Kotak Annual Global Investor Conference 2011

“Chasing Growth”

Mr. Bipin Kabra

February 11, 2011

3

Agenda

Macro update1

Dhanlaxmi Bank - An overview2

3 A Bank in Transformation

4 Financials - How the Numbers Stack up?

5 Way Forward

4

Macro update

1

5

18.519.9

17.615.9

17.1 16.518.2 18.3

FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11E FY 12E

India: Positive Investment Environment

Declining External Debt as a % of GDP (%)

Regaining Control After Financial CrisisFiscal Deficit as a % of GDP (%)

Consumer Price Index – Outlook Stable (Avg y-o-y Increase %)

Return to Peak Foreign Currency Reserves (US$ Bn)

Source RBI, CSO, Morgan Stanley Research

Source RBI, CSO, Morgan Stanley Research

Source RBI, CSO, Morgan Stanley Research

Source RBI, CSO, Morgan Stanley Research

252279 285 308

142 152

199

310

FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11E FY 12E

8.69.8

7.6 7.37.26.5

5.4

4.0

FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11E FY 12E

9.1

12.3

9.6

6.8

3.8 4.2

6.86.2

FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11E FY 12E

6

Indian Markets have seen significant uptick in last 24 months

Indian Markets – rebased to 100

Source Bloomberg as on February 9, 2011

Jan-09 Mar-09 Jun-09 Aug-09 Nov-09 Jan-10 Apr-10 Jun-10 Sep-10 Nov-10 Feb-11

Sensex NIFTY BSE500

82%

76%

72%

Liquidity has been the primary driver of Indian equity markets in 2010

– FIIs have pumped in more than $29 bn

– Domestic insurance companies have invested more than $6 bn

– Primary market volumes have been robust with more than $25 bn raised

– Correction in 2011 has been a function of rising inflation and consequent negative fallout from

tightening monetary policy on growth

7

Dhanlaxmi Bank - An overview

2

8

Dhanlaxmi: An Emerging Private Sector Bank

Incorporated at Thrissur, Kerala in 1927

Total asset base rose to Rs. 124 billion as at Dec 31, 2010

(+73% on a y-o-y basis)

A broad and loyal customer base of 1.5 million as at Dec 31, 2010

Capital adequacy of 13.4% with a Tier-I ratio of 10.7% as at Dec 31, 2010

Employee strength increased from 1,402 as of Mar 31, 2009 to 4,351 as on

Dec 31, 2010

Bank launched its 275th branch in Jan 2011; ATM network expanded to 454

History

Growth

Breadth

Reach

Security

Today

Efficiency

Emerging nationwide banking franchise with retail, SME and corporate

banking focus

9

1,411 1,402

4,0804,351

FY 08 FY 09 FY 10 9M 11

Investment Phase

Head Count (No. of employees) Business Mix (%) Cost / Income Ratio (%)

Growth in Total Income Growth in Operating Cost Opex / Assets (%)

6440 38

15 21 20

5 4 4

1635 38

Mar-10 Sep-10 Dec-10

Retail Corp TAG Agri

68

56

83 86

FY 08 FY 09 FY 10 9M 11

42

7991

101

141

201

232

275

99122 141

175

FY 08 FY 09 FY 10 9M 11

Net Interest Income Noninterest IncomeTotal

97113

193

237

FY 08 FY 09 FY 10 9M 11

Operating Expense

2.62.3

2.83.1

FY 08 FY 09 FY 10 9M 11

Organisation restructuring, branch addition, technology updation, staffing of relevant functions - Completed

Initiated & strengthened alternate channels since Mar „09 - ATMs, Internet Banking, Mobile Banking, IVR

10

30

39 3937

FY 08 FY 09 FY 10 9M 11

1,055

1,208 1,552

2,127

FY 08 FY 09 FY 10 9M 11

CASA CASA %

1.99

1.54

1.05

2.95

FY 08 FY 09 FY 10 9M 11

Gross NPA (%)

5864

71 74

FY 08 FY 09 FY 10 9M 11

Re-Booting the Franchise

Credit - Deposit Ratio (%)

CASA Asset Quality (%)

Non - Interest Income (%)

11

Product Suite - Created an Extensive Bouquet of Services Customer Touch Points (Almost 3x in 18 Months)

Retail Loans - Mortgages, Commercial Property, Loan against

Property, CE Financing, Dealer Financing, Auto Loan, Loan

against Gold / Securities

Wholesale Banking - Working Capital Finance, BGs, LCs, Bills

Discounting, Term Loans, Project Finance

Trade & Advance Group / Microfinance & Agriculture, Credit

Card, Debit Card

Third-Party Products - MF, Insurance, Forex, Depository,

Online Brokerage etc.

Liabilities - Current, Saving, Term, Recurring, Roaming

Account etc.

Payment Services - Bill Pay, Money Transfer, Charity,

Religious Offerings, Mobile Banking etc. “Rebranding”

Across Product Spectrum

1.5m Loyal

Customer Base

5x Increase

since Dec 2009

IVR, Voice chat

in FY11

1HP

7

6

3RAJ

22GUJ

3

16

18WB

97MAH

3Goa

59KK

68AP

449KER 142 TN

PB

New DelhiHAR

MP

UP(E)

39

275 Branches

454 ATMs

Internet Banking

Retail Transactions

Mobile Banking

Front-ended Investments to provide Long Term Structurally Strong Franchise

12

A Bank in Transformation

3

13

16.2%

24.1%

77.0%

49.4%

56.6%52.7%

76.3%

75.5%

30.1%

42.8%52.8%

68.7%

17.8%17.1%

15.1%14.2%

19.1%22.0%

17.0%13.6%

0%

30%

60%

90%

Dec-09 Mar-10 Jun-10 Sep-10 Dec-10

Bank Advances Bank Deposits Industry Deposits Industry Credit

Deposits - Advances Growth Continuously Better than the Industry

14

Revamp Towards a Favourable Business Mix on Track - Growth in Loan Book

7,7717,057

2,939 3,196

5,006 5,329

Dec-08 Mar-09 Mar-10 Jun-10 Sep-10 Dec-10

+164%

WBG

64%

Retail

16%

TAG

15%

Agri

5%

As at Sept 30, 2010As at Mar 31, 2010 As at December 31, 2010

Agri

4%TAG

21%

Retail

35%WBG

40%

Agri

4%

TAG

20%

Retail

38%

WBG

38%

15

Revamp Towards a Favourable Business Mix on Track - Liabilities

Change of culture at Branches from Lending to Liabilities

Approx. 36% of the incremental liabilities from new branches

2,1272,047

1,6561,5521,324

1,1261,2081,166

1,245 20%21% 22%22%22%22%22%

24%25%

0

800

1,600

2,400

Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10

0%

10%

20%

30%

CASA (Rs. Cr) Ratio

16

Loan book

5673 79

4427 21

FY09 FY10 9M FY11

Kerala Non-Kerala

By State (%)

1943

58

8158

42

FY09 FY10 9M FY11

South India Non-South

By Geographic Region (%)

Deposits

3252 56

6848 44

FY09 FY10 9M FY11

Kerala Non-Kerala

8 2540

9175

60

FY09 FY10 9M FY11

South India Non-South

Revamp Towards a Favourable Business Mix on Track - Region - wise

17

Trend in Net Interest Margin

9.7%

6.5%

2.6%

9.3%

10.6% 10.4%9.9% 10.0%

6.2%

6.9%

6.4% 6.4% 6.6%

2.4%1.9%

2.5% 2.7% 2.6%

0%

2%

4%

6%

8%

10%

12%

Q2 - FY2010 Q3 - FY2010 Q4 - FY2010 Q1 - FY2011 Q2 - FY2011 Q3 - FY2011

Yield on Advances Cost of Funds NIM

18

Retail Growth and Share of Various sub-segments (Dec 31, 2010)

810

2,438

2,944

0

800

1,600

2,400

3,200

Mar-10 Sep-10 Dec-10

Business Size (Rs. in crores)

Construction

Equip.

6%

Vehicle Loans

30%

Gold Loans

34%

Others

20%

Mortgages

10%

19

Insurance distribution tie up with Bajaj Allianz

MF product distribution tie-ups with ICICI Prudential, Kotak, UTI, Fidelity & HDFC

– ~26,000 MF SIP accounts opened in Q3 as compared to 21,000 in Q2 FY2011

– Continues to be the 2nd largest private sector bank in terms of fresh SIPs mobilised

(CAMS)

Strengthened existing relationship with Destimoney Securities

Leverage Our Multichannel Distribution Network

28

44

60

93

FY 2010 Q1-2011 Q2-2011 Q3-2011

Insurance business (Rs in Cr.)

20

Nearly 50,000 Shareholders Form Part of the Dhanlaxmi Family

The Bank plans to raise equity by issue of upto 5.50 crore shares to augment its Tier I capital base

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

Shareholding Pattern as at December 31, 2010

Corporate Bodies

15.0%

Foreign

Institutional

Investors

39.8%

Others *

6.8%

Non Resident

Indians

5.2%

Banks / Financial

Institutions

0.2%

Resident

Individuals

33.0%

21

Financials - How the Numbers Stack up?

4

22

Balance Sheet

(Rs. in Crores) Dec 31, 2010 Sept 30, 2010 June 30, 2010 Mar 31, 2010 Dec 31, 2009 Y-o-Y growth

Capital 85 85 64 64 64 32.8%

Reserves 751 743 382 376 378 98.6%

Deposits 10,532 9,497 7,747 7,098 6,002 75.5%

Borrowings 479 350 398 121 299 60.3%

Other Liabilities 526 737 436 428 406 29.7%

Total 12,373 11,413 9,027 8,087 7,149 73.1%

Cash / bank balance 847 1,230 920 750 546 55.3%

Investments 3,287 2,711 2,474 2,028 1,940 69.4%

Advances 7,771 7,057 5,329 5,006 4,391 77.0%

Fixed assets 124 111 86 79 55 125.5%

Other Assets 343 304 218 223 217 58.2%

Total 12,373 11,413 9,027 8,087 7,149 73.1%

23

Composition of the Investment Book

ParticularsDecember 31, 2010

(Rs. in Crores) (%)

Held-to-maturity 1,935.7 58.9

SLR 1,807.8 55.0

Non - SLR 127.9 3.9

Available for Sale 1,305.7 39.7

SLR 804.9 24.5

Non - SLR 500.8 15.2

Held-for-trading 45.4 1.4

Total 3,286.9 100.0

24

Profit and Loss Statement

(Rs. in Crores) Q3 - FY2011 Q3 - FY2010 Y-o-Y growth9M -

FY2011

9M -

FY2010Y-o-Y growth

Interest income 249.9 139.8 78.7% 610.3 384.1 58.9%

Interest expenses 176.3 100.7 75.1% 435.5 287.4 51.5%

Net interest income 73.6 39.1 87.9% 174.8 96.7 80.7%

Non Interest income 33.4 16.6 100.7% 100.7 59.1 70.5%

Operating expenses 89.3 53.0 68.6% 236.5 128.8 83.7%

Staff cost 54.1 30.2 79.3% 143.3 74.4 92.6%

Provisions 7.9 2.7 188.7% 18.2 6.9 161.0%

Profit before tax 9.7 0.1 - 20.6 20.0 3.2%

Provisions for tax 2.5 (1.3) - 5.7 2.3 148.3%

Profit after tax 7.3 1.3 447.0% 14.9 17.7 (15.8%)

25

Trend in Operating Expenses

13 16 17 17 1826

3035

40

4954

1212 13 14 14

18

23

29

30

28

35

89

77

70

2528

29 31 32

44

53

64

0

25

50

75

100

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11

(Rs.

in

Cro

res)

Staff Cost Others

26

Key Ratios (%)

Q3 - FY2011 Q3 - FY2010 9M - FY2011 9M - FY2010 FY2010

Cost / Income ratio 83.49 94.94 85.89 82.67 83.29

Credit - Deposit ratio 73.48 75.31 73.79 75.31 70.53

Return on Equity 3.44 1.19 2.37 5.32 5.30

Return on Assets 0.24 0.07 0.19 0.37 0.35

Dec 31, 2010 Sept 30, 2010 June 30, 2010 Mar 31, 2010 Dec 31, 2009

Gross NPAs (Rs. in crores) 82.02 89.71 75.66 77.50 77.88

Net NPAs (Rs. in crores) 40.42 50.41 40.36 41.94 39.14

Basel I

Capital adequacy 11.76% 13.09% 10.36% 12.47% 13.36%

- Tier I 9.38% 10.47% 7.39% 8.45% 9.14%

Basel II

Capital adequacy 13.39% 14.60% 11.01% 12.99% 14.29%

- Tier I 10.68% 11.68% 7.85% 8.80% 9.78%

27

Asset Quality

0.52%

1.05%

0.71%0.76%

0.84%0.88%0.96%

0.86%0.89%

1.41%

1.26%

1.54%

1.99%1.92%

1.73% 1.76%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10

Net NPA Ratio Gross NPA Ratio

28

Way Forward

5

29

Sweating the Asset Build Up and Improving Productivity

Capacity

National Franchise

Workforce

Technology

Balanced Book

• Profit, return dilution reflects on-going capacity creation

• Huge Scope to improve productivity by pushing volume, generating fee and CASA

• Well established high volume / low risk corporate banking group

• Focus on high yielding SME / Retail offset higher funding cost and improved fee income from

processing & service charges

• Credit risk in retail remains low - as book is mostly secured

Banking Sector

in IndiaPrivate Sector Banks Dhanlaxmi Bank

Business per employee (Rs. mn) 87 80 37

Advances per branch (Rs. mn) 486 609 258

Deposits per branch (Rs. mn) 660 792 348

Cost per employee (Rs. mn) 1.06 1.24 0.82

30

Business Strategy

Focus on incremental asset creation in the retail and SME segments1

Growth in Non fund income (Treasury, LCs, BGs, Forex, etc.)2

Enhancing income from distribution of third party products3

Ramped up low cost as well as retail liabilities franchise4

Enhance productivity per branch / per employee5

Priority banking6

31

Thank You