Driving
Change,
Embracing
Responsibility
The Indian economy displayed exemplary resilience postpandemic and
rebounded strongly from a contraction of 5.8 per cent in 2020-21 to an impressive growth
of 9.1 per cent in 2021-22 and 7.2 per cent in 2022-23. The Consumer Price Index (CPI)
inflation for the fiscal year 2024 would be around 5.1 per cent. Additionally, the GDP
growth rate for FY24 was projected to be 6.5 per cent.
DEAR SHAREHOLDERS,
Greetings!
I am pleased to place before you, the highlights of the Bank's
performance during the FY 2022-23, a year in which we achieved many "all the time
best" parameters, thanks to our turnaround strategy charted out in October 2020. In a
tumultuous year marked by global economic upheavals, India stood out as the best
performing large economy and the banking sector performed well on the back of the policies
by the Government and the regulator.
Globally inflation is set to fall from 8.7% in 2022 to 6.8% in 2023 on
the back of lower commodity prices, but underlying (core) inflation is likely to decline
more slowly. Risks to the outlook are heavily skewed to the downside, with the chances of
a hard landing having been risen sharply. Financial sector stress could amplify and
contagion could take hold, weakening the real economy through a sharp deterioration in
financing conditions and compelling central banks to reconsider their policy paths. The
Russia-Ukraine war that started in February 2022 resulted in high inflation that was
initially thought to be transitory, but persisted for a long time leading to most central
banks in the world adopting tight monetary policy and quickly raising interest rates in
quick succession. This resulted in growth slowing in major economies in the world. Among
the global headwinds, India, with 7.2% GDP growth for FY 2022-23 emerged as a bright star
even after RBI also tightened the policy rates by 250 bps during the year to 6.5% to
cushion in inflation. Although, Europe is still struggling, the inflation in India seems
to have largely stabilised.
In fact. RBI paused the rate hike
for two consecutive MPC meetings held in April as well as in June while
continuing to maintain a cautious stance as India's inflation rate has moved down to
4.81%in June 2023.
The Indian economy displayed exemplary resilience post-pandemic and
rebounded strongly from a contraction of 5.8% in 2020-21 to an impressive growth of 9.1%
in 2021-22 and 7.2%in 2022-23. The Consumer Price Index (CPI) inflation for the fiscal
year 2024 would be around 5.1%. Additionally, the GDP growth rate for FY 2023-24 was
projected to be 6.5%. The Indian economy has also made rapid gains in openness and has
gradually integrated with the global economy over the years. Consequently, it is getting
increasingly exposed to the vagaries of global headwinds.
It is, however, pertinent to note that India's growth in the last few
years is mainly driven by robust domestic demand, especially private consumption and
investment, amidst the global slowdown. Looking ahead, RBI expects real GDP to grow by
6.5% during 2023-24. In all likelihood, India will remain among the fastest growing large
economies in 2023. In fact, credit growth in India stood at a 12 year
high of 15% in FY 2022-23. For FY 2023-24, RBI remains confident about
6.5% GDP growth. The high frequency economic indicators like GST collection, PMI, e-way
bills, etc. generate enough confidence in the economy. This is also due to the Government
policies of increased outlay on infrastructure, continued focus on MSMEs, and impetus to
the manufacturing sector through policies like the Production Linked Incentive (PLI)
scheme.
During the FY 2022-23, the total gross business of the Bank increased
from H1,50,957.86 Cr to H1,63,743.42 Cr; deposits increased from H89,142.10 Cr to
H91,651.35 Cr; and gross advances increased from H61,815.76 Cr to
H72,092.07 Cr. Operating profit of the Bank had increased to H1,507.33 Cr in FY 2022-23
from H1,247.57 Cr in FY 2021-22. The Net Profit increased to H775.09 Cr in 2022-23 as
against H44.98 Cr reported in 2021-22.
The Provision Coverage Ratio (PCR including write-off ) has improved to
76.78% in FY 2022-23 from previous level of 69.55% in FY 2021-22. The Board has
recommended a dividend of 30% i.e. @H0.30 per equity share of face value of H1/-each,
which is subject to the approval of
shareholders in the ensuing Annual General Meeting.
The Gross NPA to Gross Advances stood at 5.14% and the Net NPA to Net
Advances stood at 1.86% as on March 31, 2023. The CASA has increased by 2% during current
financial year to H30,227 Cr from H29,601 Cr in the FY 2021-22.
Net Interest income of the Bank has increased from H2,240 Cr in the FY
2021-22 to H3,012 Cr in the FY 2022-23.
The Capital Adequacy Ratio of the Bank was 17.25 under Basel III norms
as on March 31, 2023 as against the RBI mandated level of 11.50. The Book value per share
has increased from H27.97 to H31.89 as on March 31, 2023. The gross revenue from Treasury
Operations segment decreased from H1,499.70 Cr in the FY 2021-22 to H1,088.00 Cr in the FY
2022-23. During the FY 2022-23, the Corporate/Wholesale Banking segment has increased from
H2,065.04 Cr to H2,323.02 Cr. Retail Banking segment has increased from H3,710.05 Cr to
H4,083.76 Cr and Other Banking Operations segment increased from H345.85 Cr to H551.03 Cr.
The segment results, net of allocated/apportioned cost and provisions
from Treasury segment has decreased from H18.51 Cr to H(158.42) Cr, Retail Banking segment
has increased from H291.65 Cr to H975.59 Cr whereas Corporate/ wholesale Banking segments
have increased from (H656.82) Cr to (H101.70) Cr and other banking operations increased
from H254.67 Cr to H392.74 Cr.
The Board gives utmost importance to corporate governance practices at
the Bank, and we have been meticulously following the RBI and
the SEBI guidelines, corporate laws issued by MCA, banking regulations
and all applicable laws.
The Board is extremely happy with the transformation journey of the
Bank under the leadership of Mr. Murali Ramakrishnan, who has done for the past 2.5 years,
helping the Bank to achieve a quick turnaround. And we really thank him and his team for
their efforts in restoring the glory of the Bank.
Our significantly strong financials clearly demonstrate the success of
our transformation process and the business strategy over the past 2.5 years. Our
consistent focus on execution has led to strengthening the balance sheet with higher
capital adequacy ratio, quality loan book, better NIM, strong CASA growth, higher PCR,
digitisation, and efficient recovery and collection have bolstered the financial profile
of the Bank and cushioned the balance sheet from potential risks arising out of
uncertainties. As we enter FY 2024, we are well positioned to grow our advances 2X GDP
growth and maintain growth and profitability.
The Board is convinced that the present strategy has resulted in
clearly demonstrable qualitative parameters and improvements in the financial as well as
the growth numbers. We want to pursue the same strategy going forward even after change of
the present MD for sustaining growth and profitability. We are closely watching the
scenario with respect to capital raise. Our current CAR of 17.25 is sufficient in the
short- run. But given the dynamics of risk profile of the assets that we are booking it
over the months, we are having an open mind on capital raise. If necessary,
we will be going to the market for capital.
I am associated with the Bank as a director since, January 2014 and
later on took charge as Chairman and I am exhilarated to deliver my responsibilities as
Chairman of the Bank since November, 2016. It has been a real privilege to associate with
a legacy Bank, which is having a history of handling even preindependence financial
environment of the country since 1929. My heart is filled with bitter-sweet emotions.
It is with a mixture of immense pride and a tinge of melancholy that I
address you for the last time as the Chairman of this extraordinary Bank.
After nine remarkable years of serving as your guiding light, I vividly
remember the challenges we faced through uncertain times. We have witnessed both triumphs
and tribulations, riding the unpredictable waves of the financial world, all the while
holding steadfast to our unwavering vision. We have experienced the ecstasy of success and
the depths
of despair. We weathered storms that tested our resilience, but, my
fellow shareholders, it is with immense joy and a profound sense of accomplishment that I
write to you today to proclaim that we have emerged triumphant.
Under our collective stewardship, this Bank has transformed into an
exemplar of sustainable success.
We have not only weathered the storms but also reshaped the very
landscape upon which we operate. We have grown from strength to strength, defying the
odds, and carving a niche for ourselves in an ever-evolving industry.
Our commitment to integrity, innovation, and responsible banking
practices has propelled us to new heights, earning the respect and admiration of our peers
and competitors alike. The foundation we laid has given rise to a thriving ecosystem, one
that fosters growth and nurtures talent. We have empowered our employees, the backbone of
this institution, and watched them flourish as they embraced our new vision and forged
their paths towards excellence. The enduring relationships we have cultivated with our
clients, partners, and communities have become the bedrock of our success, enabling us to
deliver exceptional value and make a meaningful difference in the world.
As I gaze into the future, I am filled with a renewed sense of hope and
anticipation. The seeds we have sown are destined to yield a bumper harvest, one that will
surpass anything we have achieved thus far. The Bank stands poised on the precipice of
greatness, armed with the collective knowledge and experience that we have amassed over
the years. It is a beacon of
possibility, radiating the promise of a brighter, more prosperous
future. My time here has been nothing short of transformation.
I have witnessed the unwavering dedication and boundless potential that
resides within each of you, and it has inspired me beyond measure.
I have served the Bank with all my heart and soul, and that the legacy
we leave behind will endure for generations to come.
In conclusion, I express my deepest gratitude to each and every one of
you, our esteemed shareholders, for your unwavering trust and support. It is your belief
in our mission that has fuelled our journey and propelled our unwavering commitment to
excellence. I would like to conclude by thanking all our customers, associates, partners,
vendors, Auditors and other well- wishers for their continued support and trust. I wish to
express my gratitude to the RBI, the SEBI, stock exchanges, and Central and State
Governments for their guidance in statutory compliances. I also thank the employees at all
levels, for their tireless effort and teamwork. Finally, I would like to thank all our
shareholders and Board for their contribution in Bank's growth over the years. I am
confident that the Bank's Retail franchise would continue to deliver sustainable
profitable growth without compromising on the quality and profitability.
It is with great pleasure that I extend my sincere thanks to fellow
Board members and our esteemed Managing Director and CEO, Mr Murali Ramakrishnan, who is
completing his tenure on September 30, 2023. Further, I am reminded of the profound impact
of our past leaders who have steered
this Bank to success. Let me take this opportunity to remember with
fondness and appreciation the contributions of our former MD & CEOs, previous Chairman
and other eminent Board members whom I have associated with during my tenure. As we move
forward, I am very confident that this outstanding group of eminent Board members and
exemplary Management will continue to guide the Bank towards even greater
achievements."
On behalf of the Board of Directors of the Bank, I thank you for your
continued trust, confidence, and support. Stay healthy, stay safe!
With best regards,
Salim Gangadharan
Chairman