PRESS RELEASE Unaudited (Reviewed) Financial Results For the period ended 31 st December, 2007 ( Nine Months 2007-08) Net Profit at Rs. 248.79 Crs. by 57.69% Return on Assets (annualized) by 24 bps at 1.00 % Earning Per Share (EPS) at Rs.8.67 (not annualized) ( Q 3 2007-08) Net Profit at Rs. 101.07 Crs. by 43.30% Return on Assets (annualized) by 19 bps at 1.17 % Earning Per Share (EPS) at Rs.3.52 (not annualized) Page 1 of 13
(December 2007 {YoY}) Capital Adequacy Ratio at 11.26% Deposits by 20.80%; Gross Credit by 23.53% Business Mix by 21.90% Demand Deposits / Aggregate Deposits (CASA) at 41.69 % Net Interest Income (NII) by 5.18 % Gross NPA Ratio by 190 bps at 3.09 % Net NPA Ratio by 106 bps at 1.41% Page 2 of 13
HIGHLIGHTS Business Mix Rs. 52095 Cr Up by 21.90 %; Total Deposits up by 20.80 % at Rs. 30839 Crs; Gross Credit up 23.53% at Rs. 21255 Crs; Retail Credit up by 27.70 % SME Credit up by 20.31 %; Agriculture Credit up by 27.70 %; Interest Income up by 28.47 % ; Interest Income on Advances up by 41.51 %; Cost of Deposits up by 101 bps at 5.83 %; Yield on Advances up by 173 bps at 10.21 %; Yield on Funds improved by 71 bps at 8.43%; Coverage Ratio at 2.95% up from 2.02 %; Business Per Employee up from Rs. 4.26 Crs to Rs. 5.34 Crs Business Per Branch up from Rs. 41.73 Crs to Rs. 49.90 Crs Page 3 of 13
Performance in Brief The Board of Directors met on 23rd January, 2008 and declared the un-audited reviewed Financial Results for the quarter ended on 31 st December, 2007, of the Bank. (Rs. in crore) Particulars Dec 2006 (Q) Dec 2007 (Q) % Variation w.r.t. Dec 2006 Total Income 685.89 804.13 17.24% Interest Income 530.14 685.02 29.21% on advances 356.72 495.51 38.91% on Investment 167.74 186.13 10.96% on others 5.68 3.38-40.49% Non Interest Income 155.75 119.11-23.52% Profit on Sale of investment 12.62 37.82 199.68% Total Expenses 477.59 637.47 33.48% Interest Expenses 320.35 470.74 46.95% on Deposits 298.46 446.93 49.75% on others 21.89 23.81 8.77% Operating Expenses 157.24 166.73 6.04% Staff expenses 99.88 96.20-3.68% Others 57.36 70.53 22.96% Net Interest Income 209.79 214.28 2.14% Operating Profit 208.30 166.66-19.99% Operating Profit excl. profit on sale of NPA 138.63 166.66 20.22% Provisions 137.77 65.59-52.39% Net Profit 70.53 101.07 43.30% 1. PROFIT GROWTH Net Profit recorded a rise of 43.30 %, up from Rs. 70.53 Crs recorded in the corresponding quarter of the previous year, to Rs101.07 Crs for the quarter under review; Net profit for Nine Months ended Dec 07, however, recorded a quantum increase of 57.69 % up from Rs157.77 Crs to Rs. 248.79 Crs; 120.00 100.00 80.00 60.00 40.00 20.00 0.00 Quarterly 101.07 70.53 43.80 Dec.06 Mar'07 Dec.07 Net Profit Operating Profit for the quarter declined by 19.99 % (YoY) basis, from Rs. 208.30 Crs for the corresponding quarter in the previous year to Rs. 166.66 Crs, for the quarter ended Dec 07; Operating profit excluding said profit from sale on NPA assets during December 06 quarter was Rs.138.63 crore and accounting for the same, the operating profit has increased by 20.22% during the quarter. (Rs. in Crores) 250 200 150 100 Quarterly 208.3 140.09 166.66 Dec.06 Mar.07 Dec.07 Operating Profit Page 4 of 13
2. CAPITAL ADEQUACY RATIO Capital Adequacy Ratio stood at 11.26% despite increase in total risk weighted assets to the tune of 25.95% visà-vis Dec 06; Tier I Capital increased by Rs. 440.38 Crs and stood at Rs. 1454.31 Crs as compared to Rs. 1013.93 Crs as on Dec 06; Tier I CRAR also improved by 86 bps up from 6.19 % as of Dec 06 to 7.05 % as at the end of the quarter under review; 3. BUSINESS GROWTH 12.00% 11.00% 10.00% 12.04% 11.26% 11.52% 11.47% 31.12.06 31.03.07 30.09.07 31.12.07 Capital Adequacy Business Mix improved by 21.90% to Rs. 52095 Crs as at the end of the quarter under review, from Rs. 42735 Crs achieved as on Dec 06; Total Deposits increased by 20.80% to Rs. 30839 Crs as at the end of the quarter under review as against Rs. 25528 Crs as on Dec 06; Aggregate deposits though recorded a higher growth of 21.65% over the same period; 48000 45500 43000 40500 38000 Rs. crore 42735 45189 48509 52095 Dec-06 Mar-07 Sep-07 Dec-07 Business Mix Low-cost deposits constituted 41.69 % of the Aggregate Deposits; Gross Advances recorded a growth of 23.53 % (YoY) and stood at Rs. 21255 Crs as against Rs.17206 Crs as at the end of Dec 06; Average advances also recorded a growth of 17.51% over the same period; The Credit Deposit Ratio stood at 68.92%, marginally higher than 67.40 % as at the end of Dec 06; Retail Credit increased by Rs. 905 Crs to Rs. 4173 cr as at 31.12.207 from Rs. 3268 cr as on 31.12.06, representing a growth of 27.70%. Retail Credit constituted 19.63% of the Gross Credit; Outstanding Agriculture Credit increased by 16.63 % and stood at Rs. 2639 Crs as against Rs. 2200 Crs as on March 07; Priority Sector advances increased by 17.12% from Rs.6662 Crs as on March 2007 to Rs. 8039 cr as at the end of the quarter under review and constituted 43.03% of Net Bank Credit, as per revised norms of RBI; Page 5 of 13
SME Credit increased from Rs. 2959 Crs as on Dec 06 to Rs. 3560 Crs as at the end of quarter under review, representing a growth of 20.31%. SME Credit constituted 16.89% of Gross Credit 4. ASSET QUALITY Gross NPA of the Bank declined by 23.41% to 6.00% 5.00% 4.99% Rs.657.01 Crs as at the 3.58% end of the quarter, as 4.00% compared to Rs. 857.83 3.00% 2.47% 3.98% Crs as on Dec 06; The 3.09% 1.56% 2.00% Gross NPA Ratio 1.99% 1.41% declined by 190bps from 1.00% 4.99 % as on Dec 06 to 31.12.06 31.03.07 30.09.07 31.12.07 3.09 % as at the end of the quarter under review; Gross NPA to Gross Advances Net NPS to Net Advances Net NPA declined by 29.11% to Rs. 293.76 Crs as at the end of the quarter as compared to Rs. 414.39 Crs as on Dec 06; The Net NPA Ratio declined by 106 bps from 2.47 % as of Dec 06 to 1.41% as at the end of the quarter under review; Upgradations contributed an improvement of asset quality, rising from Rs. 8.03 Crs posted during the corresponding period in the previous year to Rs 9.73 crs during the quarter ended Dec 07; Cash Recoveries of Rs. 42.13 Crs were effected during the quarter as compared to Rs. 66.16 Crs recovered during the corresponding quarter in the previous year; Slippages were lower at Rs. 81.61 Crs during the quarter under review as against Rs. 126.96 Crs recorded in the corresponding period in the previous year; Provision coverage of NPA moved up and stood at 54.71 % as compared to 51.04 % as at the end of Dec 06; 5. EARNINGS ANALYSIS Total income for the quarter ended Dec 07 expanded by 17.24 % to Rs.804.13 Crs, as compared to Rs. 685.89 Crs posted during the corresponding quarter in the previous year; Interest Income recorded a growth of 29.21 % during the quarter under review and stood at Rs. 685.02 Crs as compared to Rs. 530.14 Crs posted in the corresponding quarter in the previous year; Interest Income on advances (IIA) increased by 38.91 % to Rs. 495.51 Crs during the quarter as compared to Rs356.72 Crs for the corresponding quarter in the previous year; The IIA though increased higher by 41.51% for the nine months ended Dec 07 and stood at Rs. 1408.15 Crs as against Rs. 995.07 Crs recorded in the corresponding period of the previous year; Page 6 of 13
Interest Expenses increased by 46.95 % to Rs. 470.74 Crs for the quarter under review as compared to Rs. 320.35 Crs incurred during the corresponding quarter in the previous year; The rise is mainly due to increased amount of interest on borrowings (sub debt) and continued higher level of interest on deposits; Interest expenditure on deposits increased by 49.75% to Rs.446.93 Cr during the quarter as compared to Rs. 298.46 Cr. incurred during the corresponding period in the previous year; The Net Interest Income posted a growth of 2.14 %, increasing from Rs. 209.79 Crs posted in the corresponding period in the previous year to Rs. 214.28 Crs during the quarter under review; The growth remained subdued mainly due to increased interest expenses (borrowings & term deposits) and bank s increased exposure to other investments viz. Mutual funds & equity etc. during the quarter; Non-Interest Income decreased by 23.52 % to Rs.119.11 Crs as compared to Rs. 155.75 Crs posted during the corresponding quarter in the previous year; The decrease is mainly attributed to profit on sale of NPA assets of Rs. 69.66 crs in the quarter ended Dec 06 which is not there in current quarter. Otherwise, Non Interest Income has risen by 38.36%; Operating Expenses marginally increased by 6.04 % during the quarter and were at Rs. 166.73 Crs as compared to Rs. 157.24 Crs for the corresponding quarter in the previous year; 6. RATIO ANALYSIS Cost of Deposits (CoD) increased by 114 bps and stood at 6.00% for the quarter under review as compared to 4.86 % for the corresponding quarter in the previous year; the increase in the CoD is attributed to prevailing market conditions; 6.76% 5.51% 4.25% 3.00% 4.86% 5.09% 6.00% Dec-06 Mar-07 Dec-07 Cos of Deposit (Q) Yield on Advances (YoA) increased impressively by 145 bps to 10.18 % for the quarter as compared to 8.73 % recorded during the corresponding quarter in the previous year; 11.00% 10.00% 9.00% 8.00% 8.71% 9.13% 10.18% Dec-06[Q] Mar-07[Q] Dec-07[Q] Yield on Advances Linear (Yield on Advances) Yield on Investments for the quarter decreased by 48 bps to 6.79% as compared to 7.27% posted during the corresponding quarter in the previous year; Interest Spread to Avg. Working Funds was lower by 43 bps to 2.48 % for the quarter as compared to 2.91 % achieved during the corresponding quarter in the previous year; Page 7 of 13
Net Interest Margin was lower at 2.78 % as compared to 3.15 % during the corresponding quarter in the previous year; Return on Average Assets (annualised) for the quarter was higher by 19 bps and stood at 1.17 % as compared to 0.98 % posted during the corresponding quarter in the previous year; 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 1.17% 0.98% 0.71% Dec-06[Q] Mar-07[FY] Dec-07[Q] Coverage Ratio for the quarter reflected Return on Average Assets a marked improvement to 2.95 % as compared to 2.02 % achieved during the corresponding quarter in the previous year; Earning Per share (not annualized) further improved to Rs. 3.52 as compared to Rs. 2.46 for the corresponding quarter in the previous year; Book Value Per Share (including EPS (not annualised) Revaluation Reserve) improved by Rs.10.58 and stood at Rs.54.85 as at the end of the quarter as compared to Rs. 44.27 as on Dec 06; Book Value Per Share (excluding Revaluation Reserve) improved by Rs.11.00 and stood at Rs.46.35 as at the end of the quarter as compared to Rs. 35.35 as on Dec 06; 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2.46 1.53 3.52 Dec-06[Q] Mar-07[Q] Dec-07[Q] Business mix per branch improved by 19.57 % and stood at Rs. 49.90 Crs as compared to Rs. 41.73 Crs as at the end of Dec 06; Profit per Branch (annualized) improved impressively by 40.56 % and stood at Rs. 38.72 lacs as compared to Rs. 27.55 lacs for the corresponding quarter in the previous year; Page 8 of 13
NEW INITIATIVES AND THRUST Expanding Outreach : 4 New Branches were opened during the quarter, taking the total to 1143. The Bank now has a presence encompassing 21 states and 4 U.Ts; No of ISO certified branches increased to 287, up from 225 as on March 2007; Technology: CBS launched in March 07 with Data centre at Bank s owned premises in Mumbai; Disaster recovery site at Bangalore also made operational; 15 more branches rolled out under Dena Garima, Bank s Core Banking Initiative during the quarter, taking the tally to 54. 11 New ATMs installed during the quarter, including taking the total tally to 288. All the Branches of the Bank are Computerized and 98.5 % of Bank s business is conducted through technology based solutions; Recognizing the importance of communication infrastructure in the Bank s drive towards transformation through technology, the Bank has set up its own network DENANET using 635 leased lines, 253 ISDN lines, 127 V-SATs and 608 Dial up lines connecting 1034 branches and 34 administrative offices; DENANET is continuously being monitored on 24x7 basis by a facility management team for ensuring more than 99 % uptime; The Bank has ATM sharing arrangement with SBI, Corpn. Bank and through CASHTREE, VISA, CASHNET & NFS tie ups, enabling more than 15000 ATM access points & more than 3.20 lacs Merchant Establishments (MEs) in India and more than 1 million ATMs & 24 million MEs abroad, to bank s customers; Intl. Debit/ATM Card base at 5.6 lacs; The Bank has signed an MoU with Indian Railways for installation of 117 ATMs & 78 Kiosks at Railway Stations for dispensation of Railway tickets, e-tickets, monthly / quarterly tickets, PRS / UTS tickets, besides offering other normal services; Dena E-Tax Pay, an on-line payment system for Central Excise & Service Tax through Internet introduced by the Bank; Facility getting extended beyond Mumbai and expected to cover 400 branches by the end of current financial year; The bank has a number of value added services over the ATMs viz. Mobile Pre-paid Top up and Post-paid Bill payment; Debit card customers can also pay taxes through Internet; The Bank is offering host of other techno enabled products viz. Mobile banking, Internet Banking and RTGS/NEFT etc. Page 9 of 13
Human Resources Development Undertaken major initiative on building Leadership Skills across cadres, including Top Management; Engaged the services of a consultant of repute to advise on the strategies for repositioning of the Bank; Customer-centric grooming of its frontline staff at the branches. Incentives for Star Performers granting membership to prestigious Chairman s / Executive Director s Clubs Fresh Recruitment of 572 officers under various streams viz. Credit, IT, Marketing, HR and Legal etc.; Augmenting Resources: Major thrust on low cost deposits; Value added products Two new schemes launched Dena Recurring Depositors Insurance Scheme; Dena Tractor Borrowers Life Insurance Scheme; 209 Branches identified for giving major push to Business Growth; 200 Rural Branches identified for focused attention on Agriculture lending; Garnering Fee Based Income: A separate marketing cell has been created at Corporate Office for selling of third party products viz. Bancassurance & Mutual Funds etc.; Creating a strong cadre of IRDA / AMFI certified staff, through rigorous trainings, incentives for acquiring qualification; 3 new tie ups with leading Mutual funds viz. SBI mutual, Tata Mutual, Birla Sun-life increasing the tally in the basket to 11; Recently tied up with ECGC for selling of their products. Tie up arrangement with LIC for selling Life Insurance Products and entered into a referral arrangement with Oriental Insurance for Nonlife products; Launched a Special Insurance Campaign; 66 more branches of the Bank declared as Bima Bank by LIC during the quarter, taking the total to 81. All the 45 branches of Lucknow Region declared Bima Bank. A separate cell for Govt Business at Corporate Office hassle free service to the customers; quicker processing of information / remittances; Exploring for collection of Sales Tax / VAT for the States of Delhi & Chhatisgarh; Page 10 of 13
Facility of franking of stamps, beyond Mumbai, at 11 more branches at New Delhi and in the state of Rajasthan; Priority Lending : Tied up with India Post, Maharashtra Circle as Business facilitator - enabling provision of Rural farm / non-farm Credit (production / investment Credit) for agriculture operations, composite loans for rural artisans & craftsmen, loans for settling up of business units and issue of General Credit Cards etc.; 68 identified Branches catering to the specific needs of SME; Help desks for SMEs established at all Regional Offices of the Bank for counseling / guiding the entrepreneurs on their projects and availing bank finance; Special Schemes for MSME Sector e.g. Rice / Daal Mills, Channel Financing, Cotton Ginning & Pressing Units. Tied up with SIDBI for joint financing and with SMERA, CRISIL & CARE for credit rating of SME Units at concessional rates. Dena Mitra : Credit Counseling Centre o o Two more Centres established in Gujarat; plans to open 2 more shortly to take the tally to 5; To provide guidance, clarification & value education to distressed farmers & other rural borrowers; Collaborated with Gujarat Green Revolution Co Ltd. o promoting lending under Micro Irrigation Scheme Drip & Sprinkler Irrigation; Dena Swachha Gram Yojna : o to provide collateral free finance for construction of Toilets / Bathrooms in rural areas; Dena Paryavaran Suraksha Yojna : o to finance auto-rickshaw owners for acquiring / fitting CNG / LPG gas kit in old auto rickshaws; Scheme for financing Harvesters & Transporters linked with Sugar Factories: o Pre-seasonal finance, for repairs of Vehicles / Tools; Special schemes under Dairy financing linked with AMUL / Societies with assured backward & forward linkages; Dena Tax Preparers Scheme financing Tax Preparers; All eligible distressed farmers extended financial assistance at the branches under identified districts; Page 11 of 13
Asset Quality : Effective Credit Monitoring Mechanism to consistently maintain and improve asset quality and prevent delinquencies; Aggressive efforts on Recovery in NPAs & Written off A/cs through action under SAFAESI & One Time Settlements 2 nd tranche of Sale of NPAs envisaged Major initiative in skill building of staff with regard to - Income Recognition Norms / Negotiation / Implementation of OTS policy; Region wise intensified recovery campaigns with the presence of Senior Executives from Corporate office; NPAs of Rs. 10 lacs and above accounts allotted to officers at Corporate office for follow up being monitored by CMD at weekly intervals; Retail Lending : Greater thrust on due diligence of Builders / verification of assets; Other Initiatives: NRI Service Desk established at International Division, Mumbai to address queries / grievances of NRIs / Branches; Handbook on International Banking Services published to facilitate exporters / importers on the services offered by the Bank; Inward remittances facilitated from UK under Rupee Draft Drawing arrangement with UAE Exchange Centre LLC, Abu Dhabi; Corporate Social Responsibility: Association with National Innovation Foundation - Pro-actively promoting the Innovators with need based & collateral free financing; Dena Shiksha Protsahan Yojna : The Bank continues to sponsor One Girl Child at each of the villages in its command area of operation in the state of Gujarat, for pursuing secondary education; Training to farmers; facilitating formation of farmers clubs; The Bank has adopted 51 villages in the State of Gujarat for all round development; Bank has sponsored 2 RUDSETIs at Mehsana & Bhuj in the state of Gujarat to provide training to rural youth and women enabling them acquire skills for self employment; 2500 rural youth trained so far; Road Map ahead: 39 more branches to be opened during the current year licenses approved by RBI; 140 Branches are planned to be covered under Dena Garima (CBS) during FY 2007-08; Page 12 of 13
The Bank intends to make the Call Centre operationlised in the course of implementation of Core Banking, to facilitate the bank s customers; To expand outreach and facilitate rural centres with a greater number of bio-metric ATMs; Shoring up Non-interest income by: Exploring for entering into; non-life insurance business; wealth management services; expanding depository services at multiple locations; Sale of 3 rd party products, Exchange houses etc.. Bank continues to lay focus on credit to productive sectors of the economy viz. SME, Manufacturing and Agriculture etc.; Committed to reposition itself as a robust medium sized Bank with strong fundamentals. Page 13 of 13