BOB Profile-Sept05

1
Bank of Baroda From Stability to
Sustainability ( Q1, 2010-11) Dr Rupa Rege
Nitsure Chief Economist July 29, 2010
2
Bank of Baroda Key Strengths

• Bank of Baroda is a 102 years old State-owned
  Bank with modern contemporary personality,
  offering banking products and services to Large
  industrial, SME, retail agricultural customers
  across the country.

Modern Contemporary Personality

• Uninterrupted Record
• in Profit-making and
• Dividend Payment

Overseas Business Operations extend across 26
countries through 81 Offices
Strong Domestic Presence through 3, 106
Branches

• Pioneer in many
• Customer-Centric
• Initiatives

Provides Financial Services to over 36
million Customers Globally

• First PSB to receive
• Corporate Governance
• Rating (CAGR-2)

• Relatively Strong Presence
• in Progressive States like
• Gujarat Maharashtra

Robust Technology Platform with 100 CBS in
Indian Branches
A well-accepted recognised Brand in Indian
banking industry
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Domestic Branch Network

• Banks network of domestic branches as on 30th
  June, 2010 was 3,106 no. of ATMs were 1,372 .
• During Q1, FY10, Bank opened seven new branches
  and merged one existing branch.
• Around 36.35 of the Banks branch network is
  located in rural areas.
• Seven new branches are opened in Bihar,
  Jharkhand, Mumbai, Delhi, Lucknow, Bharuch
  Kaprain and One branch is merged in Ahmedabad.
• Bank proposes to open around 383 more branches
  during rest of FY11.

Regional Break-up of Domestic Branches as on 30th June, 2010 Regional Break-up of Domestic Branches as on 30th June, 2010 Regional Break-up of Domestic Branches as on 30th June, 2010 Regional Break-up of Domestic Branches as on 30th June, 2010
Metro Urban Semi-Urban Rural
673 581 723 1,129
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Robust Technology Platform

• As on 30 June 2010, all domestic branches, that
  is 3,106 branches 26 extension were on CBS.
• Additionally, 43 branches in 12 overseas
  territories 28 branches in eight overseas
  subsidiaries are on CBS covering 94.0 of total
  overseas business. During Q1, FY11, the CBS was
  rolled out in the Banks New Zealand territory.
• Banks Retail Corporate Customers enjoy several
  facilities like internet banking, phone banking,
  rapid funds2india an online money transfer
  service, retail depository services, e-tax
  payment, NEFT/RTGS thru e-banking, sms alerts,
  cash mgmt services, online institutional trading,
  etc.
• As on 30 June, 2010, Bank had 1,372 ATMs 863
  Onsite ATMs 509 Offsite ATMs.
•  An Integrated Global Treasury Solution is
  implemented in UK, UAE, Bahamas, Baharain, Hong
  Kong recently in India.
• AML System has been implemented in India in 18
  overseas territories.
• Bank has created an Online Centralised-Database
  of its employees, which enables speedy
  decision-making, promotions, selection, etc.
  through automated processes.
• Payment Messaging Solution has been implemented
  in 16 overseas territories all B category
  branches in India.
• Bank has implemented multiple accounts being
  linked to a single Debit Card (verified by Visa
  CVV2) has also implemented 3DSecure feature
  Back Office for Merchant Mgmt in the Internet
  Payment Gateway.
• Document Mgmt System has been rolled out for
  Centralised Pension Payment Cell at Baroda.
• All Back-Office functions have now been
  effectively centralised in Bank of Baroda.

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Concentration () Domestic Branch Network
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Pattern of Shareholding 30th June, 2010
As on 30th June, 2010

• Share Capital Rs 365.53 crore
• No. of Shares 364.27 million
• Net worth Rs 14,646.26 crore
• B. V. per share Rs 402.08
• Return on Equity (annualised) 23.46

• BOB is a Part of the following Indexes
• BSE 100, BSE 200 and BSE 500
• Nifty Junior and Bankex.
• BOBs Share is listed on BSE and NSE in Future
  and Options segment also.

7
Comparative Performance of BoB Stock Jun09
to Jun10
Index/Stock Value (30th Jun09) Value (30th Jun10) Change
Sensex 14,493.84 17,700.90 22.1
Nifty 4,219.10 5,312.50 25.9
Bankex 8,211.48 10,765.03 31.1
BankNifty 7,338.85 9,464.60 29.0
BoB-BSE 445.30 701.95 57.6
BoB-NSE 445.45 701.85 57.6
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Indian Macro Scene during Jun09 to Jun10
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Economic Environment Policy Developments in
Q1, FY11

• Global economy grew by over 5.0 in Q1, FY11 but
  has developed some downside risks after that due
  to sovereign debt concerns in the euro area.
• Good progress of monsoon so far implies better
  prospects for agriculture growth in FY11
  industrial output continues to grow in
  double-digits despite some moderation in May10
  lead indicators for services activity suggest
  continuation of strong growth momentum Indias
  growth expected around 8.5 in FY11
• Production trends in domestic capital goods and
  rising imports of foreign capital goods
  accompanied with improving signs of credit
  offtake imply strong investment sentiment in
  Indian economy.
• Information on production trends in consumer
  durables, auto sales, realty prices and strong
  growth in corporate earnings indicate a good pick
  up in private demand
• Indias Fiscal Consolidation Plan is going to
  benefit from the larger than expected
  mobilisation from 3G/BWA Spectrum auctions and
  partial deregulation/upward revision in the
  prices of petroleum products in June, 2010.
• Imports growth of 40.9 (y-o-y) in Apr-May10 has
  been in excess of export growth of 35.7 trade
  deficit has widened to 21.71 bln from 14.51 bln
  a year ago portfolio flows have moderated from
  6.5bln in Q1, FY10 to 3.7 bln in Q1, FY11
  Rupee has depreciated by 3.5 against the USD in
  Q1, FY11.
• Headline inflation (WPI) has been in double
  digits since Feb10 is getting generalised
  every successive month A real threat to
  inclusive growth.
• RBI has continued with the process of
  normalisation of Monetary Policy despite some
  pressures on liquidity short-term interest
  rates have edged up.

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Banks Business Growth (Y-O-Y) Jun06 to
Jun10
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Banks Profitability Jun06 to Jun10
Banks Net Profit has grown by a healthy CAGR of
51.4 between Jun06 Jun10
12
Banks Asset Quality Jun04 to Jun10
Gross NPA
Net NPA
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Banks Business Performance Jun09 to
Jun10
Particular (Rs crore) Jun09 Mar10 Jun10 Y-O-Y () Change Over March ()
Global Business 3,40,616 4,16,080 4,40,262 29.3 5.8
Domestic Business 2,60,332 3,16,926 3,31,878 27.5 4.7
Overseas Business 80,284 99,153 1,08,384 35.0 9.3
Global Deposits 1,98,609 2,41,044 2,54,668 28.2 5.7
Domestic Deposits 1,54,435 1,85,283 1,96,166 27.0 5.9
Overseas Deposits 44,175 55,762 58,502 32.4 4.9
Global CASA Deposits 58,483 71,468 74,784 27.8 4.6
Domestic CASA 54,197 66,024 69,114 27.5 4.7
Overseas CASA 4,286 5,444 5,670 32.3 4.2

• Share of Domestic CASA improved from 35.09 in
  Q1, FY10 to 35.23 in Q1, FY11.

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Banks Business Performance Jun09 to
Jun10
Particular (Rs crore) Jun09 Mar10 Jun10 Y-O-Y () Change Over March ()
Global advances (Net) 1,42,007 1,75,035 1,85,595 30.7 6.0
Domestic Advances 1,05,897 1,31,644 1,35,712 28.2 3.1
Overseas Advances 36,109 43,392 49,882 38.1 15.0
Out of Gross Domestic Credit, Out of Gross Domestic Credit, Out of Gross Domestic Credit, Out of Gross Domestic Credit, Out of Gross Domestic Credit, Out of Gross Domestic Credit,
Retail Credit Of which 20,221 24,248 24,994 23.6 3.1
Home Loans 8,741 10,313 10,779 23.3 4.5
SME Credit 15,136 21,111 21,593 42.7 2.3
Farm Credit 17,914 21,617 21,089 17.7 -2.4
Credit to Weaker Sections 8,161 10,945 11,063 35.6 1.1
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Banks Business Performance Jun09 to
Jun10
Particular (Rs crore) Jun09 Mar10 Jun10 Y-O-Y () Change Over March ()
Global Saving Deposits 44,237 52,544 56,061 26.7 6.7
Domestic Savings Deposits 43,103 51,258 54,769 27.1 6.8
Overseas Savings Deposits 1,134 1,286 1,292 13.9 0.5
Global Current Deposits 14,246 18,924 18,723 31.4 -1.1
Domestic Current Deposits 11,095 14,766 14,345 29.3 -2.9
Overseas Current Deposits 3,152 4,158 4,378 38.9 5.3
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Banks Profits NII Apr-June, FY10 FY11
Particular (Rs crore) Apr-Jun09 Apr-Jun10 Y-O-Y ()
Gross Profit 1,009.93 1,527.87 51.3
Net Profit 685.38 859.16 25.4
Net Interest Income 1,204.70 1,857.99 54.2

• The Banks NII grew even sequentially from Rs
  1744.95 crore in Jan-Mar10 to Rs 1857.99 crore
  in Apr-Jun10 on the back of healthy growth in
  business.

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Other Highlights Apr-June, FY10 FY11
Particular (in ) Apr-Jun09 Jan-Mar10 Apr-Jun10

Global Cost of Deposits 5.41 4.42 4.39
Domestic Cost of Deposits 6.16 5.08 5.09
Overseas Cost of Deposits 2.65 2.06 1.95

Global Yield on Advances 8.72 8.23 8.17
Domestic Yield on Advances 10.10 9.76 9.79
Overseas Yield on Advances 4.69 3.74 3.67
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Other Highlights Apr-June, FY10 FY11
Particular (in ) Apr-Jun09 Jan-Mar10 Apr-Jun10

Global Yield on Investment 6.83 6.51 6.66
Domestic Yield on Investment 7.07 6.72 6.83
Overseas Yield on Investment 3.87 3.68 3.71

Global NIM 2.37 2.97 2.90
Domestic NIM 2.57 3.50 3.43
Overseas NIM 1.48 1.30 1.31
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Key Financial Ratios Apr-June, FY10 FY11

• Return on Average Assets at 1.19 1.19 in Q1,
  FY10
• Earning per Share (annualised) at Rs 94.36 Rs
  75.28 in Q1, FY10
• Book Value per Share at Rs 402.08 Rs 331.26 in
  Q1, FY10
• Return on Equity (ROE) at 23.46 22.72 in Q1,
  FY10
• Capital Adequacy Ratio at 13.25 with Tier I
  Capital at 8.16
• Cost-Income Ratio declined from 47.06 to 38.27
  (Y-o-Y).
• Gross NPA ratio declined from 1.44 to 1.41
  (Y-o-Y).
• Net NPA ratio increased from 0.27 to 0.39
  (Y-o-Y).
• NPA Coverage at the healthy level of 73.01
  (without technical write-offs) and at 85.65
  (with technical write-offs)
• Incremental Delinquency Ratio at 0.37 in Q1,
  FY11.

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Non-Interest Income Apr-June, FY10 FY11
(Rs crore) Q1, FY10 Q1, FY11 Change (Y-O-Y)
Commission, Exchange, Brokerage 200.98 201.54 0.3
Incidental Charges 63.94 77.14 20.6
Other Miscellaneous Income 35.28 32.89 -6.8
Total Fee-Based Income 300.20 311.57 3.8
Trading Gains 256.58 127.94 -50.1
Profit on Exchange Transactions 96.32 121.61 26.3
Recovery from PWO 49.94 56.12 12.4
Total Non-Interest Income 703.04 617.24 -12.2
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Provisions Contingencies Apr-June, FY10
FY11
(Rs crore) Q1, FY10 Q1, FY11 Change (Y-O-Y)
Provision for NPA Bad Debts Written-off 308.51 277.54 -10.0
Provision for Depreciation on Investment -359.80 -58.91 -83.6
Provision for Standard Advances 8.58 28.81 235.8
Other Provisions (including Provision for staff welfare) 3.75 3.89 3.7
Tax Provisions 363.51 417.38 14.8
Total Provisions 324.55 668.71 106.0
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Banks Treasury Highlights Q1, FY11

• Treasury Income stood at the healthy level of Rs
  249.55 crore in Q1, FY11 despite heightened
  volatility in the G-sec market.
• The Banks Trading Gains Stood at Rs 127.94
  crore of which Rs 57 crore came from the
  domestic equity portfolio.
• As of June 30, 2010, the share of SLR Securities
  in Total Investment was 87.21.
• The Bank had 79.66 of SLR Securities in HTM and
  19.89 in AFS at end-June 2010.
• The per cent of SLR to NDTL as on 30th June, 2010
  was 27.33.
• While the modified duration of AFS investments is
  2.21 years that of HTM securities is 5.12
  years.
• Total size of Banks Domestic Investment Book as
  on 30th June, 2010 stood at Rs 62,963 crore.
• Total size of Banks Overseas Investment Book as
  on 30th June, 2010 stood at Rs 3,676 crore.

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Overseas Business Apr-June, FY11

• In Q1, FY11, the Overseas Business contributed
  24.6 to the Banks Total Business, 16.4 to its
  Gross Profit and 26.7 to its Fee-based income.
• While the Cost-Income Ratio for Domestic
  Operations stood at 41.03 in Q1, FY11, it was
  just 19.06 for the Banks Overseas Operations.
• While the Gross NPA () in Domestic Operations
  stood at 1.73 at end-June, 2010, that for
  Overseas Operations was just 0.547.
• Gross Profit to Avg. Working Funds ratio for
  Overseas Operations was 1.40 in Q1, FY11 versus
  2.38 for Domestic Operations.
• The ROAA of overseas operations was 0.95 and the
  ROE was 17.55 in Q1, FY11, reflecting
  continuation of weaknesses in global economy.
• During Q1, FY11, the Bank raised US 350 mln for
  5.5 years at 4.75 coupon under its MTN programme
  to finance asset growth in overseas operations.

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Capital Adequacy Capital Raising in Q1,
FY11

• The Banks CRAR as on 30th June, 2009 stood at
  13.25 of which Tier1 was at 8.16 and Tier 2 at
  5.09.
• The size of Banks risk-weighted assets as on
  30th June, 2010 was Rs 1,76,705 crore.
• The Bank proposes to maintain its CRAR in the
  band of 13.0 to 13.5 in the coming years (with
  the Tier 1 between 8.0 and 8.5).
• The Bank raised Rs 1,000 crore during Q1, FY11 by
  way of the following issues.
• Subordinated Upper Tier II Bonds (maturing in
  2025) Rs 500 crore in May, 2010
• Subordinated Upper Tier II Bonds (maturing in
  2025) Rs 500 crore in June, 2010

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NPA Movement (Gross) Q1, FY11
Particular ( Rs crore)
A. Opening Balance 2,400.69
B. Additions during Q1, FY11 666.21
Out of which, Fresh Slippages 639.21
C. Reduction during Q1, FY11

Recovery 143.32
Upgradation 109.56
PWO WO 156.60
Exchange Difference --
NPA as on 30th June, 2010 2,657.42
Recovery in PWO in Q1, FY11 56.12
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Sector-wise Gross NPAs Q1, FY10 FY11
Sector Gross NPA () Q1, FY10 Gross NPA () Q1, FY11
Agriculture 2.15 3.43
Large Medium Industries 1.05 1.69
Retail 2.65 2.41
Housing 2.99 2.41
SME 2.47 2.91
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Cumulative Position of Restructured
Assets

• During 27 months (1 Apr08 to 30 June10), the
  Bank has restructured 63,454 accounts amounting
  Rs 5,283.41 crore.
• Within this, the loans worth Rs 169.79 were
  restructured in Q1, FY11.
• For the period of 27 months, out of the total
  amount restructured, Rs 2,796.09 crore belonged
  to wholesale banking, Rs 1,296.52 crore to SMEs,
  Rs 560.10 crore to retail and Rs 630.70 crore to
  agriculture sector.
• About 39 accounts (of Rs 1 crore above)
  restructured on/after 1st Apr, 2008 with
  aggregate outstanding of Rs 475.77 crore became
  NPA after restructuring and most of them belonged
  to the SME segment.
• Industry-wise break-up shows that the Banks
  restructured accounts are well spread over
  different sectors, the major ones being iron
  steel, cotton textiles, engineering goods, real
  estate, food processing and infrastructure.
• The Bank has primarily helped genuine borrowers
  who suffered from temporary cash flow problems
  due to the global crisis. These accounts are
  restructured looking into the internal strength
  the financial viability of such borrowers.

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Sectoral Deployment of Credit in Q1, FY11
Sector share in Gross Domestic Credit
Agriculture 15.3
Retail 18.1
SME 15.7
Trading plus Other PS 15.2
Wholesale 35.7
Total 100.0
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Economic Outlook

• The IMF has revised upwards its projection of
  global growth from 4.2 to 4.6 for 2010 on the
  strength of robust Q1 growth but warned of many
  downside risks that may pull down the growth
  later.
• With increasing uncertainty about the pace of
  global recovery, global energy commodity prices
  have softened a positive for India.
• Growth prospects for India have improved since
  April 2010 on the back of satisfactory
  performance of monsoon and a strong rebound in
  non-agricultural activities. Official projections
  place Indian growth at 8.5 for FY11.
• Headline inflation has moved to double digits in
  Feb10 and has remained sticky. Demand-side
  pressures are evident in the inflation series.
• Since Feb10, the RBI has raised CRR by 100 bps,
  Repo by 100 bps and Reverse Repo by 125 bps
  also reduced the LAF corridor by 25 bps to reduce
  interest rate volatility and control excess
  demand pressures.
• The RBIs Policy Review (27 July) clearly hints
  significant doses of tightening in the rest of
  the FY11, as it aims to bring down inflation to
  6.0 by fiscal year-end.
• With an expected strong pick-up in credit demand
  continued tightening, interest rates in credit
  market would remain elevated but improved fiscal
  situation would help lower the pressure on bond
  yields.
• Rupee has developed a depreciation bias due to
  a faster widening of current account deficit and
  intermittent risk aversion amongst global
  investors.

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Banks Guidance Vision

• The Bank would continue with its thrust on
  sustainable qualitative growth --
• Would maintain its growth above the industry
  average to steadily expand the market share. From
  Jun09 to Jun10, the Banks market share in
  Deposits has gone up from 3.68 to 3.98 and in
  Advances from 3.72 to 3.93.
• The Bank would grow its deposits in the band of
  20 to 22.0 credit in the range of 22.0 to
  24.0, fee-based income in line with the
  loan-book and overall profitability by 25.0,
  factoring in various downside risks stemming from
  the economic environment.
• The Bank is building Strong Foundation for Future
  Growth by
• Recruiting the best possible talent in the
  country from the Premier Institutions
• Working on BPR project in consultation with
  Mckinsey Co. so as to achieve the optimum use
  of technology and right skilling of the manpower
  to yield maximum customer satisfaction.
• Aggressively launching a series of marketing
  campaigns to promote its Brand value, such as the
  well-publicised Baroda Next Reinforcement
  Campaign II.

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• Thank you.