Branch Network To Increase To 170 By March 2007

Chennai, 20/6/006 : City Union Bank Ltd. announced an ambitious target of Rs. 10,000 crores to be achieved by end of financial year 2007. An additional 24 branches before March 2007 is also anticipated, taking the entire network to 170 branches to facilitate achieving the ambitious target stated earlier. This follows the encouraging financial performance achieved in the year ended on 31^st March 2006 below.

Speaking to media at a news conference, Shri. S. Balasubramanian, Chairman & CEO, CITY UNION BANK stated “CUB is embarking on an ambitious plan to open 24 more branches in the current year with a total business target of Rs.10000 crore for the FY2007. The Percentage of Net NPA to Net Advances declined steeply from 3.37% to 1.95%. Currently, we have 146 fully operational retail branches across 7 states and 2 union territories in the country. The bank has also brought 105 of its branches under Core Banking Solution and intends to connect the remaining branches under CBS by September 2006.

New Investor Friendly Measures by City Union Bank Ltd.

Easy Procurement of Deposits :

City Union Bank has appointed Integrated Enterprises (India) Ltd., as a Business Facilitator for marketing its Fixed Deposits. Integrated Enterprises (India) Ltd., is a 30-year old company with a network of 106, branches across the country. This association would benefit the bank to garner more deposits from the public, even from locations where the bank does not have a branch. City Union Bank is in the process of setting up of ‘Integrated Advisory Kiosks’ at select branches of City Union Bank with the help of Integrated Enterprises (India) Ltd, through which Mutual Funds and other financial products will be sold to customers of the bank.

Easy Filing of Income Tax Returns :

The government is in the process of setting up help centers in various places to help small businessmen and tax payers to file their income-tax returns. City Union Bank on its part proposes to offer a unique facility by

(a) Preparing the income-tax return on the spot on the basis of information provided by clients

(b) Electronically transmitting the same to the Income Tax Department and also

This facility is being made available through branches of Integrated Enterprises (India) Ltd.

Insurance Agency

City Union Bank has emerged as the No 1 Bancassurance Partner of LIC for the South Zone for the second year in a row. The Bank recorded a business of Rs. 39.36 crores through 1,600 policies, posting a first year income of over 11 crores.

Results for the Quarter Ended March 31, 2006

(Rs. in Crore)	Q4 FY2005	Q4 FY2006	QoQ % Growth
Net Interest Income	29.51	41.89	41.95%
Non Interest Income	15.12	13.67	-9.59%
Total Income	44.63	55.56	24.49%
Operating Expense	15.57	20.30	30.38%
Operating Profit	29.06	35.26	21.34%
Provisions & Contingencies	16.30	18.16	-
Provision for Tax	-2.00	-1.89	-
Profit After Tax	14.76	18.99	28.66%

The total income for Q4-FY06 was up 24.49% to Rs. 55.56 crore as compared to Rs.44.63 crore for Q4-FY05. Profit after tax for Q4-FY06 was up 28.66% at Rs.18.99 crore as compared to Rs. 14.76 crore for Q4-FY05.

Summary Balance Sheet as at March 31, 2006

(Rs. in Crore)	FY2005	FY2006	% Growth
Advances	2013	2550	26.68%
Total Assets	3495	4127	18.08%
Shareholder's Funds	241	286	18.67%
Deposits	3095	3518	13.67%

The Advances portfolio as at March 31, 2006 was up 26.68% to Rs. 2,550 crore as compared to Rs. 2013 crore as at March 31, 2005. Deposits as at March 31, 2006 were up 13.67%
to Rs.3518 crore as compared to Rs. 3095 crore as at March 31, 2005. The Bank achieved a

balance sheet growth of 18.08%, from Rs. 3495 crore as at March 31, 2005 to Rs. 4127 crore as at March 31, 2006. During Q4-FY06, the Bank raised Tier II debt (long term - 10 years, unsecured) of Rs. 30 crore. The total Shareholders’ funds as at March 31, 2006 stood at Rs.286 crore.

Key Highlights for Quarter ended March 31, 2006:

v Raised Tier II debt (long term-10 years, unsecured) of Rs.30 crore .

v The total employee strength of the Bank at 1606 as on March 31,2006 (1434 as at March 31, 2005).

Key Highlights for Year ended March 31, 2006:

(Rs. in Crore)	FY 2005	FY 2006	% Growth
Net Interest Income	110.83	139.79	26.13%
Non Interest Income	33.44	44.35	32.63%
Total Income	144.27	184.14	27.64%
Operating Expense	62.60	74.99	19.79%
Operating Profit	81.67	109.15	33.65%
Provisions & Contingencies	28.35	39.66	-
Provision for Tax	7.00	13.12	-
Profit After Tax	46.32	56.37	21.70%

ABOUT CITY UNION BANK:

Kumbakonam based City Union Bank Ltd. (CUB) has completed 102 years of banking services. Founded in the year 1904, after becoming a scheduled bank in the year 1945, CUB has become an institution that symbolizes trust and tradition for their distinguished clientele. With a vision that combines ‘Tradition with Technology’, CUB has built up a network of 146 branches across 7 states and 2 union territories, employing over 1600 motivated employees.

The Bank has consciously followed a policy of upgrading technologies, expanding and modernizing its network of branches to meet the growing demands of customer service and reach. It has implemented Core Banking Solutions in over 100 branches and intends to extend the same to all the branches by September 2006. The International Banking Division of the Bank has ventured successfully in financing of imports, exports and also provides foreign currency loans. In order to keep its employees abreast of today’s changing banking and trade scenario, the Bank regularly conducts staff training and orientation programs through its own Staff Training College.

The Bank has consistently paid a dividend of 40% since 2001-02. The bank has been ranked # 9 by Business Standard in their Banking Annual for the year 2003-04 on the parameters of Productivity, Safety, Profitability, Growth & Efficiency.

For further information , do please contact:

Shri. S. Balasubramanian, DGM

CITY UNION BANK LIMITED

Ph.: + 91 435 2432322

Fax: +91 435 2431746

Email : investment@cityunionbank.com

Performance Highlights - 2005-06
a)	Business	-	Total Business stood at Rs.6067.26 crore.
b)	Deposits	-	Total Deposits rose by 13.65% from Rs.3095.24 crore to Rs.3517.74 crore and cost of Deposits declined to 5.75% from 6.08%.
c)	Advances	-	Advances grew by 26.66% from Rs.2012.96 crore to Rs.2549.53 crore. Yield on Advances stood at 10.85%.
d)	Non –Performing Assets	-	The percentage of Gross NPA to Gross Advances declined to 4.32% from 6.30%. The Percentage of Net NPA to Net Advances declined steeply from 3.37% to 1.95%.
e)	Staff Productivity	-	Staff productivity increased to Rs.339.69 Lakhs from Rs.325.80 Lakhs.
f)	Computerisation	-	All our branches are computerised.
g)	Core Banking Solution	-	Presently 105 Branches are covered under Core Banking Solution and all the remaining branches will come under CBS by September 2006.
h)	Operating Profit	-	Operating Profit improved from Rs.81.67 crore to Rs.109.15 crore registering a growth rate of 33.65%.
i)	Net Profit	-	Net Profit improved from Rs.46.32 crore to Rs.56.37 crore recording an increase of 21.71%.
j)	Networth	-	Owned capital funds have grown to Rs.286.15 crore from Rs.240.72 crore.
k)	Earning per share	-	Earnings per share grew to Rs.23.49 from Rs.19.30.
l)	Intrinsic value of Rs.10/- per share	-	Intrinsic value of Rs.10/- per share rose from Rs.100.30 to Rs.119.23.
m)	Capital Adequacy Ratio	-	Capital Adequacy Ratio comfortably stands at 12.33%.
n)	Return on Average Assets	-	Return on Average Assets (ROA) rose to 1.46% from 1.33%.
o)	Net Interest Margin	-	Net Interest Margin (NIM) increased to 3.61% from 3.19%.

Business Update – Q4-FY2006

Raised Tier II debt (long term-10 years, unsecured) of Rs.30 crore.
The total employee strength of the Bank at 1606 as on March 31, 2006 (1434 as at March 31, 2005).

Summary Results & Prior Period Comparison

(Rs. in Crore)	Q4 FY2005	Q4 FY2006	QoQ % Growth	FY 2005	FY 2006	% Growth
Net Interest Income	29.51	41.89	41.95%	110.83	139.79	26.13%
Non Interest Income	15.12	13.67	-9.59%	33.44	44.35	32.63%
Total Income	44.63	55.56	24.49%	144.27	184.14	27.64%
Operating Expense	15.57	20.30	30.38%	62.60	74.99	19.79%
Operating Profit	29.06	35.26	21.34%	81.67	109.15	33.65%
Provisions & Contingencies	16.30	18.16	-	28.35	39.66	-
Provision for Tax	-2.00	-1.89	-	7.00	13.12	-
Profit After Tax	14.76	18.99	28.66%	46.32	56.37	21.70%

Profitability Analysis

Return on average assets of 1.46% for FY2006.
Net Interest Margin at 3.61% for FY2006.
Yield on advances at 10.85% and yield on interest earning assets at 9.84% for FY2006.
Cost of funds at 4.82% for FY2006.
Non Interest Income to total income ratio at 11.96% during FY2006.

Quarterly Trend in Financial Performance :

(Rs. in Crore)	Q4 FY2005	Q1 FY2006	Q2 FY2006	Q3 FY2006	Q4 FY2006	FY 2006
Net Interest Income	29.51	29.57	33.23	35.10	41.89	139.79
Non Interest Income	15.12	7.25	12.42	11.01	13.67	44.35
Total Income	44.63	36.82	45.65	46.11	55.56	184.14
Operating Expense	15.57	18.26	16.43	20.00	20.30	74.99
Operating Profit	29.06	18.56	29.22	26.11	35.26	109.15
Provisions & Contingencies	16.30	3.30	11.90	6.30	18.16	39.66
Provision for Tax	-2.00	2.75	4.88	7.38	-1.89	13.12
Profit After Tax	14.76	12.51	12.44	12.43	18.99	56.37

Summary Balance Sheet & Prior Period Comparison

(Rs. in Crore)	FY2001	FY2002	FY2003	FY2004	FY2005	FY2006
ASSETS
Advances	883	1011	1214	1547	2013	2550
Investments	643	911	1099	1279	1102	1057
Other Assets	305	308	317	365	380	520
Total Assets	1831	2230	2630	3191	3495	4127
LIABILITES
Shareholder's Funds	118	142	165	203	241	286
Deposits	1612	1974	2317	2847	3095	3518
Borrowings	27	10	11	30	22	75
Other Liabilities	74	104	137	111	137	248
Total Liabilities	1831	2230	2630	3191	3495	4127

Consistent growth in advances; Increase of 26.66% over March 31, 2005.
Yield on advances at 10.85% and yield on interest bearing assets at 9.84% during FY2006.