Investor Presentation. March 2015 Q4 - FY15

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Griselda Casey
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1 Investor Presentation March 2015 Q4-1

2 IMPORTANT NOTICE 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 Company s general business plans and strategy, its future financial condition and growth prospects, and future developments in its industry and its competitive 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 Company 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 Company and neither any part of it shall form the basis of or be relied upon in connection with any contract or commitment Important Notice whatsoever. The Company may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. This presentation can not be copied and/or disseminated in any manner. 2

3 Strategy: Way Forward Strengthening long-term franchise value with focus on Retail and SME segments Housing loans - key focus segment with centralized processing and faster approvals Creating SME hubs focused on serving the needs of SME clientele Focused on improving asset quality Special cell focused on recovery from NPA accounts Cleaned books through sale of stressed assets to Asset Reconstruction Companies (ARCs) Strengthening deposit franchise Improvement in core deposits CASA expected to improve with concerted efforts at branch level Customer focused technology initiatives Increase in internet, mobile and debit card transactions 3

4 Key Performance Highlights Q4- Item Q4 - (INR mn) Q-o-Q Y-o-Y (INR mn) (INR mn) Y-o-Y Net Interest Income 3, % (4.8%) 13,662 13,988 (2.3%) Other Income 1,219 (24.0%) 26.2% 4,971 3, % Profit After Tax 163 (81.5%) (86.9%) 3,072 5,075 (39.5%) Advances 373, % 3.2% 373, , % Deposits 519, % 9.3% 519, , % GNPA 6,434 (2.7%) 48.7% 6,434 4, % NNPA 3,570 (5.9%) 26.7% 3,570 2, % NIM 2.70% 0.00% (0.32%) 2.70% 3.02% (0.32%) CASA 20.59% (0.92%) (0.10%) 20.59% 20.69% (0.10%) 4

5 Financial performance 5

6 Financial Highlights As at March 2015 Balance Sheet Overview Q4- Q4- Y-o-Y (%) Q3- Q-o-Q (%) Capital & Liabilities Capital % % Reserves and Surplus 3,454 3, % 3, % Deposits 51,912 47, % 48, % Borrowings 2,232 2, % 2, % Other Liabilities & Provisions 1,383 1, % 1, % Total 59,116 54, % 55, % Assets Cash & Balances with RBI 2,442 2, % 2, % Balances with Banks 1,154 1, % 1, % Investments 16,717 14, % 14, % Advances 37,392 36, % 36, % Fixed Assets % % Other Assets % % Total 59,116 54, % 55, % Business (Advances + Deposits) 89,304 83, % 84, % Current Accounts 1,818 1, % 1, % Savings Accounts 8,868 7, % 8, % CASA Ratio 20.59% 20.69% -0.10% 21.51% -0.92% 6

7 Financial Highlights As at March 2015 Profit and Loss Account Q4- Q4- Y-o-Y (%) Growth(%) Net Interest Income % 1,366 1,399-2% Other Income % % Total Income % 1,863 1,767 5% Operating Expenses % 1, % Operating Profit % % Provisions (Ex-Tax) & Contingencies % % Profit Before Tax % % Provision for Tax % % Exceptional Items N/A N/A Profit After Tax % % Other income increased by 34.9% during the year with strong contribution from treasury, forex and ATM usage fees Operating expenses include the impact of additional employee expenses (Rs 52 Cr.) on account of differential due to settlement and actuarial liabilities; amortization of actuarial liabilities has been completed Provisions increased on account of NPA, restructured assets and FITL Exceptional Item refers to reversal of excess depreciation charged till March 31, 2014 (net of taxes) due to change in depreciation method from WDV to SLM 7

8 Key Metrics Annual Particulars FY11 FY12 FY13 Net Interest Margin (NIM) (%) CRAR Basel II (%) RoAA (Annualized) (%) Provision Coverage (%) CASA (%) Gross NPA (%) Net NPA (%) Book Value per Share (Rs.) Earnings per Share (Rs.) Dividend per Share (Rs.)

9 Key Metrics Quarterly Particulars Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Net Interest Margin (NIM) (%) CRAR Basel II (%) RoAA (Annualized) (%) Provision Coverage (%) CASA (%) Gross NPA (%) Net NPA (%) Book Value per Share (Rs.) Earnings per Share (Rs.) Branches - Kerala South India (Ex-Kerala) Rest of India ATMs - Kerala South India (Ex-Kerala) Rest of India

Deposits Breakup of Deposits 11,258 9,579 13,783 10,560 9,326 1,818 1,826 1,859 1,879 8,868 1,888 8,598 8,456 8,382 7,937 23,883 25,668 27,052 28,456 29,968 CASA Ratio (%) 22.1 22.1 21.5 20.7 20.

10 Deposits Breakup of Deposits 11,258 9,579 13,783 10,560 9,326 1,818 1,826 1,859 1,879 8,868 1,888 8,598 8,456 8,382 7,937 23,883 25,668 27,052 28,456 29,968 CASA Ratio (%) Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 NRI Deposits 11,393 10,745 10,252 9,400 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Term Savings Current Others* *Others includes: Bulk, Certificates of Deposits 8,820 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 10

11 Core & Non Core Deposits Deposits Mar-15 Mar-15 Mar-15 40,694 11,218 51,912 21% 18% 9% 33,741 13,750 47,491 Mar-14 Mar-14 Mar-14 Core Deposit Non-Core Deposit Total Deposit Strengthening core deposit franchise for long-term growth CASA Deposits Mar-15 Mar-15 Mar-15 1,818 4% 1,888 8,868 12% 7,937 Mar-14 Mar-14 Mar-14 Current Deposit Savings Deposit Total CASA 10,686 Improved CASA by 9% through concerted 9,825 efforts at the branch level 9% 11

12 Advances: Composition of Loan Book Retail SME Aggregate Loan Book R 8,811 8,374 10,968 7,799 10,215 10,309 7,323 7,388 9,833 9,657 36,998 36,609 37,978 35,871 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Agriculture A 3,739 3,407 3,127 2,994 4,077 Corporate 15,324 13,962 14,356 15,052 15,433 34,692 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 12

Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Kerala franchise providing a strong

13 Advances: Geography wise split Kerala South Ex-Kerala Rest of India 14,766 11,444 13,741 12,880 13,421 13,530 13,542 10,549 12,113 11,621 12,435 12,769 9,742 9,658 9,892 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Mar-14 Jun-14 Sept-14 Dec-14 Mar-15 Kerala franchise providing a strong base with growth in advances led by expansion into other geographies, both in South India (ex-kerala) and Rest of India 13

1,366 FY11 FY12 FY13 FY11 FY12 FY13 Net Profit Net Interest Margin

14 Income & Profit - Annual Net Total Income Net Total Income Net Interest Income 988 1,269 1,616 1,767 1, ,022 1,281 1,399 1,366 FY11 FY12 FY13 FY11 FY12 FY13 Net Profit Net Interest Margin (%) FY11 FY12 FY13 FY11 FY12 FY13 14

Other Income Other Income Other Income Breakup: 497 ForEx 6% Other 9% Transaction 35% 368 335 247 197 FY11 FY12 FY13 Technology 17% Total Other Income (Rs. Cr.

15 Other Income Other Income Other Income Breakup: 497 ForEx 6% Other 9% Transaction 35% FY11 FY12 FY13 Technology 17% Total Other Income (Rs. Cr.): 497 Key Future Initiatives Investment Sale 33% Enhancing treasury income Targeting end-to-end SME business potential Strengthening retail presence Focus on NRI remittances and currency conversion Integrating both domestic and forex treasury 15

16 Break-up of Provisions Particulars Q4- Q4- Q3- For NPA & NPI For Depreciation on Investments For Standard Assets For Restructured Advances/Sacrifices & FITL For Unhedged Forex Exposure Others Taxes Total Provisions Increase in Provisions primarily driven by historical loan book issues: Net shortfall of Rs Cr. in sale of NPA assets to ARCs to be recognized over 2 years Provision of Rs Cr. on account of FITL during the current quarter; amortization of FITL provisioning has been completed 16

17 Operating Efficiency Yields on Advances & Deposits (%) C/I Ratio (%) Cost of Deposits Yield on Advances FY11 FY12 FY13 Average Business per Employee FY11 FY12 FY13 Business per Branch FY11 FY12 FY13 FY11 FY12 FY13 17

18 Non-Performing Assets Gross NPA 1.71% 1.36% 1.11% 1.19% 0.97% FY11 FY12 FY13 Net NPA 0.96% 0.78% 0.78% 0.29% 0.28% NPA management initiatives Special Recovery Cell headed by DGM and staffed by legal team Collection efforts for large ticket NPAs responsible for multiple recoveries over past 6 months Monitoring of restructured loan portfolio Large Asset Monitoring Cell in head office Defocusing from power and infrastructure sectors Granularise Exposure / Spread out risk Shift in focus from large corporates to mid and small enterprises Sole banker or consortium lead as against one bank in a large consortium, leading to better control FY11 FY12 FY13 18

19 Restructured Assets Restructured Assets Rs. In Crore Sectoral Breakup - Standard Restructured Advances 658 1,471 1,505 2,068 Pharma 6% Others* 17% Power 47% FY12 FY13 Construction EPC 30% *Other includes: Agriculture, Service, and Retail 19

Core Capital BASEL II () CRAR Tier I CRAR Tier II 10.5 1.6 BASEL III () CRAR Tier I CRAR Tier II 10.4 1.6 (%) (%) 11.3 11.

20 Core Capital BASEL II () CRAR Tier I CRAR Tier II BASEL III () CRAR Tier I CRAR Tier II (%) (%) FY11 FY12 FY13 CRAR Tier I CRAR Tier II CRAR Tier I CRAR Tier II 20

Returns to Stakeholders Return on Assets Return on Equity (%) (%) 0.89 0.99 1.01 0.92 15.86 18.53 16.72 15.07 0.52 8.

21 Returns to Stakeholders Return on Assets Return on Equity (%) (%) FY11 FY12 FY13 FY11 FY12 FY13 Diluted Earnings per Share Book Value per Share Rs Rs FY11 FY12 FY13 FY11 FY12 FY13 21

Business Focus: Housing Finance Housing Finance Loans Sanctioned 227 132 302 298 Total Housing Loan Book - Annual 1,544 2,106 1,173 1,195 1,238 Jun-14 Sept-14 Dec-14 Mar-15 Number of Home Loans 913

22 Business Focus: Housing Finance Housing Finance Loans Sanctioned Total Housing Loan Book - Annual 1,544 2,106 1,173 1,195 1,238 Jun-14 Sept-14 Dec-14 Mar-15 Number of Home Loans 913 1,374 1,345 1,499 Jun-14 Sept-14 Dec-14 Mar-15 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Housing Finance: Key Initiatives Special retail hub in Cochin to increase focus on housing finance Two more hubs to be set up One in South India and one in North Branch staff being given specific training to market mortgage loans Marketing initiative through TVCs Tailor made products for different segments 22

23 Business Focus: SME SME Loan Book Average SME Loan / Account 6,509 7,287 Rs. Lakhs , ,320 1, Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 SME Loan Book by Geography - Rest of India 20% South (Ex- Kerala) 33% Kerala 47% Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 SME Highlights Dedicated GM appointed to ensure focus and better coordination with regions Focused Green Channel branches to drive faster loan growth to SMEs Target to become banker of choice to SMEs thereby getting other business as well liabilities, vehicle finance, etc. Ongoing training (in house as well as external) 23

Personal Banking: Technology Banking Active Internet Users Internet Transaction Volume Internet Transaction Value (000) s Q1-13 17 24 Q2- Q3-33 Q4-41 Q1- Q2-55 Q3-74 Q4-138 (000) s 277 327 345 364

24 Personal Banking: Technology Banking Active Internet Users Internet Transaction Volume Internet Transaction Value (000) s Q Q2- Q3-33 Q4-41 Q1- Q2-55 Q3-74 Q4-138 (000) s Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q ,4091,467 1,173 1,887 Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Mobile Transaction Volume Mobile Transaction Value (000) s Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4-24

25 Personal Banking: Debit Cards # of Active Debit Cards Debit Card Transaction Volumes millions millions Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Debit Card Transaction Value 4,389 4,187 3,886 3,716 3,514 3,235 4,081 4,518 Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4-25

26 ATM : Branch Network ratio above 1.0x Total Branch Network FY11 FY12 FY13 Total ATM Network No. of Location Branches Kerala 444 South India (Ex-Kerala) 236 Rest of India 142 Total ,000 1,200 FY11 FY12 FY13 26

27 Financial performance - Quarterly 27

28 Income & Profit - Quarterly Net Total Income Net Total Income Net Interest Income Q4- Q1- Q2- Q3- Q4- Net Profit Q4- Q1- Q2- Q3- Q4- Net Interest Margin (%) Q4- Q1- Q2- Q3- Q4- Q4- Q1- Q2- Q3- Q4-28

29 Operating Efficiency Yields on Advances & Deposits C/I Ratio (%) (%) Cost of Deposits Yield on Advances Q4- Q1- Q2- Q3- Q4- Business per Employee Q4- Q1- Q2- Q3- Q4- Business per Branch Q4- Q1- Q2- Q3- Q4- Q4- Q1- Q2- Q3- Q4-29

30 Non Performing Assets Gross NPA Net NPA 1.50% 1.55% 1.80% 1.71% 0.78% 0.91% 0.90% 1.04% 0.96% 1.19% Mar-14 June-14 Sept-14 Dec-14 Mar-15 Mar-14 June-14 Sept-14 Dec-14 Mar-15 Restructured Assets 2,068 1,879 1,938 1,505 1,524 Mar-14 June-14 Sept-14 Dec-14 Mar-15 30

31 Management Profiles Board of Directors Mr. Amitabha Guha Chairman Mr. V.G. Mathew Managing Director & CEO Mr. Mohan E. Alapatt Independent Director Mr. K. Thomas Jacob Independent Director Dr. John Joseph Alapatt Independent Director Mr. Francis Alapatt Independent Director Mr. Salim Gangadharan Independent Director Mr. Cheryan Varkey Non executive Director Mrs. Ranjana Salgaocar - Independent Director Mr. Parayil George John Tharakan Independent Director Key Management Mr. V.G. Mathew Managing Director & CEO Mr. Joseph George Kavalam Senior Vice President (Administration) Mr. Varughese A.G. Senior Vice President (Operations) Mr. Thomas Joseph K Chief General Manager Mr. Gireesh C.P. Chief Financial Officer 31

32 Ownership Profile 32

33 Shareholding Breakup Ownership Profile Major Institutional Shareholders Domestic 5.5% Corp and Banks 13.7% Public 35.2% NRI 5.9% FII 39.7% SL Name of the Shareholder/BO % 1 First Carlyle Ventures Mauritius Life Insurance Corporation of India Yusuffali Musaliam Veettil Abdul Kader CX Securities Limited GKFF Ventures Deutsche Securities Mauritius Limited IVA International Fund Kotak Mahindra (International) Ltd The Pabrai Investment Fund IV, LP Acacia Partners LP 1.85 Strong Institutional Ownership 33

34 Key Strategic Initiatives Strategic Initiative Expand retail business Strengthen SME relationships Description Specific focus on retail loan products like housing loans, vehicle loans Specialized green channel branches for faster processing of retail loans Dedicated retail loan hub at Cochin; to be replicated across the country Significant focus on continuous training of work force Focus on technology initiatives such as mobile and internet banking Investment in brand building Mammootty as Brand Ambassador Cluster based approach targeting SMEs in industry hubs Be the banker of choice for SME clients across advances, liabilities, services Dedicated GM to coordinate SME banking initiatives across regions Enhance asset quality Special recovery cell for monitoring non performing and restructured assets Cautious approach on large corporate lending; Granularize loan portfolio to spread out risk CASA improvement Central processingunit for liabilitybookingto ease load on branches Specific targets and initiatives for CASA Enhance operating efficiency Improve share of other income Optimize business per branch through centralized support services in account opening, retail loan processing, etc. Focus on treasury, exchange and other services for SME, retail and NRI clients Enhance treasury capabilities and increase bench strength Expand POS/ATM network 34

35 10-Year Financial Performance 35

36 10-Year Balance Sheet Balance Sheet FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05 CAGR (%) Capital & Liabilities Capital Reserves and Surplus ,234 2,870 2,054 1,732 1,372 1,191 1, Deposits 51,912 47,491 44,262 36,501 29,721 23,012 18,092 15,156 12,239 9,579 8, Borrowings 2,232 2,731 1, Other Liabs. & Provisions 1,383 1,396 1,245 1, Total 59,116 54,986 49,795 40,370 32,820 25,534 20,384 17,090 13,653 10,827 9, Assets Cash & Balances with RBI 2,442 2,201 1,697 1,572 1,828 1, Balances with Banks 1,154 1,017 2,639 1, , , Investments 16,717 14,352 12,523 9,400 8,924 7,156 6,075 4,572 3,430 2,739 3, Advances 37,392 36,230 31,816 27,281 20,489 15,823 11,852 10,454 7,919 6,370 5, Fixed Assets Other Assets Total 59,116 54,986 49,795 40,370 32,820 25,534 20,384 17,090 13,653 10,827 9, Business (Advances + Deposits) 89,304 83,721 76,078 63,781 50,210 38,834 29,944 25,610 20,158 15,949 13,

37 10-Year P&L CAGR FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05 (%) Net Interest Income 1,366 1,399 1,281 1, % Other Income % Total Income 1,863 1,767 1,616 1, % Operating Expenses 1, % Operating Profit % Provisions & Contingencies % Profit Before Tax % Provision for Tax % Exceptional Items Profit After Tax % 37

38 10-Year Business and Financial Metrics Key Performance Highlights FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05 Net Interest Margin (%) CRAR Basel II (%)** RoAA (Annualized) (%) Provision Coverage (%) CASA (%) Gross NPA (%) Net NPA (%) Book Value per Share (Rs.) Earnings per Share (Rs.) Dividend per Share (Rs.) NIL Branches - Kerala South Ex-Kerala Others (Rest of India) ATMs - Kerala South Ex-Kerala Others (Rest of India) * PCR without considering technical/prudential write-off. ** Values from FY05-FY08 pertain to CRAR as per Basel I 38

39 Awards and Recognitions SIB wins 'Best IT Team Award Banking Technology Excellence Award SIB wins Banking Frontiers Inspiring Work Places Award 39

Investor Presentation March-2014

Investor Presentation March-2014 1 IMPORTANT NOTICE No representation or warranty, express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness