City Union Bank Investor Presentation Final

Investor Presentation – August 2010


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 bank’s general business plan’s 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 bank’s 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.


Table of contents
City Union Bank – Overview & Growth Story

4-11

1.
Ownership Pattern

12-14

Management

15-18

4.

Financial Performance

19-32

5.

Strategy

36-37

6.

Recognitions

38-40

2.
3.


1. City Union Bank – Overview & Growth Story

4


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 > 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

5


Key milestones

2003
Obtained licenses to act as a
agent for procuring life
insurance & general
insurance business

1998

2009

Initial Public Offering (IPO);
Listing Bank’s shares on the

BSE, NSE & MSE

Rights issue for equity
shares @ 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 bank’s 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

6


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
No of
Branches

Statewise %
of Branches

% of our
Business

Tamil Nadu

139

63

73

Andhra Pradesh

29

13

9

Karnataka

15

7

6

Maharashtra

12

5

6

Kerala

10

5

2

Gujarat

6

3

1

Others

11

5

3

Total

222

100

100

State

7

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
Tier I & II
centres

Tier III to VI
centres

Tamil Nadu

20

22

Andhra Pradesh

5

Karnataka

5

Maharashtra

4

Chattishgarh

1

New Delhi

2

Orissa

1

Punjab

1

Uttar Pradesh

1

State

Total

40

22

8

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

9


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

10


Offering the best of both worlds and more
Old private sector banks

New private sector banks
Flexibility to enter adjacent markets and

Perception of Poor asset quality

businesses
High proportion of retail deposits – low CASA
Diversified product portfolio
Relative size of asset base

High operating expenses

High cost of funds

High % of fee income

Strong growth

Operating efficiencies

Asset quality

Large branch network

High ROA

Strong customer base

Technology savvy

Focused approach towards SME’s
Plans to open branches in Tier II and Tier III cities
Experienced management team

11


2. Ownership Pattern

12


A well diversified investor base
Major shareholders as on 30th June 2010

Ownership profile as on 30th June 2010

Shareholders
L & T Capital Holdings

4.79

LIC of India

4.68

Nederlandse Financierings

4.68

Ares Investments

3.90

Integrated Enterprises (I) Ltd.

3.90

Argonaut Ventures

3.66

Acacia Partners Lp.

3.04

Alpha Systems Pvt Ltd

2.59

GMO Emerging Illiquid Fund

1.75

Karur Vysya Bank

1.51

 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

13

% holding


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.

14


3. Management

15


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

16


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
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, He holds a Master degree in Mathematics, CAIIB and PGDFM and has 38 years of experience in the banking
MD & CEO
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, in 2009 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. V.Jayaraman,
Director

A Post Graduate in Statistics and an agriculturist he has been on the board since 2002. He joined the Indian
Revenue Service in July 1963 and held various posts in the Income Tax Department. He was on deputation to

the Ministry of Home Affairs, New Delhi. He was the Chairman of Banking Service Recruitment Board, Southern
Region as well as an Insurance Ombudsman, Southern Region

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

17


A well experienced and strong Board

(2/2)

Profile of Board of Directors
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. M Naganathan,
Director

He is a graduate in Commerce and a Fellow Member of Institute of Chartered Accountants of India. He has
been on the board since 2008 and is a senior partner in M/s. Price Patt & Co., Chartered Accountants,
Chennai.

Mr. R.G. Chandramogan, He is the Chairman & Managing Director of Hatsun Agro Product Limited. He has been in the dairy processing
Director
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 in
the 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.

18


4. Financial Performance

19


FY10 performance – A snapshot
FY 10 performance
Particulars

FY 2009-10
(in INR mn)

FY 2008-09
( in INR mn)

Absolute
Growth

% Growth

Deposits

102,845.9

82,066.2

20,779.7

25.3%

Advances

68,967.1

56,862.2

12,104.9

21.3%

171,812.9

138,928.4

32,884.5

23.6%

Gross NPA – Qtm

935.0

1020.8

-85.8

Net NPA – Qtm

396.7

611.1

-214.4

Gross NPA

1.36%

1.80%

Net NPA

0.58%

1.08%

Total Business

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%

20

Direction


FY10 performance – A snapshot
FY 10 performance
Particulars
Total Business

FY 2009-10
( in INR mn)

FY 2008-09
( in INR mn)

Absolute
Growth

% Growth

171,812.9

138,928.4

32,884.5

23.7%

Net Interest Income

2,781.4

2,425.7

355.7

14.7%

Other Income

1,435.0

1,236.8

198.2

16.0%

Operating Exp

1,658.5

1,395.3

263.2

18.9%

Operating Profit

2,557.9

2,267.2

290.7

12.8%

Net Profit

1,527.6

1,221.3

306.3

25.1%

CRAR – Basel II

13.46%

12.69%

-

-

Core CRAR – Tier I

12.41%

11.48%

-

-

Provision Coverage Ratio

70.27%

53.23%

-

-

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

21

Direction


Key business indicators
Key indicators
Particulars

FY 2009-10

Cost of Deposits

FY 2008-09

7.73%

7.98%

13.04%

13.46%

Return on Investments

7.84%

8.58%

Net Interest Margin

3.15%

3.49%

Cost to Income

39.33%

38.10%

Operating Exp - as a % of NII

59.63%

57.52%

1.52%

1.50%

20.55%

18.48%

65.10

56.51

Per Employee Profit (in INR mn)

0.58

0.50

EPS (in INR.) – FV INR1/- Share

4.03

3.23

Yield on Advances

Return on Assets (ROA)
Return on Net worth (RONW)
Per Employee Business ( in INR mn)

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

22

Direction


Q1 FY11 performance – A snapshot
Financial Performance – Q1 FY 11 Vs Q1 FY 10
Particulars

Q1 FY 11
( in INR mn)

Q1 FY 10
( in INR mn)

Absolute
Growth

% Growth

Deposits

106,096.5

83,767.2

22,329.3

26.6%

Advances

72,096.6

55,366.5

16,730.1

30.2%

178,193.1

139,133.7

39,059.4

28.1%

21,672.4

15,234.0

6,438.4

42.3%

Gross NPA

934.4

1087.2

-152.8

Net NPA

389.2

798.5

-409.3

Gross NPA (%)

1.30%

1.96%

Net NPA (%)

0.54%

1.45%

Return on Assets

1.52%

1.32%

Net Interest Margin

3.56%

2.79%

Total Business
CASA

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%

23

Direction


Q1 FY11 performance – A snapshot
Financial Performance – Q1 FY 11 Vs Q1 FY 10
Particulars

Q1 FY 11
( in INR mn)

Q1 FY 10
( in INR mn)

Absolute

Growth

% Growth

Net Interest Income

921.7

562.7

359.0

63.8%

Other Income

321.2

259.4

61.8

23.8%

Operating Exp

456.9

349.6

107.3

30.7%

Operating Profit

786.1

472.5

313.6

66.4%

Net Profit

443.7

315.4

128.3

40.7%

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

24

Direction


Strong deposit and advances growth
Steady increase in deposits

Steady increase in advances

– 30%
CAGR

– 27%
CAGR

Steady increase in CASA
 Advances has been growing steady at a CAGR of
27% in the last 5 years; Credit Deposit ratio is

– 27%
CAGR

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%.

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

25