City Union Bank Investor Presentation Sep2010

7/30/2019 City Union Bank Investor Presentation Sep2010

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Investor Presentation November 2010


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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 beforward 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. Actualresults 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.


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Table of contents

1. City Union Bank Overview & Growth Story 4-8

2. Ownership Pattern 9-10

3. Management 11-14

4. Financial Performance 15-33


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4

1. City Union Bank Overview & Growth Story


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5

Showcasing steady performance on an ongoing basis

RoA and RoE at 2% and 27% respectively for Q2 2010-11, which is considered healthy in the banking space

Steady growth Business growing at a CAGR of 27% and Net Profit at a CAGR of 30% in last five years

Significant improvement in asset quality over the years. Net NPA 0.54% for Sep 2010 and PCR > 70%

Future plans for expansion of branch network to 500 Branches in next 3 years

Rapid progress on the technology front with 100% business under CBS and State of the Art Technology platform

CUB is well positioned to capitalize on the huge growth opportunities in the banking sector

Well capitalized; CAR Basel II 13.41% as on September 30, 2010

Long and consistent track record of profitability Profit and dividend payout in all 100 + years of operations

Best Corporate Practices; All Independent & Professional directors; Continuity in Management only 6 CEOs so for


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6

Key milestones

Take over of Common WealthBank Limited

1957

Preferential allotment for equity sharesstrengthening banks capital adequacyratio

2007

1904

Incorporation of the Bank

1965

Amalgamation of The CityForward Bank Limited and

The Union BankLimitedwithour Bank

1998

Initial Public Offering (IPO);Listing Banks shares on theBSE, NSE & MSE

Entered into agreement with TCS

for core banking solution Quartz

2002

2003

Obtained licenses to act as a

agent for procuring lifeinsurance & generalinsurance business

Rights issue for equityshares @ 1 : 4 to rewardthe existing shareholders

2009

1945

Scheduled bank since 22.03.1945


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Strong presence in the South

A network of 229 branches of which 200 branches are located in South India and 146 in Tamil Nadu alone

StateNo of

BranchesStatewise %of Branches

% of ourBusiness

Tamil Nadu 146 64 71

Andhra Pradesh 29 13 9

Karnataka 15 7 6

Maharashtra 12 5 7Kerala 10 4 2

Gujarat 6 2 1

Others 11 5 4

Total 229 100 100

State wise branches


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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 be in Tier I and Tier II centres and 22

branches in Tier III to VI centres.

Till 15th November 2010, we have opened 7 branches in Tamil Nadu out of license received for 62

branches.

Remaining 55 branches yet to be opened.

StateTier I & II

centresTier III to VI

centres

Tamil Nadu 16 19

Andhra Pradesh 5

Karnataka 5

Maharashtra 4

Chattishgarh 1

New Delhi 2

Orissa 1

Punjab 1

Uttar Pradesh 1

Total 36 19

State wise Branch Expansion planned


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2. Ownership Pattern


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Others

0.4% FII's23.1%

Public

56.6%

Domestic

Institution

6.5%

Corp. Bodies

13.4%

A well diversified investor base

Ownership profile as on 30th September 2010

Shareholders % holding

LIC of India 4.97

L & T Capital Holdings Limited 4.78

F M O, Nederlands 4.67

Argonaut Ventures 3.94

Ares Investments 3.39

Acacia Partners Lp. 3.03

GMO Emerging Illiquid Fund 1.63

Karur Vysya Bank 1.45

Wasatch Core Growth Fund 1.28

ING Vysya Life Insurance Company 1.15

Major Institutional shareholders as on 30th September 2010

Well diversified ownership

Long term investors ensuring stability 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

Chairmans Group holding reduces to 9.42%


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11

3. Management


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Transparent Corporate Governance practices

All directors are Independent and Professional directors

Code of conduct for directors and senior management put in place

Disclosure norms strictly adhered to

Various sub-committees of Board functions to oversee the operations of the Bank

KYC / AML norms strictly complied with. No penalties / fines for any violation.


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A well experienced and strong Board (1/2)

Name Profile

Mr. P.Vaidyanathan,

Chairman

He is a graduate in Commerce, a Fellow Member of the Institute of Chartered Accountants of India, Associate

Member of the Institute of Cost & Works Accountants of India and Associate Member of the Institute of Company

Secretaries of India. He has more than 35 years of experience in financial services industry

Mr. S. Balasubramanian,

MD & CEO

He holds a Master degree in Mathematics, CAIIB and PGDFM and has 38 years of experience in the banking

industry. He had joined City Union Bank in 1971 as a probationary officer and has since then been associated with

the Bank in various capacities. In 2005 he was appointed as the Chairman & CEO of our Bank and thereafter, in2009 the Reserve Bank of India has accorded approval for his appointment as the Managing Director and CEO of

our Bank with effect from January 31, 2009

Mr. K.S. Raman,

Director

He is a post graduate in Statistics. He is an agriculturist and has been on the board during 1984 to 1992 and 1994

to 2002 and presently from 2004 onwards. He has worked with Statistics Department, Annamalai University,

Automobile Products of India Limited and in Larsen & Toubro Ltd

We have eminent personalities on our Board;

1 Former Chairman of a PSU Bank

2 Chartered Accountants

2 Agriculturists

1 Industrialist

1 Advocate

1 Retired High Court Judge

1 Banking professional

Profile of Board of Directors


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A well experienced and strong Board (2/2)

Name Profile

Mr. S. Bernard,

Director

He is a graduate in Commerce and a Fellow Member of the Institute of Chartered Accountants of India. He is a

practicing Chartered Accountant of 31 years standing with expertise in the field of Accountancy and Taxation

Mr. N Kantha Kumar,

Director

He is a graduate in Commerce and Law. He has been in the Banking Industry for around 38 years. He has held

key positions such as Executive Director in Canara Bank and Chairman & Managing Director in Syndicate Bank

Mr. N.Sankaran,

Director

He is a Bachelor of Engineering (Civil) and is a Member of Institute of Engineers, India and has been on the

board since 2008. He is a retired General Manager from M/s. Voltas International, Chennai

Mr. R.G. Chandramogan,

Director

He is the Chairman & Managing Director of Hatsun Agro Product Limited. He has been in the dairy processing

and Ice cream business for around 30 years. He visits the Indian Institute of Management, Ahmedabad as a

guest faculty.

Mr. T.K. Ramkumar,

Director

He is a graduate in Commerce and an advocate. He is a partner in M/s. Ram & Rajan & Associates, and

possesses knowledge and experience in banking law, company law, intellectual property rights, civil laws etc

Justice (Retd.)S.R. Singaravelu,

Director

He is a former Judge of High Court of Madras and High Court of Orissa. He has vast experience of 36 years inthe Judiciary. He was in Judiciary Department and held various position.

Mr. C.R. Muralidharan,

Director

He retired as a whole time member of the Insurance Regulatory and Development Authority (IRDA) in

November 2009. Prior to this appointment he was a Chief General Manager in Reserve Bank of India. He has

extensive experience in regulation of Banks in Reserve Bank of India and Insurance Companies in IRDA.

Profile of Board of Directors


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15

4. Financial Performance


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FY10 performance A snapshot

HIGHLIGHTS FOR THE QUARTER ENDED 30th SEPTEMBER 2010

Deposits increased by 28.7% to Rs.114,941 Mn from Rs.89,332 Mn

Advances surged by 38.5% from 58,058 Mn to 80,393 Mn

Total Business grew by 32.5% from Rs.147,390 Mn to Rs.195,334 Mn

CASA improved by 26.7% to Rs.22,600 Mn from Rs.17,843 Mn

Highest Quarterly Profit in the Banks history

Net Profit increased by 35% from Rs.458 Mn to Rs.616 Mn

Net NPA lowered to 0.54% from 1.16% (YoY)

Highest ROA at 1.98% up from 1.86% (YoY)

Net Interest Margin higher at 3.74% from 2.79% (YoY).


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ParticularsSEP 2010

( in INR mn)SEP 2009

( in INR mn)Absolute

Growth%

GrowthDirection MAR 2010

(in INR mn)

Deposits 114,941 89,332 25,609 28.7% 102,846

Advances 80,393 58,058 22,335 38.5% 68,967

Total Business 195,334 147,390 47,944 32.5% 171,813

Demand Deposit 9,727 8,268 1,459 17.6% 10,970

Savings Deposit 12,873 9,575 3.298 34.4% 11,512

CASA 22,600 17,843 4,757 26.7% 22,482

Gross NPA 1,011 1,154 -143 935

Net NPA 428 666 -238 397

Gross NPA (%) 1.26% 1.99% 1.36%

Net NPA (%) 0.54% 1.16% 0.58%

CRAR Basel II 13.41% 14.08% 13.46%

CD Ratio 69.94% 64.99% 67.06%

P C R 72.44% 53.51% 71.56%

30th September 2010 performance A snapshot

Financial Performance 30th September 2010 Vs 30th September 2009


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ParticularsQ2 FY 11

( in INR mn)Q2 FY 10


Growth % Growth Direction

Net Interest Income 1,040 591 449 75.9%

Other Income 439 493 -54 -10.9%

Operating Expenses 529 444 85 19.2%

Operating Profit 950 641 309 48.3%

Net Profit 616 458 158 34.6%

R O A 1.98% 1.86%R O E 27.31% 25.58%

Q2 FY11 performance A snapshot

Financial Performance Q2 FY 11 Vs Q2 FY 10

NII increased by 76%

Operating Profit increased by 48% (YoY)

Net Profit grew by 35%

ROA at 1.98% and ROE at 27.31% highest in the Banking Industry.

Key highlights


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ParticularsH1 FY 11

( in INR mn)H1 FY 10


Growth % Growth Direction

Net Interest Income 1,962 1,154 808 70.0%

Other Income 761 753 8 1.1%

Operating Expenses 986 793 193 24.3%

Operating Profit 1,736 1,113 623 56.0%

Net Profit 1,060 773 287 37.1%

R O A 1.75% 1.60%R O E 24.09% 22.10%

H1 FY11 performance A snapshot

Financial Performance H1 FY 11 Vs H1 FY 10

NII increased by 70%

Operating Profit increased by 56%

Net Profit increased by 37%

Healthy ROA at 1.75% and ROE high at 24.09%

Key highlights


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Particulars Q2 FY 2010-11 H1 FY 2010-11 Direction FY 2009-10

Cost of Deposits 6.84% 6.83% 7.73%

Yield on Advances 12.51% 12.44% 13.04%

Yield on Investments 6.65% 6.60% 7.84%

Net Interest Margin 3.74% 3.64% 3.15%

Cost to Income 35.77% 36.22% 39.33%

Operating Exp - as a % of NII 50.87% 50.25% 59.63%

Return on Assets (ROA) 1.98% 1.75% 1.52%

Return on Net worth (RONW) 27.31% 24.09% 20.55%

Per Employee Business ( in INR mn) 72.56 72.56 65.10

Per Employee Profit (in INR mn) Ann 0.92 0.79 0.58

EPS (in INR.) FV INR1/- Share 1.54 2.65 4.03

Key business indicators

Key indicators


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CUB has reported strong growth in deposits and advances in the last few years

Advances (INR bn)

25

33

45

56

68

80

0

15

30

45

60

75

90

Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10

Deposits (INR bn)

35

47

64

82

103

115

0

20

40

60

80

100

120


Strong deposit and advances growth

Steady increase in advancesSteady increase in deposits

Deposits - stable and retail oriented. Growing at a

CAGR of 30%

CASA recorded 27% growth for Sep 2010 (YoY)

Advances growing at a CAGR of 29% in the last 5

years; Credit Deposit ratio is sound at 69%

CASA (INR bn)

8

11

1316

22 23

0

5

10

15

20

25


Steady increase in CASA


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PAT (INR Mn)

564

718

1,017

1,221

1,528

1,060

0

300

600

900

1,200

1,500


Strong growth in income and profitability

Other Income (INR Mn)

1,237

1,435

761

600

444

903

300

600

900

1,200

1,500


Net Interest Income (INR Mn)

2,426

2,781

1,962

1,675

1,398

1,998

1,000

1,300

1,600

1,900

2,200

2,500

2,800


Steady increase in net interest income Robust PAT growth

Strong growth in other income

CEB Income (INR Mn)

598

690

455

357

273

480

100

200

300

400

500

600

700


CEB & Charges Income over 5 years

Half year figures (Not Annualised)


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9.86

8.968.74

7.89

6.96

6.08 5.75 5.95

7.23

7.987.73

6.83

15.06

13.75

12.58

11.72

11.36 11.00 10.85 11.32

12.82

13.4613.04

12.44

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sep-10

CoD YoA

Cost of deposits and yield on advances in last 10 years

Cost of deposits & yield on advances

Spread between cost of deposits and yield on advances of our bank maintained in the last 10 years


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Particulars (Rs in Mn) SEP-10 MAR-10 SEP-09

SLR 28,819 25,788 25,661

Non SLR 6,575 6,397 4,257

Total Investments 35,394 32,185 29,918

Yield on Investments 6.6% 6.5% 6.4%

Investments Breakup:

- A F S 4,954 3,928 5,914

- H T M 30,389 28,256 23,959

- H F T 51 0 46

Total Investments 35,394 32,184 29,919

M D AFS 2.86 2.89 2.09

M D HTM 5.81 5.98 6.23

M D HFT 6.46 - 7.15

M D Overall 5.31 5.49 5.30

Investments At a Glance

Investments Breakup and Category wise

In total Non-SLR securities of Rs.6,575 Mns, investment in NABARD RIDF constitutes Rs.5,924 Mns.

Modified Duration for entire investment portfolio is 5.31 only.


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Loans Composition

Amount

(in INR mn)

% to Total

AdvancesConstruction (Comm RealEstate) 3,561 4%

Textiles 8,426 11%

Food Processing 1,390 2%

Iron & Steel 3,760 5%

Paper & Paper products 1,798 2%

Other Metal & MetalProducts 1,332 2%

Other Industries 2,480 3% Textiles, 11%

Iron & Steel, 5%

Food Processing,

2%

Construction, 4%

Paper & Paper

Products, 2%

Other Industries,

3%

Other Metals, 2%

Advances to Major Industries as on 30th September 2010

Loan book Major Industry wise exposure


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Loan book Major Sector wise Exposure & Regulatory Classification

ClassificationAmount

( in INR mn)% to Total Adv

Corporates 27,287 34%

Regulatory Retail 33,656 42%

NBFC 2,411 3%

Other Advances 17,039 21%

Gross Loans Total 80,393

Regulatory Classification of Advances as on 30 th September, 2010

Major SectorAmount

( in INR mn)% to Total Adv

M S M E 25,912 32%

Agriculture 9,401 12%

Large Industries 4,679 6%

Retail Traders 8,043 10%

Wholesale Traders 9,487 12%

Major Sector wise Advances as on 30th September, 2010

SME and trade loans earning higher yields constitute

54%.

Diversified credit portfolio reduces credit risk

Lower ticket size backed by adequate collaterals

Unsecured Advances aggregate to 3% only


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Loan book products composition

Loan Products CombinationAmount

( in INR mn) % to Total Adv

OD/CC and Demand Loans 46,263 58%

Term loans 32,489 40%

Bills Purchased / Discounted 1,641 2%

Gross Loans Total 80,393

Demand

loans

23%

Overdraft/Ca

sh credit

34%

Bills

purchased/di

scounted

2%

Term loans

41%

Working capital loans yielding higher interestconstitute 58% 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

Loan Products composition as September 30, 2010


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Asset quality is showing continuous improvement

Smart improvement in Asset quality over the years; Gross NPA has come down from 5.9% in March 05 to 1.3% in

September 10

Net NPA level brought down to 0.5% in September 10 from 3.4% in March 05

We have a well defined and robust credit appraisal policy and risk management system

Gross NPA & Net NPA - Quantum Gross NPA & Net NPA - %

130.69

112.83

87.07 82.93

102.0893.50

101.11

67.79

49.80

36.2544.46

61.11

39.67 42.79

0

20

40

60

80

100

120

140

Gross NPA Net NPA

Gross NPA 130.69 112.83 87.07 82.93 102.08 93.50 101.11

Net NPA 67.79 49.80 36.25 44.46 61.11 39.67 42.79

2005 2006 2007 2008 2009 2010 Sep-10

5.89%

4.32%

2.58%

1.81% 1.80%

1.36% 1.26%

3.37%

1.95%

1.09% 0.98% 1.08%

0.58% 0.54%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Gross NPA % Net NPA %

Gross NPA % 5.89% 4.32% 2.58% 1.81% 1.80% 1.36% 1.26%

Net NPA % 3.37% 1.95% 1.09% 0.98% 1.08% 0.58% 0.54%

2005 2006 2007 2008 2009 2010 Sep-10

NPA AN ANALYSIS LAST 5 YEARS

d


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Restructured Accounts

Details of Restructured Accounts

No accounts Restructured in the last 5 quarters.

25% of the Restructured amounts already recovered (full cash recovery).

Only 2.9% of restructured accounts turned NPA and no addition from Restructured accounts in the last 5 quarters.

The Restructured accounts are performing well and certain accounts got closed well before the due date. Out of Rs.4843

Mn in Restructured amounts, the amount collected upto September 2010 was Rs.1921 Mn.

Regular repayments received for more than one year in accounts with restructured balance of Rs.1640 Mn.

An amount of Rs.1697 Mn only in the Moratorium period of one year in entire Restructured Accounts.

Balance outstanding on Restructured Accounts as on 30th September 2010 Rs.3337 Mns

R d A


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Restructured Accounts

No .of BorrowersAmount

( in INR mn)

Restructured in I Phase FY 2008-09 213 3,187.9

Restructured in II Phase FY 2009-10 51 1,655.6

Total 264 4,843.5

Out of the above,

Accounts closed till 30.09.2010 699.5

Accounts turned as NPA 142.5

Amounts repaid till 30.09.2010 1221.9

Balance outstanding as at 30.09.2010 3337.0

Details of Restructured Accounts

Out of Rs.3337 Mn, accounts corresponding to Rs.1640 Mn have completed 1 year of principal repayment after

the moratorium period.

Rs.1232 Mn have completed more than 6 to 12 months of principal repayment after the moratorium period.

Rs.401 Mn have completed 6 months of principal repayment after the moratorium period.

Only Rs.64 Mn yet to start principal repayment.

I d E b k Q2 FY 11 V Q2 FY 10


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Income and Expenses break up Q2 FY 11 Vs Q2 FY 10

Particulars Q2 FY 11 Q2 FY 10 % Change March 10

Interestexpended 1,881 1,765 6.6% 6,785

Employee cost 247 224 10.3% 801

Other operatingexp 282 220 28.2% 857

Total expenses 2,410 2,209 9.1% 8,443

Expenses break up


CEB & Charges 244 148 64.9% 690

Treasury Income 24 287 -Ve 458

Others includingSuit Recoveries 172 59 291.5% 260

Total OtherIncome 440 494 - ve 1,435

Other income break up


Interest on Loans 2,292 1,853 23.7% 7,558

Interest onInvestments 603 495 21.8% 1,937

Other Interest Income 26 8 325.0% 71

Total expenses 2,921 2,356 24.0% 9,566

Interest income break up (in INR Mn)

I d E b k H1 FY 11 V H1 FY 10


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Income and Expenses break up H1 FY 11 Vs H1 FY 10

Particulars H1 FY 11 H1 FY 10 % Change March 10

Interestexpended 3,632 3,486 4.2% 6,785

Employee cost 478 405 18.0% 801Other operatingexp 508 388 30.9% 857

Total expenses 4,618 4,279 7.9% 8,443

Expenses break up


CEB & Charges 455 280 162.5% 690

Treasury Income 79 370 -Ve 458

Others includingSuit Recoveries 227 103 220.4% 260

Total OtherIncome 761 753 - ve 1,435

Other income break up


Interest on Loans 4,407 3,694 19.3% 7,558

Interest onInvestments 1,143 917 24.6% 1,937

Other InterestIncome 44 28 57.1% 71

Total expenses 5,594 4,639 20.6% 9,566

Interest income break up (in INR Mn)

I i l ffi i


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Increasing employee efficiency

Profit per Employee (INR Mn)

0.4 0.4

0.5 0.5

0.6

0.8

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8


Business Per Employee (INR Mn)

34.0 35.0

49.9

56.5

65.1

72.6

20

30

40

50

60

70

80


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

Annualised


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City Union Bank Investor Presentation Sep2010

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