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Chennai, 6^th February 2006 : City Union Bank Ltd., has posted excellent working results for the quarter ended 31.12.2005. Operating profit surged by 93% to Rs.26.10 cr for the quarter ended 31.12.2005 vis-à-vis Rs.13.56 cr for the quarter ended 31.12.2004. The net profit was up by 26% to Rs.12.43 cr for the quarter ending 31^st Dec 2005 from Rs.9.86 cr during the previous period. The bank created higher provisions for NPAs with a view to bring down the Net NPA level to sub 2% by the end of current fiscal. The bank’s interest income improved from Rs.72.39 cr to Rs.81.92 cr during the said period. The Net Interest Income was up by 23% from Rs.28.64 cr to Rs.35.09 cr and the total income increased from Rs.75.03 cr to Rs.92.93 cr. The quarterly EPS improved from Rs.4.11 to Rs.5.18.

The deposits of the bank grew smartly by 14% from Rs.2927 cr as on 31.12.2004 to Rs.3324 cr as on 31.12.2005. Similarly the gross advances swelled by 31% from Rs.1819 cr to Rs.2391 cr. The bank has planned to achieve a total business volume of Rs.10,000 cr by 31.03.2007 and further of Rs.25,000 cr by 31.03.2010. The bank has detailed plans of action in place to achieve the targeted business which includes higher IT initiatives, focus on enlarged customer base, improved customer service through agents, opening of more branches, recruitment of additional staff and so on. Based on RBI’s recent policy guidelines, the Bank is planning to appoint Agents to mobilize deposits thereby increasing the customer base. It is pertinent to note that RBI has permitted banks to mobilize deposits and canvas for other business through Agents in areas which are not covered by their branches. This gives an added advantage to the Bank to improve the business manifold. The bank has obtained authorization from RBI to open 15 new branches of which 6 branches will be opened before 31^st March, 2006.

Network Expansion & Service to customers

The bank has brought over 80 branches under CBS in association with TCS and has well laid plan for achieving 100% networking of all branches before 30.06.2006.The Bank has offered to its customers a charge-free access to more than 5200 ATMs through its membership in NFS. The bank offers instant transfer of funds in 76 of its branches to the RTGS-enabled branches of any bank in the country. The bank offers attractive interest rates up to 8% for senior citizens and 7.5% for other customers. Not only to increase its fee based income, the bank offers a host of products like life insurance, general insurance and mutual funds to help its customers meet all financial needs under one roof. The Bank has secured the highest ever business for LIC of India amongst all Corporate Agents in South India and is proud to continue with the same ranking in the current year too.

The bank recently introduced a monthly savings plan called “ Multiple Benefits Plan “ with added facilities like life insurance, DP, E-filing of IT returns, etc to the deposit holders free of cost. The bank’s e-credit will reduce the process time for loan proposals and E-treasury will further fine-tune its treasury operations. The bank has made considerable progress in credit risk management with an all inclusive extensive credit risk rating of borrowal accounts and the PD calibration is in an advanced stage with the use of risk scan software from TCS. Another software from TCS for ALM purposes, named Almity is used to mitigate market risks.

CUB has entered into a MoU with an NGO … Kathir Foundations … to channelize micro-credit across five districts of Thanjavur, Trichirappalli, Nagappattinam, Tiruvarur & South Arcot and plans to extend the same to other districts in Tamilnadu in near future. It is worthwhile to note that CUB has been a regular and continued recipient of NABARD awards for best bank financing SHGs in Tamilnadu.

The bank will, in all likelihood, end the current financial year with Rs.300 crores of networth, which should touch Rs.1000 crore by 2010. In order to achieve volume growth in business and in tune with Basel II requirements, the bank is exploring possibilities of raising Tier I and Tier II capital, though the present Capital Adequacy Ratio is comfortable at 12.01% as against RBI’s minimum stipulated level of 9%. RBI’s recently announced innovative capital instruments as also the proposed preference share capital are doing serious rounds for consideration in the bank at the appropriate time.

City Union Bank Ltd., completed over 100 years of banking service, having been founded in the year 1904 and becoming a scheduled bank in year 1945 with a vision that combines ‘Tradition with Technology’, City Union Bank is an excellent example of growth through ‘Relationship Banking’. The profile of City Union Bank’s customers range from middle class households to SMEs to industry leaders in categories such as FMCG, Durables, Information Technology, Media and Entertainment, Infrastructure, Manufacturing particularly in sectors such as automobiles, auto components, textiles, engineering, gems and jewellery, leather processing, foodstuff, printing and publishing, etc.