Shamrao Vithal Co-operative Bank Ltd.

Financial markets in India, which, by and large, remained in order from April 2008 to mid-September 2008, witnessed heightened volatility subsequently reflecting the knock-down effects of the disruptions in the international financial markets and the uncertainty that followed. This necessitated the Reserve Bank of India to undertake a series of measures to inject adequate liquidity from mid-September 2008 onwards, as a result of which liquidity became comfortable from mid-November 2008. However, banks have become more risk-averse owing to expected credit defaults. Reserve Bank of India has now introduced a Debt Restructuring Mechanism to obviate the stress on liquidity and payments for the otherwise viable units which will result in preserving the economic value of units.
On the macroeconomic front, the downside risks for economic growth emanate from global economic slowdown. On the positive side, Indian economy continues to grow at a decent rate as compared to the rest of the world and medium-to-long term Indian growth story remains intact.
With the results of the recent elections, a stable and progressive government at the centre has become a reality and with India looking forward to reform of the economy by revitalization of agriculture, acceleration of industrial development in order to become more globally competitive to face global economic challenges, the outlook for economy and banking in particular looks promising.

Bank's Business Performance:

Your Bank's deposits grew by 24.09% and advances registered a growth of 16.30%. The Bank delivered this performance in a year in which there was a noticeable deceleration in credit growth at the industry level. I am happy to report that your Bank has achieved targets pertaining to profitability and asset quality that it had set at the beginning of the year.

Despite the pressures of heightened competition and tighter monetary environment, your Bank earned net profit of Rs. 47.47 crore during 2008-09. Your Bank's Net Profit registered a year-on-year growth of 40.78%. Your Bank's Net Interest Income increased by 23.45% as against increase of 19.59% in previous financial year. Your Bank was able to record a noticeable improvement in its key efficiency and productivity ratios during F.Y. 2008-09. In comparison with the financial year 2007-08, your Bank's Return on average Assets (ROA) improved from 0.93% to 1.06%, the Cost to Income Ratio, which reflects operating efficiency of any Bank, further reduced from 51.03% to 45.94%, Capital Adequacy increased to 13.27%, Business Per Employee improved from Rs. 5.79 crore to Rs. 6.23 crore.

Through continuous monitoring and concerted efforts at all levels, your Bank was able to bring down its Gross and Net NPAs during the year, both in percentage as well as absolute terms as detailed in the Annual Report.
Trust of the shareholders and depositors in a bank and trust of the bank on its borrowers form the bedrock of the banking business. The strength and soundness of a bank is the measure of this trust and reflects the ability of a bank to absorb and overcome any obstacles. The overall results indicate the underlying strength of your Bank's financials.

Future Challenges and Road Ahead:

As an important player in the global economy, India cannot be completely insulated from the global weaknesses which pose a challenging environment for the Indian banking industry characterized by more pressures on its Net Interest Margins, Treasury Profits, Third Party Product distribution and Asset Quality Management.

But I am confident that your Bank will successfully meet these future challenges with its inherent strengths in the form of good capital base and liquidity, a healthy balance sheet, robust risk management capabilities and a team of dedicated staff whose skill, attitude and knowledge are playing crucial role to achieve a competitive edge. Your Bank will pursue opportunities emerging from the turmoil. We constantly review businesses and the environment, preemptively taking steps to ensure a high asset quality. Your Bank will continue to demonstrate significant growth in deposits, secured lending and fee based businesses. There will be continued focus on disciplined cost management and productivity enhancement. Our corporate goal for the F.Y. 2009-2010 is -"To leverage technology for providing superior customer service and broad-based business expansion with cost consciousness".

Vision :
"To accomplish great things, we must not only act, but also dream; not only plan, but also believe".
Your Bank has chalked out a Plan of 100 Branches & Rs.10000 crore turnover by the end of year 2010 and a goal to achieve business turnover of Rs.20000 crore in a span of 5 years, by having a pan–India presence, wider customer base, geographic reach as well as increased penetration of the existing customer base with an eye on profitable business without compromising on portfolio quality.

Your Bank has adopted an effective system of Corporate Governance which permits adequate autonomy to the Board of Directors and the Top Management to take decisions that can enhance the progress of your Bank within the framework of regulatory prescriptions, corporate goals and social responsibilities. Your Bank has been actively promoting greater transparency as a part of its measures through wider disclosure of information that reflects the quality of transparency in good governance.

On behalf of my colleagues on the Board and on my own behalf, I am grateful to the Reserve Bank of India, Central Registrar of Co-operative Societies, Statutory and Concurrent Auditors, Consultants, Legal Advisors and various other authorities who have supported us in the march towards this progress year after year. I must mention here the valuable contribution of the erstwhile Chairman, Shri Suresh Hemmady, who guided the Bank for the last ten years. I am happy to state that the future of your Bank is safe in the hands of our CEO, Mr. Srinivas Joshi. He has not only set ambitious targets but also ensured that these are achieved.

I would like to thank our employees who have made a significant contribution to your Bank's success and they deserve to be congratulated on their efforts. I would like to thank the shareholders for their presence and for their valued contribution to the Bank over the years.