For the year		Growth (%)
	2005-06	2006-07
Net Profit	656.34*	750.14	14.29
Operating Profit	974.36*	1099.91	12.89

• Net Profit of the Bank increased to Rs.750.14 crores during the period under review from Rs.656.34* crores during the corresponding period last year, registering a growth of 14.29%.
   

• Operating Profit of the Bank during 2006-07 increased to Rs.1099.91 crores from Rs.974.36* crores during 2005-06, showing a growth of 12.89%.
   

• Higher profit is attributable to better asset management, higher yield of funds, judicious expenditure control and higher NFNI income.

EXPANDING BUSINESS GROWTH

Parameters	31.3.'05	31.3.'06	31.3.'07	Variation
				2006-07		2005-06
				Amt.	%	Amt.	%
1) Total Business	62914	78561	101458	22897	29.15	15647	24.87%
2) Total Deposits	40762	48500	59544	11044	22.77	7738	18.98%
3) Gross Advances	22152	30061	41914	11853	39.43	7909	35.71%
4) Non-Food Credit	21216	28940	40601	11661	40.29	7724	36.40%
5) Investments (Gross)	19129	18316	19050	734	4.01	-812	-4.25%

• The Bank's total business registered a growth of 29.15% during 2006-07 as against 24.87% during 2005-06. The Business of the Bank has increased to Rs.1,01,458 crores as at March-end 2007 from Rs.78,561 crores as at March-end 2006.
   

• Deposits grew by 22.77% during 2006-07 as compared to 18.98% in the corresponding period last year. The low-cost deposits of the Bank increased by 17.7% during 2006-07 as against 20.78% during 2005-06.
   

• Gross Advances grew by 39.43% against the growth of 35.71% during the period under review.
   

• Non-Food credit grew by 40.29% (Rs.11,661 crores) during 2006-07 as compared to 36.40% (Rs.7724 crores) during 2005-06.
   

• As on 31.3.2007, aggregate deposits of the Bank increased by Rs.11,198 crores or 23.43% as against the growth of Rs.7706 crores or 19.22% in the corresponding period last year. The market share of aggregate deposits of the Bank was 2.24% as on 31.3.2007. The Market share of Credit was 2.18% during this period.

SOCIAL BANKING - A NATIONAL COMMITMENT

• A multi dimensional strategy was put in place during 2006-07 to augment the credit flow to various sectors/ schemes under priority sector with thrust on agriculture and rural infrastructure. The total PSC of our Bank grew by 32.94% (Previous year growth 25.17%) to Rs.16,554 crore as at March-end, 2007 from Rs.12,453 crore as on March-end 2006. The percentage of total Priority Sector Credit of the Bank to Adjusted Net bank credit stood at 39.13%.
   

• The outstanding agriculture credit increased from Rs.5726 crore as on March-end 2006 to Rs.7692 crore as on March-end 2007 registering growth of 34.33% and constituting 18.18% of the net bank credit against norm of 18%.
   

• Fresh Kisan Credit Cards (KCCs) involving an amount of Rs.882.73 crore were issued to 1,76,876 farmers during the year 2006-07 taking the total card base of the Bank to 9,40,799 involving Rs.3393.08 crores. The credit to SSI and other priority sectors also increased by 32.93% and 31.30% respectively during 2006-07.
   

• The Bank has revamped its agricultural credit operations by adopting fresh policy decisions and by formulating new product lines, which suit the requirements of farming community.
   

• Thrust areas include Farm Mechanization, Rural Godown, Multi-purpose Cold Storage, Gold Loan to Farmers and many others

NON-FUND/NON-INTEREST INCOME

Non-Fund/Non-Interest Income of the Bank increased from Rs.287.24 crores during 2005-06 to Rs.358.97 crores during 2006-07, registering a growth of about 25%. The increase is attributable mainly improved customer service and fee based income through cross-selling of products.

FEE-BASED BANKING

To improve the fee-based income, the Bank has made tie-up with NIC and LIC to sell their insurance products and UTI and Principal-PNB Mutual Funds to sell their mutual fund products through Bank's branches. The Bank has deployed 128 fully trained officers in potential branches across the country for promotion of bancassurance and mutual fund business, after they successfully cleared the regulatory certification process of IRDA and AMFI. The Bank has further decided to increase its Mutual Fund alliances by tying up with Reliance MF, Franklin Templeton & Kotak MF during 2007-08.

NPA REDUCTION

During the year 2006-07, there has been marked decline in NPA of the Bank both in absolute and percentage terms

• Gross NPA declined to 2.61% as on 31.3.2007 from 3.94% as on 31.3.2006 and in absolute terms Gross NPA amount declined to Rs.1094 crores from Rs.1184 crores during the period.
   

• Net NPA ratio stood at 1.07% as at March-end 2007.

BRANCH EXPANSION

The Bank has 2060 branches (excluding 1 Foreign Branch) as on 31.3.2007 (1999 as on 31.3.2006) of which 969 are in Rural, 368 in Semi-Urban, 433 in Urban and 290 in Metropolitan areas. The Bank has also 116 Extension Counters spread all over India. During the year the Bank has opened 30 branches, merged 2 branches and upgraded 33 extension counters to full fledged branches. The Bank has authorization for opening 87 more branches during the year. The Bank has also applied for authorization of 167 more branches during the current financial year.

RISK MANAGEMENT SYSTEMS

• In line with the best practice in Industry, the Bank has set up a comprehensive Risk Management Framework to effectively identify, measure and manage risk elements of Credit, Market and Operational Risks in an integrated and comprehensive manner to facilitate Bank's smooth switch over to Basel-II framework. The Bank has evolved suitable Risk Management architecture comprising a Board Level Risk Management Committee.
   

• The Bank has developed Risk Assessment Module (RAM) in consultation with CRISIL for rating the corporate borrowers. The Bank has also introduced an exclusive in-house Credit Risk Grading modules for rating SSI and SME sectors.
   

• For Market Risk, Bank has already switched over to Standardized Approach through modified duration method for investment portfolio while Bank has put in place Operational Risk Management Policy based on latest RBI guidelines.
   

• Bank has already initiated parallel run exercise towards Basel II readiness, in accordance with the RBI guidelines.

EVENTS HIGHLIGHTS

STRATEGIC INITIATIVES DURING THE YEAR

A. Resources Mobilization - Basketful of benefits to customers

• Champion Deposit Scheme with 9.1% interest p.a. helped the Bank to strengthen its resource base.
   

• 9% Tax Saving Term Deposit Scheme brought confort for tax payers and resources for the Bank.
   

• Special Thrust on Current Deposit and Savings Bank Depsosit Mobilization with free Accidental Insurance cover of Rs.1 lakh.
   

• High return Term Deposit Account for Senior Citizens Always offering competitive interest rates in term deposit with 1% more for senior citizens on depsosit up to one year and 0.50% on deposit over that period.

B. DEPLOYMENT

Credit policies and introducing New Lending schemes

• Schemes for channel financing to meet the both legs of corporate financing - purchase and sell.
   

• Special Economic Zone (Mart) financing scheme for firms and companies which intend to start their export/import business in Special Economic Zones (SEZ).

Lending Schemes for rural India

• To Provide Urban Amenities in Rural Areas (PURA), Bank introduced various lending schemes for basic infrastructure in village clusters like Rural Telephony and Rural Kiosks, Rural Health Care, Development of Rural Tourism and Rural Educational and Vocational Training Institutes.
   

• The Bank has schemes of Business Facilitator and Business Correspondents engaging good rated NGOs/Farmers' Club for outsourcing financial and non-financial jobs of the Bank specially where it has no branch. This is a new scheme of financial inclusion to be implemented in Lead Districts in the first phase.

Extending Credit to SME Sector

In line with the directives of the Govt. of India, Bank is extending loan to SME Sector on borrower-friendly terms. Bank's exposure to SME sector is over Rs.3412 crores which is about 8.16% of net bank credit.

Retail Lending

• Bank has given more thrust to capture larger market share in loans to trading concerns under Allbank Trade Scheme.
   

• Other initiatives include -Life Insurance cover for all education loan
  Total disbursement under Retail Credit up to March,2007 was Rs.2737.19 crores in 1,21,766 accounts as against Rs.2115.93 crores in 1,08,695 accounts last year registering a growth of 29.36%. Total outstanding under retail credit was Rs.7188.33 crores as on 31.3.2007 as against Rs. 5136.07 crores previous year recording a growth of 39.96%.
  
  Upto 31.3.2007, total outstanding in education loan including on-line and second time loan, disbursed was Rs.324.12 crores in 18,127 accounts.

C. CAPACITY BUILDING

Integrated model of training for farmers/rural entrepreneurs

• For operationalizing integrated model of providing training, credit and facilities of backward & forward linkage to farmers and rural entrepreneurs, the Bank established Farmers' & Entrepreneurs' Training Institute at Bolpur (Santiniketan, West Bengal during the year. Encouraged by wide response from all sections of beneficiaries, Bank has planned to open more such institutes in near future.

Technological Upgradation

• 99.72% of Bank's business has been brought under computerization.
   

• 208 ATMs installed with VISA and National Financial Switch (NFS) connectivity with accessibility from more than 6000 points. Bank has already issued more than 2 lakh Photo and Signature VISA International ATM-cum-VISA Cards.
   

• Real Time Gross Settlement (RTGS) live in 117 branches.
   

• Online Tax Accounting System (OLTAS) implemented in all 167 designated branches
   

• Bank is fast progressing for CBS implementation with 13 Pilot branches rolling out under CBS platform and another 12 branches to join soon after.
   

• Bank has initiated implementation of Cheque Truncation system in 55 branches under National Capital Region of Delhi as per RBI requirement.

Overseas Presence - Bank goes international

Bank has opened its first overseas branch in the busy economic centre of Hong Kong, which has become operational since February 2007. This is besides its Representative Office at Shenzhen, China. Bank has plan to open more international branches in future

Human Capital- HR Initiatives

• Managing human resources are considered by the Bank as most important determinant for organizational development. Continuous efforts are made for skilling and reskilling of the officers and employees through various sources like internal Training Institutes and reputed external institutes including overseas training.
   

• During the financial year, a total of 9223 officers/ employees have been exposed to training, which constitutes more than 50% of the total work force excluding sub-staff. 401 officers/employees were trained in external institutes and 8 officers were nominated for overseas training programmes.
   

• The Bank engaged XLRI as a consultant for drafting comprehensive HR Policy document for the Bank. They have submitted their final report covering categorization of branches/offices, geographical and functional organizational restructuring which is being implemented in phased manner.
   

• A massive Competency Mapping exercise has been conducted for Executives/ Officers for putting the right man in right place and for proper succession planning.
   

• The Bank has developed a team of IT Officers for in-house implementation of application packages procured from outside agency and maintenance of the same through the Bank's Institute for Research and Technology at Panchkula.

Joint Venture Initiative

• The Bank has already floated a Joint Venture Company for insurance business named Universal Sompo_General Insurance Company Ltd. The partners in the JV Company are Indian Overseas Bank, Karnataka Bank Ltd, Dabur Ltd and Sompo, Japan.

Corporate Communications

Bank's visibility has increased manifold and its products have made distinctive presence in the market. With continuous efforts for better communication with the support from the Press, Bank has created a favourable environment in which mutual understanding and relationship amongst various stakeholders have strengthened.

LOOKING AHEAD - TOWARDS A BRIGHTER FUTURE

Fully equipped to face the emerging challenges before us

• Automation : Bank has made strategic plan for extensive mechanization of operations by the year 2007-08. Some of the steps envisaged are :
  
  a) Centralized Banking Solutions (CBS) in more Branches. Computerization of 100% business.
  
  b) Installation of 50 number touch screen kiosks to provide rural/semi-urban customers various information regarding their accounts.
   

• Human Resources restructuring :
  Competency Based Training (CBT) will be implemented for creating an ideal environment for learning, relearning on an on-going basis.
  
  The Bank has taken initiative to rationalise its Retail Banking Boutiques to make these units more effective and buisness oriented.

Other future Initiatives

• Continuing endeavour to open more intergrated, comprehensive and holistic training model in line with Farmers' & Entrepreneurship Training Institute at Tirwa (UP) and Bolpur (West Bengal)
   

• Thrust on low-cost Deposit accounts like Saving Bank and Current Accounts.
   

• More aggressive marketing of cross selling of insurance and mutual fund products with more emphasis on income generation.

SUBSIDIARY

ALLBank Finance Ltd

• AllBank Finance Ltd, a wholly owned subsidiary of the Bank, have been registered with the SEBI as a Category I merchant bankers and underwriters. The company earned an operating profit of Rs.2.89 crores for the year 2006-07 as against Rs.2.02 crores during the last year
   

• The subsidiary offers a host of emerging opportunities which are as under

a) Investment Banking
b) Insurance Broking
c) Stock broking
d) Wealth Management and portfolio Advisory
e) Underwriting

Kolkata
5th May 2007.