City Union Bank Investor Presentation Final

Showcasing steady performance on an ongoing basis …RoA and RoE at 1.5% and 20.5% respectively, which is considered healthy in the banking space Rated as No.1 by Chartered Financial Analy

Investor Presentation – August 2010

1 City Union Bank – Overview & Growth Story

Showcasing steady performance on an ongoing basis …

RoA and RoE at 1.5% and 20.5% respectively, which is considered healthy in the banking space

Rated as No.1 by Chartered Financial Analyst Magazine

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 – 0.58% and Provision Coverage Ratio > 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

Well capitalized; CAR – Basel II – 13.46% as on March 31, 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

Key milestones

1957

Preferential allotment for equity shares strengthening bank’s capital adequacy ratio

2007

1904

Incorporation of the Bank

1965

Amalgamation of ‘The City

Forward Bank Limited’ and

‘The Union Bank Limited’ with

our Bank

1998

Initial Public Offering (IPO);

Listing Bank’s shares on the BSE, NSE & MSE

Entered into agreement with TCS for core banking solution “Quartz”

2002

2003

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

Rights issue for equity shares @ 1 : 4 – to reward the existing shareholders

2009

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 Branches No of Statewise % of Branches % of our Business

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 Tier I & II centres Tier III to VI centres

Providing a wide array of services (1/2)

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

Services & facilities – Domestic banking

Providing a wide array of services (2/2)

 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

Services & facilities - International banking

Offering the best of both worlds and more

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

Flexibility to enter adjacent markets and businesses

Diversified product portfolio High operating expenses High % of fee income

Operating efficiencies Large branch network Strong customer base

Strong growth Asset quality High ROA Technology savvy

Old private sector banks New private sector banks

Perception of Poor asset quality High proportion of retail deposits – low CASA Relative size of asset base

High cost of funds

2 Ownership Pattern

A well diversified investor base

Ownership profile as on 30 th June 2010

Major shareholders as on 30 th June 2010

 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

Rights Issue – FY 2009-10

The total proceeds through rights issue was around Rs.480 mn.

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.

Capital increases from Rs.320 mn to Rs.400 mn

3 Management

Transparent ‘Corporate Governance’ practices

All directors are Independent and Professional directors

Code of conduct for directors and senior management has been put in place

Disclosure norms are strictly adhered to

Various sub-committees of Board have been formed to oversee the operations of the Bank

A well experienced and strong Board (1/2)

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, 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

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

A well experienced and strong Board (2/2)

4 Financial Performance

Particulars (in INR mn) FY 2009-10 ( in INR mn) FY 2008-09 Absolute Growth % Growth Direction

FY10 performance – A snapshot

 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%

Key highlights

FY 10 performance

Particulars ( in INR mn) FY 2009-10 ( in INR mn) FY 2008-09 Absolute Growth % Growth Direction

-FY10 performance – A snapshot

FY 10 performance

 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

Key highlights

Operating Exp - as a % of NII 59.63% 57.52%

Return on Net worth (RONW) 20.55% 18.48%

Per Employee Business ( in INR mn) 65.10 56.51

Per Employee Profit (in INR mn) 0.58 0.50

EPS (in INR.) – FV INR1/- Share 4.03 3.23

Key business indicators

Key indicators

Particulars ( in INR mn) Q1 FY 11 ( in INR mn) Q1 FY 10 Absolute Growth % Growth Direction

Q1 FY11 performance – A snapshot

Financial Performance – Q1 FY 11 Vs Q1 FY 10

 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

Key highlights

Particulars ( in INR mn) Q1 FY 11 ( in INR mn) Q1 FY 10 Absolute Growth % Growth Direction

 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

Key highlights

Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Strong deposit and advances growth

Steady increase in advances Steady increase in deposits

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

PAT (INR mn)

Strong growth in income and profitability

Steady increase in net interest income Robust PAT growth

Strong growth in other income

Cost of deposits and yield on advances in last 10 years

Cost of deposits & yield on advances

Loans Composition (in INR mn) Amount % to Total Advances

Construction (Comm Real

Paper & Paper products 1,550 2%

Other Metal & Metal

I ron & S teel,

Advances to Major Industries as on 30 th June 2010

Loan book – Major Industry wise exposure

Loan book – Major Sector wise Exposure & Regulatory Classification

Regulatory Classification of Advances as on 30 th June, 2010

Major Sector wise Advances as on 30 th June, 2010

 SME and retail trade loans earning higher yields

 Diversified credit portfolio reduces credit risk

 Lower ticket size backed by adequate collaterals

 Unsecured Advances around 3% only

Loan book products composition

Loan Products Combination ( in INR mn) % to Total Adv Amount

Overdraft / Cash credit 28,066.7 39%

Bills Purchased / Discounted 1,281.7 2%

Demand

l oans 24%

Over dr af t/

Cash cr edi t

38%

B i l l s pur chased/

Asset quality is showing continuous improvement

 Asset quality has shown continuous improvement over the years; Gross NPA has come down from 5.9% in March’ 05 to 1.4% in March’ 10

 Net NPA levels has come down from 3.4% in March’ 05 to 0.6% in March ’10

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

130.69

112.83

87.07 82.93 102.08 93.5067.79

49.80

36.25 44.46

61.11

39.67 0

2005 2006 2007 2008 2009 2010

NPA – AN ANALYSIS – LAST 5 YEARS

Out of the above,

Details of Restructured Accounts

 The Restructured accounts are performing well and certain accounts got closed well before the due date

 Around 18% of amount repaid in restructuring accounts

 Around 3.7% of restructured accounts turned NPA

Income and Expenses break up

Particulars ( in INR mn) March’ 10 ( in INR mn) % Change March’ 09

Interest expended 6,785 5,618 20.8%

Expenses break up

Particulars ( in INR mn) March’ 10 ( in INR mn) % Change March’ 09

Other income break up

Particulars ( in INR mn) March’ 10 ( in INR mn) March’ 09 % Change

Increasing employee efficiency

0.6

0.1 0.2 0.3 0.4 0.5 0.6

Business/ Employee (INR mn)

Growth in business per employee Steady rise in profit per employee

5 Strategy

 Achieve 30% growth in deposits & increase

low cost deposits from 20% at present to 25%

over 3 years

 Broad base retail depositors to ensure stability

 To improve depositor base from 0.8 mn to

1.25 mn; Focus on cross selling of products

 Improving fee income by way of exchange &

commission on non funded business

 Increase fee income from cross selling of

insurance, mutual fund products, Online Share

trading money transfers & other technology

based services

Expenses

 Improving staff productivity to lower man power cost

 Tight vigil on miscellaneous expenditure

 Maintain cost income ratio at the present level of 40% (lowest in the industry) Our four pronged strategy going forward…

6 Recognitions

Ranking by Magazine – “The Chartered Financial Analyst”

No.1 in Customer Satisfaction awarded by IBA

Clusters 5 + 6

Indian Banks’ Association awarded City Union Bank as No.1

in Customer Satisfaction Study for IBA 2008 conducted by

GALLUP consulting.

Rank of Banks – Index – Bank within Clusters

Thank You