9th Annual „India Unlimited‟ Investor

Conference

Mr. Bipin Kabra

March 9, 2010

Origin

Capital of

11,0007 employees

Nov 14, 1927

Trichur

Milestones

Incorp.

1927

1st

Branch

Br. o/s

Kerala

SCB

status

100

branches

Public

issue

1st

ATM

Rights

issue

1937

1975

1977

1980

1996

2000

2002

The distant past…

• Dependency in Kerala

• Banking business

• Infrastructure

• Employees

• Bulk of the business from the SME segment

• High NPA level

• Low employee base and Higher age of employees

• 207 branches and 72 ATMs

The Turning Point…

• As per RBI guidelines

• Net worth of Rs. 300 crores

• No single shareholder with control in excess of 10%

• Decline in holding by the largest shareholder from 37% to

10%

• Change in Board of Directors with induction of highly reputed

professionals

• Rights issue made in April, 2008 at a price of Rs. 62 per share

• Revamp in the top and senior management with emphasis on

proven industry credentials and execution capabilities

Vision

Large Profitable “A” Rated Bank

Large Profitable A Rating

To be amongst the top 5 Private Sector Banks

Balance sheet size Asset Quality

Profits Branch network

Mission

“There is nothing in a caterpillar

that tells you it‟s going to be a

butterfly.”

Growth phases

Change is the deviation from one condition to another condition, one process

to another process, one stage to another stage, one phase to another phase…

Past Capacity Productivity Optimisation

Capacity

Branding

Treasury & Fee Income

Operation and Technology

Business Mix

Human Resources

Liabilities

Channels

Product Suite

Continuous progression in strategy

Capacity Productivity

Five speed transmission

Balanced Scorecard

Retail Assets

Capital Raising Plan

Fee income - New products

Strengthening Channels

Other Initiatives

Wealth Management

Mutual Fund

BPO

• “India‟s Fastest Growing Mid-size Bank” by

on the basis of a KPMG survey

• Awarded Best bank in the private sector by the State

Forum of Bankers‟ Clubs at their Banking Excellence

Awards

Accolades … Last 12 months

Name Age Total Work Experience

Mr. G.N. Bajpai

Chairman

66 He has had a distinguished career in the Indian financial sector and is currently

Director of Future Generali Life Insurance, Future Generali Insurance, Invent ARC

Private Limited, Informerics Valuation and Rating Private Limited. He is the ex-

chairman of Life Insurance Corporation & Securities Exchange Board of India (SEBI)

Mr. Amitabh

Chaturvedi

MD & CEO

41 A Chartered Accountant by qualification having experience of over 18 years in the

areas of Banking, Asset Management, Investment Banking. Life Insurance, General

Insurance, Broking & Distribution. He was the Group President of Reliance Capital

Limited and was in charge of financial services arm of Reliance ADA group. Prior to

the Reliance Group, he was in charge of the Retail Banking group at ICICI. Mr.

Chaturvedi was appointed on the Board of the Bank on October 10, 2008.

Mr. Shailesh

Haribhakti

53 A Chartered Accountant by qualification, he is the only Indian Member on the

Standards Advisory council of the International Accounting Standards Board (IASB).

He is the Chairman of FPSB, India. He is a Committee member of Futures & Options

segment of NSE, SEBI Committee on Disclosure and Accounting Standards,

Managing Committees of ASSOCHAM and IMC, and Corporate Governance

Committees of ASSOCHAM and CII. He has been awarded “The Best Non Executive

Independent Director Award - 2007” by the Asian Centre for Corporate Governance

and IMC in January 2008.

Board of Directors

Board of Directors (contd.)… Name Age Total Work Experience

Mr. S.

Santhanakrishnan

64 Retired as Deputy Managing Director of SBI after serving them 36 years. An independent

Director on Board. He was also the executive Chairman of Credit Information Bureau

(India) Limited (CIBIL).

Mr. K. S. Reddy 56 He has been in Indian Civil Services for over 16 years and worked in Ministries of Planning

and Programme Implementation, Food Processing Industries, Defense, Communications,

Welfare and Tourism and Civil Aviation.

Mr. Vidyadhara Rao

Chalasani

64 An additional / independent director on board. He has over three decades experience in

financial services. Currently, he is the Director of Advice America (California, USA).

During 1987-2000, he was the chief investment strategist of Wachovia Securities.

Mr. Ghanshyam

Dass

57 He was the Managing Director of NASDAQ QMX for Asia Pacific until February 2009. He

was also the CEO of British Bank of Middle East in India & Majan International Bank in the

Sultanate of Oman. Currently, he is the Senior Advisor of KPMG and Advisor, Intel Capital.

Mr. Sateesh Kumar

Andra

41 He is on the board of start-ups like Metromela Internet Services Private Limited, Ginger

Soft Media Private Limited, Pressmart India Limited and Metrikus India Private Limited,

started by young and first generation entrepreneurs. He was the Promoter and CEO of

EUCLID software, a leading provider of Business Intelligence for IT. He is engaged as

venture partner with DFJ (Draper Fisher Jurvetson) India, which lends support to

enterprising entrepreneurs.

Shareholding Pattern as on Dec 31, 2009

Stakeholders

December 31, 2009 September 30, 2009

Shares in

million

% Shares in

million

%

Resident Individuals 30.0 46.86 27.9 43.55

Foreign Institutional Investors 14.8 23.15 14.9 23.30

Corporate Bodies 14.3 22.24 15.0 23.34

Non Resident Indians 3.6 5.63 3.5 5.46

Banks / Financial Institutions 0.2 0.39 0.7 1.06

Others * 1.1 1.74 2.1 3.29

Total 64.1 100.00 64.1 100.00

* Includes insurance companies, Mutual funds, Trusts and Clearing members

Financial Overview

Balance Sheet Rs. in crores

ParticularsDec 31,

2009

Sept 30,

2009

June 30,

2009

Mar 31,

2009

Dec 31,

2008

Y-O-Y

growth

Capital 64 64 64 64 64 -

Reserves 378 377 371 360 346 9.3%

Deposits 6,002 5,629 5,070 4,969 4,615 30.1%

Borrowings 299 140 38 - - -

Other Liabilities 406 407 249 250 232 75.1%

Total 7,149 6,618 5,792 5,643 5,256 36.0%

Cash & bank

balance 546 678 589 686 965 (43.4)%

Investments 1,940 1,698 1,523 1,567 1,170 65.8%

Advances 4,391 4,002 3,489 3,196 2,939 49.4%

Fixed assets 55 48 46 46 44 24.9%

Other Assets 217 192 145 147 138 57.8%

Total 7,149 6,618 5,792 5,643 5,256 36.0%

Profit and loss statement

ParticularsQ3 -

FY2010

Q3 -

FY2009

Y-O-Y

growth

9m -

FY2010

9m -

FY2009

Y-O-Y

growth

Interest income 139.8 111.8 25.0% 384.1 293.5 30.9%

Interest expenses 100.6 74.4 35.2% 287.4 200.1 43.6%

Net interest income 39.2 37.4 4.8% 96.7 93.4 3.5%

Non Interest income 16.6 12.1 37.2% 59.1 38.4 53.9%

Operating expenses 53.0 29.2 81.5% 128.8 81.9 57.3%

- Staff cost 30.2 16.6 81.9% 74.4 45.8 62.4%

Provisions 2.7 (4.0) - 7.0 (1.3) -

Profit before tax 0.1 24.3 (99.6)% 20.0 51.2 (60.9)%

Provision for tax (1.2) 7.4 - 2.3 16.0 (85.6)%

Profit after tax 1.3 16.9 (92.3)% 17.7 35.2 (49.7)%

Rs. in crores

Non interest income driven by an increased focus on fee based business

Net Interest Income Rs. in crores

ParticularsQ3 -

FY2010

Q3 -

FY2009

Y-O-Y

growth

9m -

FY2010

9m -

FY2009

Y-O-Y

growth

Interest Income 139.8 111.8 25% 384.1 293.5 31%

- from Advances 108.0 78.8 37% 304.0 204.0 49%

- from Investments 30.8 21.4 44% 73.6 60.3 22%

- from balances with

RBI / other banks0.6 11.6 (95)% 4.5 29.2 (85)%

- Others 0.4 - - 2.0 - -

Interest Expenses 100.7 74.4 35% 287.4 200.1 44%

Net Interest Income 39.2 37.4 5% 96.7 93.4 4%

Trend in Net Interest Margin

Margins improved on a sequential basis due to higher growth in low cost

deposits from the new branches and renewed thrust on the SME segment

2.38%

1.91%

2.52%

1.4%

1.6%

1.8%

2.0%

2.2%

2.4%

2.6%

2.8%

3.0%

Q1-2010 Q2-2010 Q3-2010

Trend in Operating expenses

1316 17 17 18

2630

12

12 13 1414

18

23

25

2829

3132

44

53

0

10

20

30

40

50

60

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10

Rs.

in

cro

res

Others Staff cost

Key Ratios (%)

ParticularsQ3 -

FY2010

Q2 -

FY2010

Q1 -

FY2010

9m -

FY2010

9m -

FY2009

Yield on Advances 10.41 10.55 11.46 10.81 12.04

Cost of Funds 6.36 6.86 7.22 6.78 7.06

Net Interest Margin 2.52 1.91 2.38 2.35 3.29

Cost / Income ratio 94.94 79.71 71.15 82.67 62.14

Credit - Deposit ratio 75.31 74.17 71.04 75.31 69.52

Return on Equity 1.19 5.70 9.31 5.32 11.45

Return on Assets 0.07 0.50 0.71 0.37 1.07

Key Ratios (contd.)…

ParticularsDec 31,

2009

Sept 30,

2009

June 30,

2009

Mar 31,

2009

Dec 31,

2008

Capital Adequacy Ratio

Basel I (%) 13.36 14.93 13.38 14.44 14.33

- Tier I 9.14 10.16 11.97 12.90 12.82

Basel II (%) 14.29 15.90 14.14 15.38 -

- Tier I 9.78 10.81 12.65 13.75 -

Gross NPA ratio (%) 1.76 1.73 1.92 1.99 2.27

Net NPA ratio (%) 0.89 0.86 0.96 0.88 0.89

Gross NPAs (Rs. in crores) 77.88 70.26 67.96 64.43 67.76

Net NPAs (Rs. in crores) 39.14 34.43 33.70 28.24 26.12

ParticularsDec 31,

2009

Sept 30,

2009

June 30,

2009

Mar 31,

2009

Dec 31,

2008

Y-O-Y

growth

CASA 1,323.6 1,244.9 1,126.0 1,207.6 1,166.3 13.5%

CASA (%) 22% 22% 22% 24% 25% -

Term Deposits 4,678.5 4,384.6 3,944.6 3,761.1 3,448.4 35.7%

Total Deposits 6,002.1 5,629.4 5,070.6 4,968.8 4,614.7 30.1%

Net Advances 4,390.6 4,001.8 3,488.6 3,196.1 2,938.8 49.4%

Rs. in croresCredit - Deposit Growth

• Growth in deposits and advances continue to be higher than the

industry average

• Deposits grew by 30% as compared to industry growth of 18%

• Advances rose by 49% vis-à-vis 14% increase in the industry

Thank You

Appendix

Payment Services -Bill pay, Money transfer, charity,

Religious offerings, etc.

Bill Discounting, BGs,

LCs, Working capital

finance, Term loan, project finance etc.

Retail Loans -Mortgages, Vehicle

, Gold, Shares, Property etc.

Credit / Debit CardInvestment Banking

Third Party Products -

MF, Insurance, Gold, Forex, Depository

etc.

Liabilities -Current, Saving, Term, Recurring, Roaming account

etc.

Liability

Products Loan Products

Transaction

products

Product Suite

Branch

ATM

Internet

Channel Development

Total touch points will increase to 726 as at March

2010 from 279 as at March 2009

Regional Bank

All India Bank

Presence in 600 locations

Branch network increased from 207 to 273

140 Locations covered

Branches - Old look

Branches - New look

Euronet

New Operational ATM

Proposed ATM

Increase from 73 to 453

“Pay per transaction”

No. of transactions rose

from 1.7 lakhs p.m. to 3.2

lakhs p.m.

ATMs

Old Look New look

Old Web site…

New Web site…dhanbank.com

Internet banking hits increased from 7 lakhs to 34 lakhs p.m.

Business Mix

Micro/Agri11%

TAG14%

WBG62%

Retail13%

High volume, less

margin, less risky

Business Mix - Geographical

44%

30%

56%

70%

20%

30%

40%

50%

60%

70%

80%

31/03/2009 15/02/2010

Kerala Non Kerala

Change of culture at Branches from Lending to Liabilities

Dedicated sales team of 1,000 people

Focus on CASA - Average CASA deposits increased from Rs.

1,054 crores (March 2009) to Rs. 1,275 crores (Feb 2010)

30 to 1,000 new accounts per day

Tapped deposits from new geographies / new clients

Cross selling started

Commenced Door step banking

Liabilities

Evolution into a contemporary and modern

brand identity

Unveiling the new identity

Pan India Signage and communication

under new identity

Unified Communication

Unified Communication (contd.)…

VISITING CARD LETTERHEAD

• Recruited over 2,500 employees

• Introduction of ESOPs

• Average employee age reduced to 34 years (Dec 2009)

from 48 years (Sept 2008)

• Senior management team

• Recruited senior management from Industry

• Formed core team of existing and new members

Human Resources

• Awards won at the World HRD Congress

• “Continuous Innovation in HR Strategy at Work”

• “Most Innovative Recruiting and Staffing Program / Initiative” and

“Recruiting & Staffing Industry Leader of the Year”

• Our Chairman Mr. G.N. Bajpai was honoured with the “Lifetime

Achievement Award” under the Global HR Excellence Award category

• Awarded “Best Employer Brand” among private

sector banks by the Employer Branding Institute

in Southern Region

Human Resources (contd.)…

Senior ManagementName Designation Qualification Previous Org. Exp.

Mr. Amitabh Chaturvedi MD & CEO CA Reliance Capital, ICICI 18

Mr. Bipin Kabra Chief Financial Officer ICWAI, CA Reliance Capital, ICICI,

SBI

17

Mr. Manish Kumar Head - HR & CSR PGDPM IDFC, Reliance, ICICI 15

Mr. Rajeev Deoras Head - Wholesale Banking B.E., CAIIB Kotak Mahindra Bank,

ICICI, SBI

25

Ms. Sheran Mehra Head - Marketing MBA Barclays, HSBC 11

Mr. Salil Datar Head - Branch Banking MMS ICICI 19

Mr. Deepak Singh Head - Insurance PGBM HDFC Sales 14

Ms. Jaya Janardanan Head - Operations M.Com, MFM Brics Online Services,

ICICI

14

Mr. S. Balasubramanian Head - Trade & Advances CA Kotak Mahindra Bank 23

Mr. Manish Sarraf Head - Treasury MBA Siemens, Citibank 17

Mr. Anand Kumar Gupta Head - Alternate Channels B.E. ICICI 13

Mr. Rajrishi Singhal Head - Policy & Research M.A. Economic Times 24

Senior Management (contd.)…Name Designation Qualification Previous Org. Exp.

Mr. Sachin Sikka AGM - New Delhi BA, MBA ICICI Bank 10

Mr. K.V. Ajay Kumar AGM - Karnataka B.Com. Kotak Mahindra Bank 15

Mr. Parag Kothari Head - Investment Banking B.E., MFM Cholamandalam DBS 19

Mr. V. Venkat Krishnan AGM - IT Projects MCA HSBC, ICICI 14

Mr. Sachin Saraf AGM - Infrastructure Diploma in Int.

Designing and

Decoration

HSBC 12

Mr. Dilip Janardhanan AGM - Regional Head, T.N. MBA, AMFI, IRDA Kotak Mahindra Bank 11

Mr. P Balachendil AGM - Regional Head, Mumbai B.E., CFA, PGDBA Tata AIG General

Insurance

10

Mr. P. S. Sankaran Dy. Zonal Head, Kerala MBA, CAIIB IndusInd Bank 23

Mr. Venugopal AGM - HR MBA, MHRM,

PGDCA

Reliance Capital 19

Mr. Raj Gaurav AGM - HR PGDM Canara HSBC Life

Insurance

10

Mr. J. Renganathan DGM - Credit MLS SBI 24

Name Designation Qualification Previous Org. Exp.

Mr. Lalit Gupta AGM - Corporate Banking MIB GE Capital 12

Mr. Rajesh Rajah AGM - NRI PGDM ICICI Bank 14

Mr. Vishal Kukreja AGM - HR MBA IDFC 7

Mr. Sureshkumar AGM - HR MSW HDFC 11

Ms. Jayachandran Zonal Head - Kerala B.Com HDFC Bank 9

Mr. P.J. Manjunaath AGM - Credit CAIIB,DBF IndusInd Bank 30

Mr. Kiran Deshwal AGM - Corporate Banking M.Sc., PG Dipl. in

Agri. Business Mgmt.,

CAIIB

BNP Paribas 7

Mr. Ashok Gupta Zonal Head - West & East Zone MMS,CAIIB State Bank of India 27

Mr. Neeraj Madhekar Zonal Head - TAG, Rest of Mah. MBA, CAIIB ICICI Bank, Axis Bank 14

Mr. D. A. Dhananjaya Head - Broking & Distribution B.Com Reliance Money 11

Mr. M. Guruvayurappan Regional Head - Corporate

Banking

MBA ICICI Bank 17

Mr. M. Muralidharan Senior Advisor to MD & CEO M.A., CAIIB BRICS Online Services,

ICICI, SBI

24

Senior Management (contd.)…

Old order change yielding place to new…

ITPL Datacenter

New Managed Datacenter

Chembur Branch IT –

New Infrastructure Setup

Freeing up Branch - 62%

38%

55%

7%

BRANCH CENTRALISATION OUTSOURCED

• CMS

• DP and Trading

• Trade Finance

• Credit card operations

• Account opening

• Loan set up

• Logistics

• Clearing

• FD processing

• Outstation cheques

• ECS

• Corporate salary

• Service desk

• Credit process

Branch Activities Vs. DCS / RPC Centralised

Activities

Operations and Technology

• Moving to a Managed Data centre model

• End-to-end online tracking system for account opening forms

• Bank carried out successful rollout of

• Loan Flow software

• Treasury Dealer Board and Core Treasury Solution

• New accounting system (Oracle Financial)

• Risk Management software

• Upgrade to the latest version of Flex Cube in process

Treasury & Fee Income

• Treasury

• Leverage our Multichannel distribution network

• Insurance distribution tie up with Bajaj Allianz

• Mutual Funds

• Bullion, IPO‟s, D‟mat, G-sec, E-broking, etc.

• Online trading platform with Destimoney

• Locker charges, LC / BG income

• CMS facility

• Targets 35% of the revenue from fee income

Treasury

Gilts trading business rose from nil to about 50-60 crores per day

Fx volumes (interbank side) touched $300 million per month

Two way Quote (market maker) from plain price taker

New Fx customers added: Cooperative Banks, travel agencies, etc.

Increase in Bank limits

Selective rise in non-SLR business

No equity investment during the year

Tie up with five Mutual Funds

. .

.

.

Online TradingCompetition

ICICI Direct with 19 lakh customers

Reliance Securities with 10 lakh customers

India Infoline with 3 lakh customers

Uniqueness of our offering

Funds lying in the Bank account need not be segregated

• Unique proposition in the industry

Benefits to the Bank

Increase in Savings account balance

Customer stickiness increases

Fee income arising out of service charges and broking income

What is a Balanced Scorecard?

At the highest level, the Balanced

Scorecard is a framework that helps

organizations translate strategy into

operational objectives that drive both

behavior and performance

Translate the strategy to operational terms

• Measurement is the

language that gives

clarity to vague

concepts

• Measurement is used

to communicate, not to

control

• Strategy can be

described as a series of

cause and effect

relationship

The Strategy

Financial Perspective

"If we succeed, how will we

look to our shareholders?"

Customer Perspective

"To achieve my vision, how

must I look to my customers?"

Organization Learning

"To achieve my vision, how must

my organization learn &

improve?"

Internal Perspective

"To satisfy my customer, at which

process must I excel?"

The Conclusion

Measurement must be linked to strategy

Strategy Balanced

Scorecard

Measurement to Communicate, not to Control

Measurement communicates Values,

Priorities and Direction

The Premise

Premise behind the BSC

Changing Consumer Demographics

Consumer Demographics of

India

• Increasingly affluent, with a bulging middle

class

• The youngest population in the world

• 65% of population below 35 years of age

• Rising savings rate >30%

• Increasing literacy levels

• Higher adaptability to technology

• Urbanization is a continuing trend

• Increasing "consumption" mindset in India

Growing Per capita GDP

Consuming class

population

estimated at

about 260 mn*

Consuming

class population

estimated at

about 350 mn*

2000: Per capita GDP

$500

2007: Per capita GDP

$1,000

35%

growth

Consuming class

population

estimated at

about 600 mn*

2015: Per capita GDP

$1,500

70%

growth

• Per capita GDP to rise from $1,000 to $1,500: consuming population to grow manifold

• However, retail credit / GDP is at low at 10% as compared to 37% in Malaysia and 59% in the Taiwan

• Low penetration leaves tremendous growth opportunity* Estimates based on NCAER data. Consuming class comprises middle and high income households

Retail Products

• Mortgages

• Home Loan, Commercial Property

• LAP, LRD

• Vehicles

• Commercial vehicles

• Dealer funding

• Auto loan

• Construction Equipment

• Loan against Gold / Securities

Capital raising

• Overall requirement of Rs. 3,000 crores next 5 years

• To raise Rs. 200 crores of Tier II capital by March 2010

• No capital dilution till September 2010

• Issued Tier II capital of Rs. 150 crores to high net worth NRIs

• CARE and ICRA upgraded rating for Tier II capital by two

notches to A (minus)

• Higher Investment limits for FIIs/NRIs

• from 24% to 49% for FIIs and 10% to 24% for NRIs

Fee Income - New products

Gold coin

Forex / TCs / Fx Card

Channel Initiatives proposed for FY 2011

• Addition of about 500 ATMs

• Fully functional Corporate Internet Banking

• Retail Internet Banking - enhancements

• E-tax payments

• Two factor authentication

• Verified by VISA

• Fully functional Customer Contact Center with

• IVR, Voice, Email, Chat

• Launch of Mobile Banking