CORPORATE PRESENTATION Perf...entire Post Sanction Credit Operations pertaining to Corporate and MSME Segment Relieve branches from credit & related operations and enhance focus on

CORPORATE PRESENTATION

DEC - 2017

PAN Indian Network with Strong Presence in South India

2As on 31st March, 2015

Geographic Presence in India – # Branches Geographic Presence in India – Business Size [ Dec-17]

Split of Branches [Dec-17]

Branches

Tamil Nadu,

43.18%

Karnataka, 13.71%

Kerala, 3.06%

Telangana, 5.66%

Gujarat, 1.47%

Maharashtra, 16.85%

Orissa, 0.97%

New Delhi, 6.19%

Andhra Pradesh,

5.73%

Puduchery

Current network of 519 branches and

981 ATMS spread over 16 states

As on 31st Dec, 2017

Rural 23%

Semi Urban 32%

Urban 28%

Metro 17%

Senior management team

Past: Axis Bank

Qualification: Bachelors in Science

P. MukherjeeManaging Director and CEO

Meenakshi Sundaram R.MPresident, Wholesale Banking Akkidas Jacob Vidya Sagar

President, Retail Banking

R.V.S. SridharPresident and Chief Risk Officer

Revamped risk management framework

8

BRANCH SETUP

Exclusion of lending decision from branches

Branches will have authority to sanction only LADs, JDLs, and LAS, and government sponsored schemes

Centralization of the wholesale credit process to the Corporate Office

NEW RECOVERY VERTICAL

Separate Recovery vertical at Regional level and monitored at corporate level

Recovery agencies empanelled to assist the bank in reducing the TAT of recovery

Strong retail collections to ensure better repayment controls and diligence on customers to repay on time

NEW COMMERCIAL BANKING OPERATIONS DEPARTMENT

Separate specialised branches in 7 cities (covering all regions) to handle the entire Post Sanction Credit Operations pertaining to Corporate and MSME Segment

Relieve branches from credit & related operations and enhance focus on business

Commercial Branches to be monitored at Corporate Office

OVERHAUL OF RISK MANGEMENT SYSTEM

Appointment of CRO & strengthening of operations risk department

Developed risk management systems and new risk rating models

Comprehensive policies and procedures to identify, measure, monitor and control risk throughout organization

LAD: Loan against Deposits, JDL: Jewel Deposit loan, LAS: Loan against shares/securities

• LVB Performance Highlights

“Total” denotes total business : ( O/s deposits + O/s Advances)

RWA (Risk weighted Assets), Tier I & Tier II values provided are as per Basel III

Growth in Asset Book in Q3FY18 inhibited due to deficiency in CET1. The bank is pleased to inform the successful completion of Rights Issue in January, 2018. The value of CET1 raised is INR 786 Cr and shall serve as growth capital for the coming 3-4 quarters

Q3FY17E Q4FY17E Q1FY18E Q2FY18E Q3FY18E

Total 47,465 54,511 52,712 52,387 55,851

O/s Deposits 27,751 30,553 29,476 29,171 30,620

O/s Advances 19,714 23,958 23,236 23,216 25,231

Bal. Sheet Size 31,626 35,245 33,737 37,151 40,597

RWA 19,312 22,360 21,037 22,627 24,930

Tier I 1,608 1,956 1,982 1,934 1,964

Tier II 364 366 474 457 466

No. of Branches 463 481 501 509 519

No. of employees 4,471 4,569 4,643 5,010 5,040

463 481 501 509 519

4,471 4,569 4,643 5,010 5,040

1

1,000

-

10,000

20,000

30,000

40,000

50,000

60,000

INR

Cr

Q3FY17E Q4FY17E Q2FY18E Q3FY18E

Total 27,751 30,553 29,171 30,620

O/s CASA 5,943 5,839 6,118 6,482

O/s TD 21,808 24,714 23,053 24,138

CASA % 21.4% 19.1% 21.0% 21.2%

Avg CASA % 16.8% 17.7% 18.8% 19.3%

21.4% 19.1% 21.0%21.2%

16.8%

17.7%18.8%

19.3%

0%

5%

10%

15%

20%

25%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

INR

Cr

LVB Deposit Characteristics


Gross Adv 19,714 23,958 23,216 25,231

Net Adv 19,510 23,729 22,926 24,863

Avg. Gross Adv 19,589 19,831 22,493 22,242

CD Ratio 71.0% 78.4% 79.6% 82.4%

Yield 11.5% 11.3% 10.9% 10.9%

71.0%78.4% 79.6% 82.4%

11.5%

11.3%10.9%

10.9%

0%

20%

40%

60%

80%

18,000

20,500

23,000

25,500

INR

Cr

LVB Advance Characteristics Average Balance of CASA ratio has bettered by 50 bps over last quarter

11%

17%

19%

8%

45%

Q3FY17E

Retail

Rural

MSME

Commercial

Corporate

8%16%

16%

6% 54%

Q3FY18E

Asset Mix

Focused customer segmentation asset strategy

Retail

MSME/

Rural/

Agri

Wholesale

Relationship Management Group

Formation of a specialised core relationship management team to become a one-stop shop

Branch-wise strategies drawn up and performance of sales executives monitored

Development of Retail Asset Centre

Ensure specialised underwriting norms to improve customer turnaround times and quality of assets

Product expansion with a focus on innovation

Product reengineering by launching bundled products

Focus on value added services

Focus on moving up the value chain by offering competitive and neighbourhood-oriented products

Relationship Management Group

Corporate Relationship Management Group aiming for a 360 Degree coverage of Corporate Customers

Focus on high-rated Clients* leading to reduction in credit costs

Development of sales channels for proactive origination of quality loan proposals through DST and DSA strategy

Competitiveness | Matching price to market

Rationalizing pricing across the product portfolio and improving lending to Micro Enterprises

Customer Deliverance

Loan processing automation under implementation to provide technology in the delivery of products

Specialized MSME centres

Recap centres converted as specialized MSME centres for faster loan processing and reduced Turn Around Time

Focus on loan syndication and becoming a co-lender to reputable corporates and minimizing restructured portfolio

Multiple banking partner channeling high-rated* relationships towards cross-selling opportunities

Corporate Relationship Management Group aiming for a 360 Degree coverage of corporate customers

Well diversified retail advances book with a strong focus on profitable gold loans and home loans

Transformation of MSME business model underway with top tier management consulting firm

Conscious de-focusing on wholesale business segment

*Rating of customers is done internally


Gross Inv 8,802 8,703 11,294 12,704

SLR Sec 7,937 7,911 10,410 11,332

Non SLR 865 792 883 1,372

Less: Depr -44 -51 -79 -68

Net Inv 8,758 8,652 11,215 12,637

Avg. Inv 7,672 8,137 9,659 10,500

Avg. Int. Yield 7.8% 7.6% 7.0% 6.9%

Inv. Dep Ratio 31.7% 28.5% 38.7% 41.5%

7.8%7.6% 7.0%

6.9%

31.7%

28.5%

38.7%

41.5%

0%

15%

30%

45%

-100

1,900

3,900

5,900

7,900

9,900

11,900

INR

Cr

LVB Investments Characteristics

Average investments increased ~37% QoQ on account of higher liquidity ratios and lower asset growth

• LVB Income break up

Q3FY17E (9M) Q4FY17E (12M) Q2FY18E(6M) Q3FY18(9M)

Int. on Advances 1,686.0 2,239.7 1,225.9 1,817.3

Int. on Investements & others 427.0 607.0 322.9 521.7

Trading Profit 201.9 260.0 136.3 98.3

Other Income 169.5 242.8 144.9 210.2

Total Income 2,484.4 3,349.4 1,830.0 2,647.5

Int. on Adv : Total Inc 67.9% 66.9% 67.0% 68.6%

Int. Inc : Total Inc 85.0% 85.0% 84.6% 88.3%

2,484.4

3,349.4

1,830.0

2,647.5

67.9% 66.9%

67.0%68.6%

85.0%

85.0%

84.6% 88.3%

50.0%

75.0%

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

INR

Cr

On YTD basis, Interest on advances has bettered by ~8%

Trading profit diminishes on account of interest rate movements

On YTD basis, other income has bettered by ~24%Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18

NII 186.7 190.6 227.8 217.7 232.7 219.7

150.0

200.0

250.0

INR

Cr

NII

QoQ NII betters by 15%

• LVB Expense break up


Interest Exp. 1,558.3 2,064.0 1,098.4 1,668.9

Staff Exp. 249.3 334.7 176.6 277.2

Other Exp. 221.2 316.7 176.6 276.8

Total Exp 2,028.7 2,715.4 1,451.5 2,222.9

CIR% 50.8% 50.7% 48.3% 56.6%

2,028.7

2,715.4

1,451.5

2,222.9

50.8%

50.7%

48.3%

56.6%

44.0%

46.0%

48.0%

50.0%

52.0%

54.0%

56.0%

58.0%

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

INR

Cr

Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18

Credit Cost 62.6 48.1 108.2 112.0 187.4 85.4

OPEX 160.2 169.4 180.9 175.9 177.2 200.9

50.0

100.0

150.0

200.0

250.0IN

R C

r

Interest expense increase on account of increase in deposits and increase of borrowing in money market

Staff expense has increased by ~11% on account of new branch hiring and additional hiring for business veticalisation

Additional IT & RE expenditure incurred for upgradation and new branch opening

• LVB Profit Statement


Operating Profit excluding Trading Profit 253.8 374.1 242.2 326.3

Trading Profit 201.9 260.0 136.3 98.3

Operating Profit 455.7 634.1 378.5 424.6

Provn for NPA 142.2 235.5 282.0 379.3

Dep. On Investments -4.9 2.4 31.5 20.6

Provn for Std & Restr. Adv 4.8 15.5 -14.9 -19.6

Other Provn 3.6 0.6 0.8 4.5

PBT 309.9 380.1 79.1 39.9

Tax 106.0 124.0 2.5 2.5

PAT 203.9 256.1 76.6 37.4

-10.0

190.0

390.0

590.0

INR

Cr

** Core operating profit has seen resurgence

**

• LVB Profit Statement QoQ

Q3 FY17 Q4FY17 Q1 FY18 Q2 FY18 Q3 FY18

Operating Profit excluding Trading Profit 71.3 120.3 98.7 143.5 84.2

Trading Profit 100.2 58.1 100.5 35.9 -38.0

Operating Profit 171.5 178.4 199.1 179.4 46.1

Prov. For NPA 38.3 93.3 82.6 199.4 97.3

Dep. On Investments 1.4 7.2 24.0 7.5 -10.9

Prov. for Standard & Restr. Advances 5.0 10.7 5.0 -19.8 -4.7

Other Provisions 3.4 -3.0 0.5 0.3 3.7

Profit before Tax 123.4 70.2 87.1 -8.0 -39.2

Prov. for Tax 45.0 18.0 21.0 -18.5 0.0

Net Profit 78.4 52.2 66.1 10.5 -39.2

-20.0

30.0

80.0

130.0

180.0

INR

Cr

Provision for Depreciation as of 30/12/2017 amounted to Rs.67.69 crore as against Rs.78.61 crore in 30/09/2017. Hence there was a reversal of provision amounting to Rs.10.92 crore.

Successful pull back of fraud losses ~INR 65 Cr (INR 80 Cr was reported in Q2FY18 financials) in Q4FY18 likely; shall help in bettering the profitability nos. for the FY18 overall

** Core operating profit has seen resurgence

**

Q3FY17E Q4FY17E Q1FY18E Q2FY18E Q3FY18E

Gross NPA 548.6 640.19 878.16 1277.66 1427.01

Net NPA 354.23 418.41 653.64 993.21 1060.46

0

200

400

600

800

1000

1200

1400

Gross NPA Net NPA

INR

Cr

• LVB Non Performing Assets

Incremental slippages mainly seen in Chemicals & Mining related portfolio .

3.9

7.3

11.1

19.1

19.5

26.4

26.5

37.0

44.9

45.7

52.2

88.6

99.4

164.5

174.9

240.7

0.0 50.0 100.0 150.0 200.0 250.0 300.0

Micro fin

Print Pack

Gems & Gold

Textiles

Road project

Education

Others

Pharma

Aluminium

Shipyard

Food processing

Metals & Minerals

Communication

Power

Iron

Infrastructure

INR CR

• LVB Restructured Assets Industry wise

0.98

0.630.74

0.12

(0.42)

Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18

Return on Assets (ROA %)

18.18 11.09 13.14

2.01

(8.02)


Return on Equity (ROE %)

• LVB Balance sheet ratios

10.2110.38 11.67 10.57 9.75

8.32 8.75 9.42 8.55 7.88


CRAR%

CRAR% ( Basel III) CRAR% (Tier I)

349.5%

326.9%

304.1%

208.9%

277.4%


LCR as per BASEL III

2.782.67

3.78

5.50 5.66

1.82 1.762.84

4.33 4.27


NPA Ratio %

Gross NPA

Net NPA

62.21 59.5151.32 46.27 46.75


Provision Coverage Ratio (%)

The bank is pleased to inform the successful completion of Rights Issue in January, 2018. The value of CET1 raised is INR 786 Cr that shall aid in book growth and healthier CRAR ratios

9.07 9.138.65 8.73

8.41


Yield of Funds (%)

2.37

2.99

2.45

2.61

2.34


Interest Spread (%)

6.70

6.146.21

6.12 6.07


Cost of Funds (%)

2.723.10 2.74

2.93

2.63


Net Interest Margin (%)

49.70

50.35

46.90

49.70

81.33


Cost to Income Ratio (%)

• LVB P&L ratios

NIM Slippage on account of lower asset book growth and maintenance of higher liquidity levels

Technology enabling automation and enhanced customer experience

DIGITAL BANKING AND

OMNICHANNEL PRESENCE

Strong presence across banking

mediums for a seamless customer

interface

BUSINESS INTELLIGENCE UNIT

Customer segmentation based on analytics

providing bespoke financial products and

services based on differentiated

requirements

AUTOMATED LOAN ORIGINATION

Uniform processing and standardised

enforcement of credit terms and

reporting improving productivity

MOBILE BANKING

Multifunction mobile app with intuitive

functions for a

state-of-the-art customer interface

SALES AUTOMATION

CRM Tool for salesforce automation and

leads management

UPGRADED CORE BANKING SUITE

Upgrade of the hardware and network setup to the

latest scalable technologies to enhance core

banking and internet banking platform for long

term sustainability

REVAMPED TECHNOLOGY

ARCHITECTURE

E LOUNGE

Automated branch for advanced banking

facilities such as cheque deposit with

T+1 clearing and passbook printing

Funds transfer pricing

Profitability Management System

Analytical Applications Infrastructure

Business Intelligence

ORACLE FINANCIAL PRODUCT SUITE

Thank you

Documents

CORPORATE PRESENTATION Perf...entire Post Sanction Credit Operations pertaining to Corporate and MSME Segment Relieve branches from credit & related operations and enhance focus on