Investor Presentation November 2010

Disclaimer
No representation or warranty, express or implied is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of such information or opinions contained herein. The information contained in this presentation is only current as of its date. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements, including those relating to the banks general business plans and strategy, its future financial condition and growth prospects and future developments in the industry and regulatory environment. Actual results may differ materially from these forward-looking statements due to a number of factors, including future changes or developments in the banks business, its competitive environment and political, economic, legal and social conditions in India. This communication is for general information purpose only, without regard to specific objectives, financial situations and needs of any particular person. This presentation does not constitute an offer or invitation to purchase or subscribe for any shares in the bank and neither any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. The bank may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revisions or changes. This presentation should not be copied and/or disseminated in any manner.

Table of contents

1. 2. 3. 4.

City Union Bank Overview & Growth Story Ownership Pattern Management Financial Performance

4-8 9-10 11-14 15-33

1. City Union Bank Overview & Growth Story

Showcasing steady performance on an ongoing basis

Long and consistent track record of profitability Profit and dividend payout in all 100 + years of operations Steady growth Business growing at a CAGR of 27% and Net Profit at a CAGR of 30% in last five years RoA and RoE at 2% and 27% respectively for Q2 2010-11, which is considered healthy in the banking space Best Corporate Practices; All Independent & Professional directors; Continuity in Management only 6 CEOs so for Rapid progress on the technology front with 100% business under CBS and State of the Art Technology platform Significant improvement in asset quality over the years. Net NPA 0.54% for Sep 2010 and PCR > 70% Well capitalized; CAR Basel II 13.41% as on September 30, 2010 Future plans for expansion of branch network to 500 Branches in next 3 years

CUB is well positioned to capitalize on the huge growth opportunities in the banking sector

Key milestones

2003 Obtained licenses to act as a agent for procuring life insurance & general insurance business

1998 Initial Public Offering (IPO); Listing Banks shares on the BSE, NSE & MSE

2009 Rights issue for equity shares @ 1 : 4 to reward the existing shareholders

1965 Amalgamation of The City Forward Bank Limited and The Union Bank Limited with our Bank 1904 Incorporation of the Bank

2007 Preferential allotment for equity shares strengthening banks capital adequacy ratio 2002 Entered into agreement with TCS for core banking solution Quartz

1957 Take over of Common Wealth Bank Limited

1945 Scheduled bank since 22.03.1945

6

Strong presence in the South

A network of 229 branches of which 200 branches are located in South India and 146 in Tamil Nadu alone

State wise branches

State Tamil Nadu Andhra Pradesh Karnataka Maharashtra Kerala Gujarat Others Total No of Branches 146 29 15 12 10 6 11 229 Statewise % of Branches 64 13 7 5 4 2 5 100 % of our Business 71 9 6 7 2 1 4 100

Branch Expansion

We have received License from Reserve Bank of India to open 62 more branches in various states within a Year, out of which 40 branches be in Tier I and Tier II centres and 22 branches in Tier III to VI centres. Till 15th November 2010, we have opened 7 branches in Tamil Nadu out of license received for 62 branches. Remaining 55 branches yet to be opened.

State wise Branch Expansion planned

State Tamil Nadu Andhra Pradesh Karnataka Maharashtra Tier I & II centres 16 5 5 4 Tier III to VI centres 19

Chattishgarh
New Delhi Orissa Punjab Uttar Pradesh Total

1
2 1 1 1 36 19

2. Ownership Pattern

A well diversified investor base

Ownership profile as on 30th September 2010
Others 0.4%

Major Institutional shareholders as on 30th September 2010

Shareholders % holding 4.97 4.78 4.67 3.94 3.39 3.03 1.63 1.45 1.28 1.15 LIC of India L & T Capital Holdings Limited F M O, Nederlands Argonaut Ventures Ares Investments Acacia Partners Lp. GMO Emerging Illiquid Fund Karur Vysya Bank Wasatch Core Growth Fund ING Vysya Life Insurance Company

FII's 23.1%

Public 56.6%

Domestic Institution 6.5% Corp. Bodies 13.4%

Well diversified ownership Long term investors ensuring stability and support to management Cash management services offered to LIC to improve CASA and customer base Bank Assurance partner to LIC and ranked No.1 in South India consecutively for three years Chairmans Group holding reduces to 9.42%

10

3. Management

11

Transparent Corporate Governance practices

All directors are Independent and Professional directors

Various sub-committees of Board functions to oversee the operations of the Bank

Code of conduct for directors and senior management put in place

Disclosure norms strictly adhered to

KYC / AML norms strictly complied with. No penalties / fines for any violation.

12

A well experienced and strong Board

We have eminent personalities on our Board; 1 Former Chairman of a PSU Bank 2 Chartered Accountants 2 Agriculturists 1 Industrialist

(1/2)

1 Advocate
1 Retired High Court Judge 1 Banking professional

Profile of Board of Directors Name

Mr. P.Vaidyanathan, Chairman

Profile
He is a graduate in Commerce, a Fellow Member of the Institute of Chartered Accountants of India, Associate Member of the Institute of Cost & Works Accountants of India and Associate Member of the Institute of Company Secretaries of India. He has more than 35 years of experience in financial services industry

Mr. S. Balasubramanian, He holds a Master degree in Mathematics, CAIIB and PGDFM and has 38 years of experience in the banking MD & CEO industry. He had joined City Union Bank in 1971 as a probationary officer and has since then been associated with the Bank in various capacities. In 2005 he was appointed as the Chairman & CEO of our Bank and thereafter, in 2009 the Reserve Bank of India has accorded approval for his appointment as the Managing Director and CEO of our Bank with effect from January 31, 2009 Mr. K.S. Raman, Director He is a post graduate in Statistics. He is an agriculturist and has been on the board during 1984 to 1992 and 1994 to 2002 and presently from 2004 onwards. He has worked with Statistics Department, Annamalai University, Automobile Products of India Limited and in Larsen & Toubro Ltd

13

A well experienced and strong Board

Profile of Board of Directors Name
Mr. S. Bernard, Director Mr. N Kantha Kumar, Director Mr. N.Sankaran, Director

(2/2)

Profile
He is a graduate in Commerce and a Fellow Member of the Institute of Chartered Accountants of India. He is a practicing Chartered Accountant of 31 years standing with expertise in the field of Accountancy and Taxation He is a graduate in Commerce and Law. He has been in the Banking Industry for around 38 years. He has held key positions such as Executive Director in Canara Bank and Chairman & Managing Director in Syndicate Bank He is a Bachelor of Engineering (Civil) and is a Member of Institute of Engineers, India and has been on the board since 2008. He is a retired General Manager from M/s. Voltas International, Chennai

Mr. R.G. Chandramogan, He is the Chairman & Managing Director of Hatsun Agro Product Limited. He has been in the dairy processing Director and Ice cream business for around 30 years. He visits the Indian Institute of Management, Ahmedabad as a guest faculty. Mr. T.K. Ramkumar, Director Justice (Retd.) S.R. Singaravelu, Director Mr. C.R. Muralidharan, Director He is a graduate in Commerce and an advocate. He is a partner in M/s. Ram & Rajan & Associates, and possesses knowledge and experience in banking law, company law, intellectual property rights, civil laws etc He is a former Judge of High Court of Madras and High Court of Orissa. He has vast experience of 36 years in the Judiciary. He was in Judiciary Department and held various position. He retired as a whole time member of the Insurance Regulatory and Development Authority (IRDA) in November 2009. Prior to this appointment he was a Chief General Manager in Reserve Bank of India. He has extensive experience in regulation of Banks in Reserve Bank of India and Insurance Companies in IRDA.

14

4. Financial Performance

15

FY10 performance A snapshot

HIGHLIGHTS FOR THE QUARTER ENDED 30th SEPTEMBER 2010 Deposits increased by 28.7% to Rs.114,941 Mn from Rs.89,332 Mn Advances surged by 38.5% from 58,058 Mn to 80,393 Mn Total Business grew by 32.5% from Rs.147,390 Mn to Rs.195,334 Mn CASA improved by 26.7% to Rs.22,600 Mn from Rs.17,843 Mn Highest Quarterly Profit in the Banks history Net Profit increased by 35% from Rs.458 Mn to Rs.616 Mn Net NPA lowered to 0.54% from 1.16% (YoY) Highest ROA at 1.98% up from 1.86% (YoY) Net Interest Margin higher at 3.74% from 2.79% (YoY).

16

30th September 2010 performance A snapshot

Financial Performance 30th September 2010 Vs 30th September 2009 Particulars Deposits Advances Total Business Demand Deposit Savings Deposit CASA Gross NPA Net NPA Gross NPA (%) SEP 2010 ( in INR mn) 114,941 80,393 195,334 9,727 12,873 22,600 1,011 428 1.26% SEP 2009 ( in INR mn) 89,332 58,058 147,390 8,268 9,575 17,843 1,154 666 1.99% Absolute Growth 25,609 22,335 47,944 1,459 3.298 4,757 -143 -238 % Growth 28.7% 38.5% 32.5% 17.6% 34.4% 26.7% Direction MAR 2010 (in INR mn) 102,846 68,967 171,813 10,970 11,512 22,482 935 397 1.36%

Net NPA (%)

CRAR Basel II

0.54%
13.41%

1.16%
14.08%

0.58%
13.46%

CD Ratio
PCR

69.94%
72.44%

64.99%
53.51%

67.06%
71.56%

17

Q2 FY11 performance A snapshot

Financial Performance Q2 FY 11 Vs Q2 FY 10 Particulars Net Interest Income Other Income Operating Expenses Operating Profit Net Profit ROA ROE Key highlights NII increased by 76% Operating Profit increased by 48% (YoY) Net Profit grew by 35% ROA at 1.98% and ROE at 27.31% highest in the Banking Industry. Q2 FY 11 ( in INR mn) 1,040 439 529 950 616 1.98% 27.31% Q2 FY 10 ( in INR mn) 591 493 444 641 458 1.86% 25.58% Absolute Growth 449 -54 85 309 158 % Growth 75.9% -10.9% 19.2% 48.3% 34.6% Direction

18

H1 FY11 performance A snapshot

Financial Performance H1 FY 11 Vs H1 FY 10 Particulars Net Interest Income Other Income Operating Expenses Operating Profit Net Profit ROA ROE Key highlights NII increased by 70% Operating Profit increased by 56% Net Profit increased by 37% Healthy ROA at 1.75% and ROE high at 24.09% H1 FY 11 ( in INR mn) 1,962 761 986 1,736 1,060 1.75% 24.09% H1 FY 10 ( in INR mn) 1,154 753 793 1,113 773 1.60% 22.10% Absolute Growth 808 8 193 623 287 % Growth 70.0% 1.1% 24.3% 56.0% 37.1% Direction

19

Key business indicators

Key indicators Particulars Cost of Deposits Yield on Advances Yield on Investments Net Interest Margin Cost to Income Operating Exp - as a % of NII Return on Assets (ROA) Return on Net worth (RONW) Per Employee Business ( in INR mn) Per Employee Profit (in INR mn) Ann EPS (in INR.) FV INR1/- Share Q2 FY 2010-11 6.84% 12.51% 6.65% 3.74% 35.77% 50.87% 1.98% 27.31% 72.56 0.92 1.54 H1 FY 2010-11 6.83% 12.44% 6.60% 3.64% 36.22% 50.25% 1.75% 24.09% 72.56 0.79 2.65 Direction FY 2009-10 7.73% 13.04% 7.84% 3.15% 39.33% 59.63% 1.52% 20.55% 65.10 0.58 4.03

20

Strong deposit and advances growth

Steady increase in deposits
Deposits (INR bn)
120 100 80 60 40 20 0 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10 35 47 64 82 115 103

Steady increase in advances

Advances (INR bn)
90 75 60 45 30 15 0 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10 25 33 56 45 68 80

Steady increase in CASA

CASA (INR bn)
25 20 15 10 5 0 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10 8 11 13 16 22 23

Deposits - stable and retail oriented. Growing at a CAGR of 30% CASA recorded 27% growth for Sep 2010 (YoY) Advances growing at a CAGR of 29% in the last 5 years; Credit Deposit ratio is sound at 69%

CUB has reported strong growth in deposits and advances in the last few years
21

Strong growth in income and profitability

Strong growth in other income
Other Income (INR Mn)
1,500 1,237 1,200 900 600 300 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10 600 444 903 761 1,435 700 600 500 400 300 200 100 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10 273 357 480

CEB & Charges Income over 5 years

CEB Income (INR Mn)
690 598 455

Steady increase in net interest income

Net Interest Income (INR Mn)
2,800 2,500 2,200 1,900 1,600 1,300 1,000 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10 1,398 1,675 1,998 2,426 1,962 2,781

Robust PAT growth

PAT (INR Mn)
1,500 1,200 900 600 300 0 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Sep-10 564 718 1,221 1,017 1,060 1,528

Half year figures (Not Annualised)

22

Cost of deposits & yield on advances

Cost of deposits and yield on advances in last 10 years

CoD
16.0 15.06 14.0 13.75 12.58 12.0 11.72 11.36 11.32

YoA

13.46 12.82

13.04 12.44

11.00

10.85

10.0

9.86 8.96 8.74 7.89 6.96 7.23 6.08 5.95 7.98 7.73 6.83

8.0

6.0

5.75

4.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sep-10

Spread between cost of deposits and yield on advances of our bank maintained in the last 10 years
23

Investments At a Glance
Investments Breakup and Category wise Particulars (Rs in Mn) SLR Non SLR Total Investments Yield on Investments Investments Breakup: -AFS -HTM 4,954 30,389 3,928 28,256 5,914 23,959 SEP-10 28,819 6,575 35,394 6.6% MAR-10 25,788 6,397 32,185 6.5% SEP-09 25,661 4,257 29,918 6.4%

-HFT
Total Investments M D AFS M D HTM M D HFT M D Overall

51
35,394 2.86 5.81 6.46 5.31

0
32,184 2.89 5.98 5.49

46
29,919 2.09 6.23 7.15 5.30

In total Non-SLR securities of Rs.6,575 Mns, investment in NABARD RIDF constitutes Rs.5,924 Mns. Modified Duration for entire investment portfolio is 5.31 only.

24

Loan book Major Industry wise exposure

Advances to Major Industries as on 30th September 2010
Loans Composition
Construction (Comm Real Estate) Textiles Food Processing Iron & Steel Paper & Paper products Other Metal & Metal Products Other Industries

Amount (in INR mn)

3,561 8,426 1,390 3,760 1,798 1,332 2,480

% to Total Advances
4% 11% 2% 5% 2% 2% 3%

Paper & Paper Products, 2% Other Metals, 2% Other I ndustries, 3% I ron & Steel, 5%

Construction, 4%

Food Processing, 2% Textiles, 11%

25

Loan book Major Sector wise Exposure & Regulatory Classification

Major Sector wise Advances as on 30th September, 2010
Major Sector MSME Agriculture Large Industries Retail Traders Wholesale Traders Amount ( in INR mn) 25,912 9,401 4,679 8,043 9,487 % to Total Adv 32% 12% 6% 10% 12%

SME and trade loans earning higher yields constitute 54%. Diversified credit portfolio reduces credit risk Lower ticket size backed by adequate collaterals Unsecured Advances aggregate to 3% only

Regulatory Classification of Advances as on 30th September, 2010

Classification Corporates Regulatory Retail NBFC Other Advances Gross Loans Total Amount ( in INR mn) 27,287 33,656 2,411 17,039 80,393 % to Total Adv 34% 42% 3% 21%

26

Loan book products composition

Loan Products composition as September 30, 2010

Amount ( in INR mn) % to Total Adv
46,263 32,489 1,641 58% 40% 2%

Working capital loans yielding higher interest constitute 58% of advances Re-pricing possible at short intervals thus

Loan Products Combination OD/CC and Demand Loans Term loans Bills Purchased / Discounted

reducing interest rate risk

~80% of our loan book is on floating rate basis which reduces interest rate risk

Gross Loans Total

80,393

Bills purchased/di scounted 2% Demand loans 23%

O verdraft/Ca sh credit 34% Term loans 41%

27

Asset quality is showing continuous improvement

NPA AN ANALYSIS LAST 5 YEARS
Gross NPA & Net NPA - Quantum
140 130.69 120 100 80 67.79 60 49.80 40 20 0 Gross NPA Net NPA 2005 130.69 67.79 2006 112.83 49.80 2007 87.07 36.25 2008 82.93 44.46 Gross NPA 2009 102.08 61.11 Net NPA 2010 93.50 39.67 Sep-10 101.11 42.79
Gross NPA % Net NPA %

Gross NPA & Net NPA - %

7.00% 6.00% 5.89%

112.83 102.08 87.07 93.50 82.93 61.11 44.46 36.25 39.67 42.79 101.11
5.00% 4.00% 3.37% 3.00% 2.58% 2.00% 1.00% 0.00% 1.95% 1.09% 1.81% 0.98% 1.80% 1.08% 1.36% 0.58% 2005 5.89% 3.37% 2006 4.32% 1.95% 2007 2.58% 1.09% 2008 1.81% 0.98% 2009 1.80% 1.08% 2010 1.36% 0.58% 1.26% 0.54% 4.32%

Sep-10 1.26% 0.54%

Gross NPA %

Net NPA %

Smart improvement in Asset quality over the years; Gross NPA has come down from 5.9% in March 05 to 1.3% in September 10 Net NPA level brought down to 0.5% in September 10 from 3.4% in March 05 We have a well defined and robust credit appraisal policy and risk management system

28

Restructured Accounts

Details of Restructured Accounts No accounts Restructured in the last 5 quarters. 25% of the Restructured amounts already recovered (full cash recovery).

Only 2.9% of restructured accounts turned NPA and no addition from Restructured accounts in the last 5 quarters.
The Restructured accounts are performing well and certain accounts got closed well before the due date. Out of Rs.4843 Mn in Restructured amounts, the amount collected upto September 2010 was Rs.1921 Mn. Regular repayments received for more than one year in accounts with restructured balance of Rs.1640 Mn. An amount of Rs.1697 Mn only in the Moratorium period of one year in entire Restructured Accounts. Balance outstanding on Restructured Accounts as on 30th September 2010 Rs.3337 Mns

29

Restructured Accounts

Details of Restructured Accounts

Amount ( in INR mn)
3,187.9 1,655.6 4,843.5

No .of Borrowers Restructured in I Phase FY 2008-09 Restructured in II Phase FY 2009-10 Total Out of the above, Accounts closed till 30.09.2010 Accounts turned as NPA Amounts repaid till 30.09.2010 Balance outstanding as at 30.09.2010 213 51 264

699.5 142.5 1221.9 3337.0

Out of Rs.3337 Mn, accounts corresponding to Rs.1640 Mn have completed 1 year of principal repayment after the moratorium period. Rs.1232 Mn have completed more than 6 to 12 months of principal repayment after the moratorium period. Rs.401 Mn have completed 6 months of principal repayment after the moratorium period. Only Rs.64 Mn yet to start principal repayment.

30

Income and Expenses break up Q2 FY 11 Vs Q2 FY 10

Interest income break up

Particulars Q2 FY 11 Q2 FY 10 % Change March 10

(in INR Mn)

Interest on Loans Interest on Investments

2,292 603

1,853 495

23.7% 21.8%

7,558 1,937

Other Interest Income

Total expenses

26
2,921

8
2,356

325.0%
24.0%

71
9,566

Other income break up

Particulars Q2 FY 11 Q2 FY 10 % Change March 10 Particulars Interest expended Employee cost Other operating exp Total expenses

Expenses break up
Q2 FY 11 Q2 FY 10 % Change March 10

CEB & Charges Treasury Income Others including Suit Recoveries Total Other Income

244 24 172 440

148 287 59 494

64.9% -Ve 291.5% - ve

690 458 260 1,435

1,881 247

1,765 224

6.6% 10.3%

6,785 801

282
2,410

220
2,209

28.2%
9.1%

857
8,443

31

Income and Expenses break up H1 FY 11 Vs H1 FY 10

Interest income break up

Particulars H1 FY 11 H1 FY 10 % Change March 10

(in INR Mn)

Interest on Loans Interest on Investments

4,407 1,143 44 5,594

3,694 917 28 4,639

19.3% 24.6% 57.1% 20.6%

7,558 1,937 71 9,566

Other Interest Income

Total expenses

Other income break up

Particulars H1 FY 11 H1 FY 10 % Change March 10 Particulars Interest expended Employee cost Other operating exp

Expenses break up
H1 FY 11 H1 FY 10 % Change March 10

CEB & Charges Treasury Income Others including Suit Recoveries Total Other Income

455 79 227 761

280 370 103 753

162.5% -Ve 220.4% - ve

690 458 260 1,435

3,632 478 508

3,486 405 388

4.2% 18.0% 30.9%

6,785 801 857

Total expenses

4,618

4,279

7.9%

8,443

32

Increasing employee efficiency

Growth in business per employee
Business Per Employee (INR Mn)

Steady rise in profit per employee

Profit per Employee (INR Mn)

80 70 60 50 40 30 20
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 34.0 35.0 56.5 49.9 65.1

72.6

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1

Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 0.4 0.4 0.5 0.5 0.6

0.8

Sep-10

Sep-10

Our employee efficiency has been going up continuously as reflected by the above parameters Annualised
33

Thank You