Investor Presentation – November 2010
Disclaimer
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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
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Table of contents
1.
City Union Bank – Overview & Growth Story
2.
Ownership Pattern
3.
Management
11-14
4.
Financial Performance
15-33
4-8
9-10
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 2% and 27% respectively for Q2 2010-11, 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 – 0.54% for Sep 2010 and PCR > 70%
Well capitalized; CAR – Basel II – 13.41% as on September 30, 2010
Future plans for expansion of branch network to 500 Branches in next 3 years
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 229 branches of which 200 branches are located in South India and 146 in Tamil Nadu alone
State wise branches
No of
Branches
Statewise %
of Branches
% of our
Business
Tamil Nadu
146
64
71
Andhra Pradesh
29
13
9
Karnataka
15
7
6
Maharashtra
12
5
7
Kerala
10
4
2
Gujarat
6
2
1
Others
11
5
4
Total
229
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 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.
State wise Branch Expansion planned
Tier I & II
centres
Tier 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
State
Total
36
19
8
2. Ownership Pattern
9
A well diversified investor base
Ownership profile as on 30th September 2010
Major Institutional shareholders as on 30th September 2010
Shareholders
Others
0.4%
Public
56.6%
FII's
23.1%
Domestic
Institution
6.5%
Corp. Bodies
13.4%
% 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
 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
 Chairman’s Group holding reduces to 9.42%
10
3. Management
11
Transparent ‘Corporate Governance’ practices
All directors are Independent and Professional directors
Various sub-committees of Board functions to oversee the operations of the Bank
Code of conduct for directors and senior management put in place
Disclosure norms strictly adhered to
KYC / AML norms strictly complied with. No penalties / fines for any violation.
12
A well experienced and strong Board
(1/2)
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
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. 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
13
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. 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.
14
4. Financial Performance
15
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 Bank’s 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).
16
30th September 2010 performance – A snapshot
Financial Performance – 30th September 2010 Vs 30th September 2009
Particulars
SEP 2010
( in INR mn)
SEP 2009
( in INR mn)
Absolute
Growth
%
Growth
Direction
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
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
1,011
1,154
-143
935
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%
PCR
72.44%
53.51%
71.56%
Total Business
Gross NPA
Net NPA
17
Q2 FY11 performance – A snapshot
Financial Performance – Q2 FY 11 Vs Q2 FY 10
Particulars
Q2 FY 11
( in INR mn)
Net Interest Income
Q2 FY 10
( in INR mn)
Absolute
Growth
% Growth
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%
ROA
1.98%
1.86%
ROE
27.31%
25.58%
Key highlights
 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.
18
Direction
H1 FY11 performance – A snapshot
Financial Performance – H1 FY 11 Vs H1 FY 10
Particulars
H1 FY 11
( in INR mn)
Net Interest Income
H1 FY 10
( in INR mn)
Absolute
Growth
% Growth
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%
ROA
1.75%
1.60%
ROE
24.09%
22.10%
Key highlights
 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%
19
Direction
Key business indicators
Key indicators
Particulars
Cost of Deposits
Q2 FY 2010-11
H1 FY 2010-11
Direction
FY 2009-10
6.84%
6.83%
7.73%
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%
1.98%
1.75%
1.52%
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
Yield on Advances
Return on Assets (ROA)
Return on Net worth (RONW)
20
Strong deposit and advances growth
Steady increase in deposits
Steady increase in advances
Deposits (INR bn)
115
120
90
103
100
68
56
60
64
60
80
75
82
80
40
Advances (INR bn)
45
45
47
35
30
20
25
33
15
0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
0
Sep-10
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Sep-10
Steady increase in CASA
 Deposits - stable and retail oriented. Growing at a
CASA (INR bn)
25
22
CAGR of 30%
23
 CASA recorded 27% growth for Sep 2010 (YoY)
20
15
10
11
13
16
 Advances growing at a CAGR of 29% in the last 5
8
years; Credit Deposit ratio is sound at 69%
5
0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Sep-10
CUB has reported strong growth in deposits and advances in the last few years
21
Strong growth in income and profitability
Strong growth in other income
CEB & Charges Income over 5 years
Other Income (INR Mn)
CEB Income (INR Mn)
1,435
1,500
1,237
600
598
600
1,200
480
500
903
900
690
700
357
400
761
600
273
300
444
200
300
100
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Sep-10
Mar-06
Steady increase in net interest income
Mar-07
Mar-08
Mar-09
1,528
1,500
2,426
2,500
1,221
1,200
2,200
1,998
1,900
Sep-10
PAT (INR Mn)
2,781
2,800
Mar-10
Robust PAT growth
Net Interest Income (INR Mn)
1,600
455
1,962
900
1,675
600
1,398
1,060
1,017
718
564
300
1,300
1,000
Mar-06
Mar-07
Mar-08
Mar-09
Half year figures (Not Annualised)
Mar-10
0
Sep-10
Mar-06
22
Mar-07
Mar-08
Mar-09
Mar-10
Sep-10
Cost of deposits & yield on advances
Cost of deposits and yield on advances in last 10 years
YoA
CoD
16.0
15.06
14.0
13.75
13.46
12.82
12.58
12.0
10.0
11.72
11.36
11.00
10.85
13.04
12.44
11.32
9.86
8.96
8.74
8.0
7.98
7.89
6.96
6.08
6.0
7.73
7.23
5.75
6.83
5.95
4.0
2000
2001
2002
2003
2004
2006
2005
2007
2008
2009
2010
Spread between cost of deposits and yield on advances of our bank maintained in the last 10 years
23
Sep-10
Investments – At a Glance
Investments Breakup and Category wise
Particulars (Rs in Mn)
SLR
SEP-10
MAR-10
SEP-09
28,819
25,788
25,661
6,575
6,397
4,257
35,394
32,185
29,918
6.6%
6.5%
6.4%
-AFS
4,954
3,928
5,914
-HTM
30,389
28,256
23,959
-HFT
51
0
46
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
Non SLR
Total Investments
Yield on Investments
Investments Breakup:
Total Investments
 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.
24
Loan book – Major Industry wise exposure
Advances to Major Industries as on 30th September 2010
Loans Composition
Amount
(in INR mn)
Paper & Paper
% to Total
Advances
Products, 2%
Other Metals, 2%
Other I ndustries,
Construction (Comm Real
Estate)
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 & Metal
Products
1,332
2%
Other Industries
2,480
3%
3%
I ron & Steel, 5%
Construction, 4%
Food Processing,
2%
Textiles, 11%
25
Loan book – Major Sector wise Exposure & Regulatory Classification
Major Sector wise Advances as on 30th September, 2010
Major Sector
MSME
Amount
( in INR mn)
% to Total Adv
 SME and trade loans earning higher yields constitute
54%.
25,912
32%
Agriculture
9,401
12%
Large Industries
4,679
6%
Retail Traders
8,043
10%
Wholesale Traders
9,487
12%
 Diversified credit portfolio reduces credit risk
 Lower ticket size backed by adequate collaterals
 Unsecured Advances aggregate to 3% only
Regulatory Classification of Advances as on 30th September, 2010
Classification
Amount
( in INR mn)
% to Total Adv
Corporates
27,287
34%
Regulatory Retail
33,656
42%
2,411
3%
17,039
21%
NBFC
Other Advances
Gross Loans Total
80,393
26
Loan book products composition
Loan Products composition as September 30, 2010
Loan Products Combination
Amount
( in INR mn) % to Total Adv
OD/CC and Demand Loans
46,263
58%
Term loans
32,489
40%
1,641
2%
Bills Purchased / Discounted
Gross Loans Total
scounted
constitute 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
80,393
Bills
purchased/di
 Working capital loans yielding higher interest
Demand
loans
2%
23%
O verdraft/Ca
sh credit
34%
Term loans
41%
27
Asset quality is showing continuous improvement
NPA – AN ANALYSIS – LAST 5 YEARS
Gross NPA & Net NPA - Quantum
Gross NPA & Net NPA - %
7.00%
140
130.69
6.00%
120
102.08
100
93.50
87.07
80
101.11
5.00%
3.37%
67.79
3.00%
61.11
49.80
40
44.46
2.58%
39.67
36.25
42.79
2.00%
20
1.00%
0
0.00%
Net NPA
2005
130.69
4.32%
4.00%
82.93
60
Gross NPA
5.89%
112.83
2006
112.83
67.79
49.80
2007
87.07
36.25
2008
82.93
44.46
Gross NPA
2009
102.08
61.11
2010
93.50
39.67
42.79
1.09%
1.81%
1.80%
0.98%
1.08%
1.36%
1.26%
0.58%
0.54%
2005
2006
2007
2008
2009
2010
Sep-10
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%
Sep-10
101.11
1.95%
Net NPA
Gross NPA %
Net NPA %
 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
28
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
29
Restructured Accounts
Details of Restructured Accounts
No .of Borrowers
Amount
( 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
264
4,843.5
Total
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
 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.
30
Income and Expenses break up – Q2 FY 11 Vs Q2 FY 10
Interest income break up
Particulars
Q2 FY 11
Interest on Loans
Interest on
Investments
Other Interest Income
Total expenses
Q2 FY 10
(in INR Mn)
% Change
2,292
1,853
23.7%
7,558
603
495
21.8%
1,937
26
8
325.0%
71
2,921
2,356
24.0%
9,566
Other income break up
Particulars
Q2 FY 11
Q2 FY 10
March’ 10
Expenses break up
% Change
Particulars
March’ 10
Q2 FY 11
Q2 FY 10
% Change
March ’10
1,881
1,765
6.6%
6,785
244
148
64.9%
690
Interest
expended
Treasury Income
24
287
-Ve
458
Employee cost
247
224
10.3%
801
Others including
Suit Recoveries
172
59
291.5%
260
Other operating
exp
282
220
28.2%
857
Total Other
Income
440
494
- ve
1,435
2,410
2,209
9.1%
8,443
CEB & Charges
Total expenses
31
Income and Expenses break up – H1 FY 11 Vs H1 FY 10
Interest income break up
Particulars
H1 FY 11
H1 FY 10
(in INR Mn)
% Change
Interest on Loans
4,407
3,694
19.3%
7,558
Interest on
Investments
1,143
917
24.6%
1,937
44
28
57.1%
71
5,594
4,639
20.6%
9,566
Other Interest
Income
Total expenses
Other income break up
Particulars
CEB & Charges
Treasury Income
March’ 10
H1 FY 11
H1 FY 10
Expenses break up
% Change
Particulars
March’ 10
455
280
162.5%
690
79
370
-Ve
458
Others including
Suit Recoveries
227
103
220.4%
260
Total Other
Income
761
753
- ve
1,435
H1 FY 10
% Change
March ’10
3,632
3,486
4.2%
6,785
Employee cost
478
405
18.0%
801
Other operating
exp
508
388
30.9%
857
4,618
4,279
7.9%
8,443
Interest
expended
Total expenses
32
H1 FY 11
Increasing employee efficiency
Growth in business per employee
Steady rise in profit per employee
Business Per Employee (INR Mn)
Profit per Employee (INR Mn)
80
70
56.5
34.0
0.6
0.6
49.9
50
40
0.7
65.1
60
0.8
0.8
72.6
0.5
0.4
35.0
0.4
0.4
Mar-06
Mar-07
0.5
0.5
Mar-08
Mar-09
0.3
30
0.2
20
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
0.1
Sep-10
Our employee efficiency has been going up continuously as reflected by the above parameters
Annualised
33
Mar-10
Sep-10
Thank You