MESSAGE FROM THE CHAIRMAN TO SHAREHOLDERS
On behalf of the Board of Directors and the Management of Vijaya Bank, it is my pleasure to share with you the progress and performance of the Bank during the year 2016-17.
The recovery of global economy remained weak with lower growth in the backdrop of depressed commodity prices and volatile financial markets. The global economy also faced uncertainties in the form of unprecedented geopolitical shifts, as evident in the United Kingdom’s decision to leave the European Union and the outcome of US Presidential Election. Several advanced and emerging economies showed subdued performance during the year.
In the context of slower growth in the global economy, India performed better with a predictable and steady growth despite several challenges and downward pressures. The second Advance Estimates (AE) released by the Central Statistical Organization (CSO), the economy was estimated to register a growth rate of 7.1% in 2016-17. For the Banking sector, 2016-17 was a year of stress and Challenges, Banks’ asset quality showed increased stress impacting the profitability. Several banks showed significant losses after setting aside huge provisions for non performing loans.
Vijaya Bank could meet these challenges adopting a business strategy of measured growth with prudent policies aimed at operational efficiency, driving growth to meet our objectives. The Bank has taken a considered and disciplined approach towards cost, growth and managing risk
Against the challenging business scenario, we have focused on strengthening and developing our processes, promote innovation and operational transformation which have resulted in a positive and eventful year for the Bank achieving several significant milestones.
During the year 2016-17, the Bank had taken several initiatives to strengthen its business portfolio, to improve its presence across the country and to increase the clientele base. We have strengthened the network, increase our business, profitability and enhanced corporate value through technological advancements.
Total Business of the Bank reached all time high of Rs, 2,29,833 Crore as at March 31, 2017. During the year, the Bank has made significant strides in building profitable retail business portfolio on both asset and liability segments. The retail advances portfolio of the Bank has moved from strength to strength and continued to outperform the market with a healthy growth of 24.33% and Retail Credit accounted for 30.29% of Gross Credit. Savings Deposits and Current Account Deposits grew by a robust 28.41% and 28.41% respectively and y-o-y CASA ratio improved by 4.90% to reach 28.12%.
The Bank showed consistent profits in every quarter while the banking industry was under severe stress due to impaired asset quality and subdued business growth. Operating profit before provisions increased by 56.32% year-on-year to Rs, 2421 Crore. Net profit for the year reached Rs, 750.48 Crore, showing an increase of 96.56% as compared to the previous year. The Bank had made positive strides on the profitability front with impressive improvements in several profitability parameters, such as Net Interest Margin, Return on Assets etc.
As a proactive risk measure, the Bank continued its vigilance over high risk sectors and timely remedial measures were taken to maintain the quality of assets. Credit policies and procedures were reviewed and updated regularly to align with the overall risk management strategy of the Bank. The Bank carefully diversified credit exposures across various sectors and maintained the regulatory ceiling.
On the asset quality front, the Bank had taken several measures to improve the quality of credit portfolio and remedial measures for recovery of non-performing advances. As a result, the Bank’s asset quality remained stable successfully bucking the market trend. Net non performing loans to total loans in percentage terms has came down to 4.36% from 4.81% at the end of last year.
The Bank also maintained its strong liquidity and capital positions, demonstrating its financial strength. The Bank is well capitalized with a capital adequacy ratio of 12.73% as per Basel III, which is well above the minimum regulatory requirements.
During the year, organizational structures are streamlined to strengthen the administrative efficiency and the Bank had taken measures to enhance the digital capabilities to strengthen the online and mobile technology platforms. The Bank has taken comprehensive human development initiatives to enhance staff engagement levels and to deliver superior products and services. The Bank also consciously engaged itself in various socially responsible activities under the corporate social obligations during the year, for which gained wide acclaim from various quarters.
Despite the complex macro situations, the Bank maintained its quality growth momentum, showed a good performance and could meet the market expectations.
FY 2017-18 comes with challenges and opportunities. The outlook on growth and macroeconomic stability for India is positive and favorable. Banking business will continue to be challenging. Managing asset quality and finding capital to support business growth and regulatory prescriptions will be the major challenges. Competition from new entrants with cutting edge technology would pose new threat in retaining market share. Perhaps Indian banks would be entering a transformative change to meet these challenges and a road map for consolidation may bring in a radical transformation in the Indian banking scenario. Only the fit and efficient ones adopting quickly to the changes would survive.
Going forward, we will continue with our prudent strategy to sustain our growth momentum. The major goals and objectives of the Bank are aimed at building a profitable business model, greater customer orientation, leveraging brand equity and providing support in terms of greater technology application. The Bank is committed to the process of updating technology to improve efficiency and to make the customer’s experience at various touch points convenient and user friendly. The Bank has drawn comprehensive plans to strengthen its retail banking operations along with its expansion plans, its commitment to enhance its financial solvency and the quality of its asset portfolio. The Business strategy also remains focused on effective control over risks and maintaining a long term growth to meet the expectations of all stakeholders.
I am confident that Vijaya Bank will be able to take advantage of these plans with concerted efforts on innovative and novel approach.
The Board of Directors expresses their sincere gratitude and appreciation to the Bank’s esteemed shareholders, valued clients and other stakeholders for their confidence and support. I would like to take this opportunity to express my sincere thanks to the Bank’s Management and Staff for their efforts and dedication towards the growth of the Bank.