HSBC Bank, Wachovia Bank,
    Standard Chartered Bank, Commerce Bank others
  • Forex dealing services through forward contracts,
    etc.
  • Tie up with Doha Bank for arrangement of money
    transfer
  • Drawing arrangement from Singapore with Bank of
    India
  • Money 2 India Service Tie up with ICICI Bank
    for fund transfer
  • Arrangement with UAE Exchange and Majan exchange
    for money transfer

11
Offering the best of both worlds and more
Old private sector banks
New private sector banks
  • Flexibility to enter adjacent markets and
    businesses
  • Diversified product portfolio
  • High operating expenses
  • High of fee income
  • Perception of Poor asset quality
  • High proportion of retail deposits low CASA
  • Relative size of asset base
  • High cost of funds
  • Strong growth
  • Asset quality
  • High ROA
  • Technology savvy
  • Operating efficiencies
  • Large branch network
  • Strong customer base
  • Focused approach towards SMEs
  • Plans to open branches in Tier II and Tier III
    cities
  • Experienced management team

12
2. Ownership Pattern
13
A well diversified investor base
Major shareholders as on 30th June 2010
Ownership profile as on 30th June 2010
  • Well diversified ownership
  • Long term investors adding credibility and
    support to management
  • Cash management services offered to LIC to
    improve CASA and customer base
  • Bank Assurance partner to LIC and ranked No.1 in
    South India consecutively for three years

14
Rights Issue FY 2009-10
During the year 2009-10, we have issued 80 mn
equity shares with a face value of Re.1/- each
(Rights Equity shares) for cash at a price of
Rs.6/- including a premium of Rs.5/- aggregating
to Rs.48 crores to the existing equity
shareholders of our Bank on rights basis in the
ratio of 1 Rights Equity share for every 4 Equity
shares held.
The total proceeds through rights issue was
around Rs.480 mn.
Capital increases from Rs.320 mn to Rs.400 mn.
15
3. Management
16
Transparent Corporate Governance practices
All directors are Independent and Professional
directors
Various sub-committees of Board have been formed
to oversee the operations of the Bank
Code of conduct for directors and senior
management has been put in place
Disclosure norms are strictly adhered to
17
A well experienced and strong Board (1/2)
  • We have eminent personalities on our Board
  • 1 Former Chairman of a PSU Bank
  • 3 Chartered Accountants
  • 2 Agriculturists
  • 1 Industrialist
  • 1 Advocate
  • 1 Chief Comm. Of Income Tax (Retd.)
  • 1 Retd. High Court Judge
  • 1 Banking professional

Profile of Board of Directors
18
A well experienced and strong Board (2/2)
Profile of Board of Directors
19
4. Financial Performance
20
FY10 performance A snapshot
FY 10 performance
Key highlights
  • Total Business of the Bank increased by 24
    during the FY 2009-10.
  • Deposits increased by 25 over previous year and
    Advances increased by 21.
  • Gross NPA brought down to 1.36
  • Net NPA reduced to 0.58

21
FY10 performance A snapshot
FY 10 performance
Key highlights
  • Total business of the Bank grew by 24 in FY10
  • Net interest income increased by 15 and PAT
    increased by 25
  • Net Profit increased by 25 from Rs.1221.3 Mn to
    Rs.1527.6 Mn
  • Provision Coverage Ratio achieved well in
    advance.
  • High CRAR offers scope for more leverage
  • High Tier I Capital offers huge scope for
    increasing Tier II Bonds

22
Key business indicators
Key indicators
Key highlights
  • Healthy RONW at 20.5 in FY10 up from 18.5 in
    FY09
  • Cost of Deposits decreased from 7.98 in FY09 to
    7.73 in FY10
  • ROA increased marginally from 1.50 in FY09 to
    1.52 in FY10

23
Q1 FY11 performance A snapshot
Financial Performance Q1 FY 11 Vs Q1 FY 10
Key highlights
  • Total Business increased by 28.1 from
    Rs.139133.7 Mn to Rs.178193.1 Mn
  • CASA position grew by 42.3 to Rs.21672.4 Mn from
    Rs.15234.0 Mn
  • Net NPA brought down to 0.54 from 1.45 last
    year
  • ROA increased to 1.52 from 1.32

24
Q1 FY11 performance A snapshot
Financial Performance Q1 FY 11 Vs Q1 FY 10
Key highlights
  • Q1 FY 2011 Net interest income increased by 64
    over previous Q1 FY 2010
  • Operating Profit increased by 66 (YoY)
  • Net Profit increased by 41 (YoY) from Rs.315.4
    mn to Rs.443.7 mn

25
Strong deposit and advances growth
Steady increase in deposits
Steady increase in advances
CAGR 30
CAGR 27
Steady increase in CASA
  • Advances has been growing steady at a CAGR of 27
    in the last 5 years Credit Deposit ratio is
    sound at 67
  • Deposits is retail oriented. Stable and growing
    at a CAGR of 30
  • CASA grew by 44.94 in FY 2010 at a CAGR of 27.

CAGR 27
CUB has reported strong growth in deposits and
advances in the last few years
26
Strong growth in income and profitability
Strong growth in other income
CEB Charges Income over 5 years
CAGR 26
CAGR 34
Steady increase in net interest income
Robust PAT growth
CAGR 27
CAGR 19
27
Cost of deposits yield on advances
Cost of deposits and yield on advances in last 10
years
Spread between cost of deposits and yield on
advances of our bank maintained in the last 10
years
28
Investments At a Glance
Investments Breakup and Category wise
  • In total Non-SLR securities of Rs.6510.6 Mns,
    investment in NABARD RIDF constitutes Rs.5782.6
    Mns.
  • Modified Duration for entire investment portfolio
    is 5.48 only.

29
Loan book Major Industry wise exposure
Advances to Major Industries as on 30th June 2010
30
Loan book Major Sector wise Exposure
Regulatory Classification
Major Sector wise Advances as on 30th June, 2010
  • SME and retail trade loans earning higher yields.
  • Diversified credit portfolio reduces credit risk
  • Lower ticket size backed by adequate collaterals
  • Unsecured Advances around 3 only

Regulatory Classification of Advances as on 30th
June, 2010
31
Loan book products composition
Loan Products composition as June 30, 2010
  • Working capital loans yielding higher interest
    constitute 60 of advances
  • Re-pricing possible at short intervals thus
    reducing interest rate risk
  • 80 of our loan book is on floating rate basis
    which reduces interest rate risk

32
Asset quality is showing continuous improvement
NPA AN ANALYSIS LAST 5 YEARS
Gross NPA Net NPA - Quantum
Gross NPA Net NPA -
  • Asset quality has shown continuous improvement
    over the years Gross NPA has come down from 5.9
    in March 05 to 1.4 in March 10
  • Net NPA levels has come down from 3.4 in March
    05 to 0.6 in March 10
  • NPA levels has come down despite the fact that we
    continue to focus on SMEs and retail trade
    loans.
  • We have a well defined and robust credit
    appraisal policy and risk management system

33
Restructured Accounts
Details of Restructured Accounts
  • The Restructured accounts are performing well and
    certain accounts got closed well before the due
    date.
  • Around 18 of amount repaid in restructuring
    accounts.
  • Around 3.7 of restructured accounts turned NPA.
  • We have not restructured any account during the
    first quarter of 2010-11.
  • Accounts turned as NPA during the first quarter
    of 2010-11 was NIL.
  • Balance outstanding on Restructured Accounts as
    on 30th June 2010 Rs.3474.6 Mns

34
Income and Expenses break up
Interest income break up
Other income break up
Expenses break up
35
Increasing employee efficiency
Growth in business per employee
Steady rise in profit per employee
Our employee efficiency has been going up
continuously as reflected by the above parameters
36
5. Strategy
37
Our four pronged strategy going forward
  • Deposits
  • Achieve 30 growth in deposits increase low
    cost deposits from 20 at present to 25 over 3
    years
  • Broad base retail depositors to ensure stability
  • To improve depositor base from 0.8 mn to 1.25 mn
    Focus on cross selling of products
  • Advances
  • Maintaining focus in retail/SME sectors at around
    65
  • Continuing the high yielding cash credit
    component at around 60 of advances
  • Achieve steady growth of 25
  • Income
  • Continued focus on high yielding retail SME
    credits
  • Improving fee income by way of exchange
    commission on non funded business
  • Increase fee income from cross selling of
    insurance, mutual fund products, Online Share
    trading money transfers other technology based
    services
  • Expenses
  • Improving staff productivity to lower man power
    cost
  • Tight vigil on miscellaneous expenditure
  • Maintain cost income ratio at the present level
    of 40 (lowest in the industry)

Our strategy is to focus on all these four
aspects of banking business to capitalize on the
growth opportunities going ahead
38
6. Recognitions
39
Ranking by Magazine The Chartered Financial
Analyst
40
No.1 in Customer Satisfaction awarded by IBA
Indian Banks Association awarded City Union Bank
as No.1 in Customer Satisfaction Study for IBA
2008 conducted by GALLUP consulting. Rank of
Banks Index Bank within Clusters
41
Thank You
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