BOB Analysts Q1 FY11

8/8/2019 BOB Analysts Q1 FY11

1/31

Bank of BarodaBank of BarodaFrom Stability to SustainabilityFrom Stability to Sustainability

( Q1, 2010( Q1, 2010--11)11)

Dr Rupa Rege NitsureDr Rupa Rege Nitsure

Chief EconomistChief Economist

July 29, 2010July 29, 2010


2/31

Bank of Baroda: Key StrengthsBank 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.

Relatively Strong Presencein Progressive States like

Gujarat & Maharashtra

Uninterrupted Recordin Profit-making and

Dividend Payment

Overseas BusinessOperations extend across

26 countriesthrough 81 Offices

First PSB to receive

Corporate GovernanceRating (CAGR-2)

Robust Technology

Platform with 100%

CBS in Indian Branches

Pioneer in manyCustomer-Centric

Initiatives

Strong DomesticPresence through

3, 106 Branches

Modern & Contemporary

Personality

Provides FinancialServices to over

36 million CustomersGlobally

A well-accepted &recognised Brand in

Indian banking industry


3/31

Domestic Branch NetworkDomestic Branch Network

2703

2735

2851

2927

3106

2500

2600

2700

2800

2900

3000

3100

3200

Q1-

FY07

Q1-

FY08

Q1-

FY09

Q1-

FY10

Q1-

FY11

No. of Domestic Branches

Regional Break-up of

Domestic Branches as on 30thJune, 2010

Metro Urban Semi-Urban

Rural

673 581 723 1,129

Banks network of domesticbranches as on 30thJune, 2010 was3,106 & no. of ATMs were 1,372 .

During Q1, FY10, Bank openedseven new branches and mergedone existing branch.

Around 36.35% of the Banksbranch network is located in ruralareas.

Seven new branches are openedin Bihar, Jharkhand, Mumbai,Delhi, Lucknow, Bharuch &Kaprain and One branch is

merged in Ahmedabad.

Bank proposes to open around383 more branches during rest ofFY11.


4/31

Robust Technology PlatformRobust 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 onCBS covering 94.0% of total overseas business. During Q1, FY11, the CBS was rolled out in the BanksNew Zealand territory.

Banks Retail & Corporate Customers enjoy several facilities like internet banking, phone banking, rapidfunds2india an online money transfer service, retail depository services, e-tax payment, NEFT/RTGSthru 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 PaymentGateway.

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.


5/31

Concentration (%): Domestic Branch NetworkConcentration (%): Domestic Branch Network

Gujarat, 22.47

Maharashtra, 11.3

Rajasthan, 11.82South, 10.97

UP & Uttaranchal,

21.99

Rest of India, 21.45


6/31

Pattern of Shareholding: 30Pattern of Shareholding: 30thth June, 2010June, 2010

FIIs

17.8%

Corp.Bodies

4.9%

Indian

Public

5.9%Others

0.2%

Mutual

Funds

8.9%

Insurance

Cos

8.5%

Govt. of

India

53.8%

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 inFuture and Options segment also.

As on 30thJune, 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%


7/31

Comparative Performance of BoB Stock: Jun09 to Jun10

Index/StockValue

(30thJun09)

Value

(30thJun10) % 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%

BoBBoB--BSEBSE 445.30445.30 701.95701.95 57.6%57.6%

BoBBoB--NSENSE 445.45445.45 701.85701.85 57.6%57.6%


8/31

Indian Macro Scene during Jun09 to Jun10

IIP Grow h (%)

11 5

16 5

13 9

15 1

8 3

7 2

10 6

9 3

10 2

12

17

7

16 3

0

2

4

6

8

10

12

14

16

1820

Jun'09 Ju

'09Au

g'09S

p '09 O'09

Nov'09

D'09

Jan'10

Fb'10 ar'10 Ap

r'10 ay'10

WPI (%)

10

55

-1

01

-0

67-0

17

0

46

1

46

5

55

7

31

8

56

9

89

9

90

10 1611 23

-2

0

2

4

6

8

10

12

Jun'09

Aug'09

O

'09

D

'09

F

b'10

Apr'10

Jun'10

15.1

15.8

14.112.6

9.510.0

12.2

14.815.1

16.717.6

18.1

21.7

0.0

5.0

10.0

15.0

20.0

25.0

Jun'09 Aug'09 Oct'09 Dec'09 Feb'10 Apr'10 Jun'10

Bank Credit Growth (%)

47.9 47.94

48.82

48.1

46.95

46.51 46.53

46.1746.08

44.9

44.36

46.37

46.46

42

43

44

45

46

47

48

49

Jun'09 Aug'09 Oct'09 Dec'09 Feb'10 Apr'10 Jun'10

Rs/$


9/31

Economic Environment & Policy Developments in Q1, FY11

Global economy grew by over 5.0% in Q1, FY11 but has developed some downside risks after thatdue to sovereign debt concerns in the euro area.

Good progress of monsoon so far implies better prospects for agriculture growth in FY11; industrialoutput continues to grow in double-digits despite some moderation in May10; lead indicators forservices activity suggest continuation of strong growth momentum; Indias growth expected around8.5% in FY11

Production trends in domestic capital goods and rising imports of foreign capital goodsaccompanied with improving signs of credit offtake imply strong investment sentiment in Indianeconomy.

Information on production trends in consumer durables, auto sales, realty prices and strong growthin corporate earnings indicate a good pick up in private demand

Indias Fiscal Consolidation Plan is going to benefit from the larger than expected mobilisation from3G/BWA Spectrum auctions and partial deregulation/upward revision in the prices of petroleumproducts 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 everysuccessive month A real threat to inclusive growth.

RBI has continued with the process of normalisation of Monetary Policy despite some pressures onliquidity; short-term interest rates have edged up.


10/31

Banks Business Growth (YBusiness Growth (Y--OO--Y): Jun06 to Jun10Y): Jun06 to Jun10

13.7

19.3

25.224.7

27.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Jun' 06 Jun' 07 Jun' 08 Jun'0 9 Jun' 10

Growth: Total

eposits (%)

37.5

27.5

42.1

27.7

30.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Jun '0 6 Ju n'07 J un'08 Ju n'09 Ju n'10

Growth: Total Advances (%)

22.021.1

29.4

24.5

29.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Jun'06 Jun'07 Jun'08 Jun'09 Jun'10

Growth: Total Business (%)

25.0

11.1

20.3 18.8

27.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0


Domestic CASA Growth (%)


11/31

Banks Profitability: Jun06 to Jun10Banks Profitability: Jun06 to Jun10

503.53

644.45

800.19

1009.93

1527.87

859.16

685.38

370.86330.83

163.33

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

1400.00

1600.00

1800.00


Rs crore

ross rofit Net rofit

Banks Net Profit has grown by a healthy

CAGR of 51.4% between Jun06 & Jun10


12/31

Banks Asset Quality: Jun04 to Jun10Banks Asset Quality: Jun04 to Jun10

7.21

4.06

2.78

1.86

1.44 1.41

0.39

2.94

1.47

0.92

0.67 1.03

0.270

1

2

3

4

5

6

7

8

9

Jun'04 Jun'05 Jun'06 Jun'07 Jun'08 Jun'09 Jun'10

%

0

0.5

1

1.5

2

2.5

3

3.5

4%

Gross NPA

Net NPA


13/31

Banks Business Performance: Jun09 to Jun10Banks Business Performance: Jun09 to Jun10

Particular

(Rs crore) Jun09 Mar10 Jun10Y-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 ofDomestic CASA improved from 35.09% in Q1, FY10 to 35.23% in Q1, FY11.


14/31


Particular

(Rs crore) Jun09 Mar10 Jun10Y-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,

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 WeakerSections

8,161 10,945 11,063 35.6% 1.1%


15/31


Particular(Rs crore)

Jun09 Mar10 Jun10 Y-O-Y(%)

Change

Over

March (%)

Global SavingDeposits

44,237 52,544 56,061 26.7% 6.7%

Domestic SavingsDeposits

43,103 51,258 54,769 27.1% 6.8%

Overseas SavingsDeposits

1,134 1,286 1,292 13.9% 0.5%

Global CurrentDeposits

14,246 18,924 18,723 31.4% -1.1%

Domestic Current

Deposits11,095 14,766 14,345 29.3% -2.9%

Overseas CurrentDeposits 3,152 4,158 4,378 38.9% 5.3%


16/31

Banks Profits & NII: AprBanks Profits & NII: Apr--June, FY10 & FY11June, FY10 & FY11

Particular(Rs crore)

Apr-Jun09

Apr-Jun10

Y-O-Y(%)

GrossProfit

1,009.93 1,527.87 51.3%

Net Profit 685.38 859.16 25.4%

NetInterestIncome

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 inbusiness.


17/31

Other Highlights: AprOther Highlights: Apr--June, FY10 & FY11June, 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


18/31

Other Highlights: AprOther Highlights: Apr--June, FY10 & FY11June, 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


19/31

Key Financial Ratios : AprKey Financial Ratios : Apr--June, FY10 & FY11June, 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 at85.65% (with technical write-offs)

Incremental Delinquency Ratio at 0.37% in Q1, FY11.


20/31

NonNon--Interest Income: AprInterest Income: Apr--June, FY10 & FY11June, 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%


21/31

Provisions & Contingencies: AprProvisions & Contingencies: Apr--June, FY10 & FY11June, FY10 & FY11

(Rs crore) Q1, FY10 Q1, FY11 % Change

(Y-O-Y)

Provision for NPA & Bad DebtsWritten-off

308.51 277.54 -10.0%

Provision for Depreciation onInvestment

-359.80 -58.91 -83.6%

Provision for StandardAdvances

8.58 28.81 235.8%

Other Provisions (includingProvision 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%


22/31

Banks Treasury Highlights: Q1, FY11Banks 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 was87.21%.

The Bank had 79.66% of SLR Securities in HTM and 19.89% in AFS atend-June 2010.

The per cent of SLR to NDTL as on 30thJune, 2010 was 27.33%.

While the modified duration of AFS investments is 2.21 years; that ofHTM securities is 5.12 years.

Total size of Banks Domestic Investment Book as on 30thJune, 2010 stood

at Rs 62,963 crore.

Total size of Banks Overseas Investment Book as on 30th June, 2010stood at Rs 3,676 crore.


23/31

Overseas Business: AprOverseas Business: Apr--June, FY11June, 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% inQ1, 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 was1.40% in Q1, FY11 versus 2.38% for Domestic Operations.

The ROAA of overseas operations was 0.95% and the ROE was 17.55% inQ1, 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 overseasoperations.


24/31

Capital Adequacy & Capital Raising in Q1, FY11Capital Adequacy & Capital Raising in Q1, FY11

The Banks CRAR as on 30thJune, 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 Rs1,76,705 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 thefollowing issues.

Subordinated Upper Tier II Bonds (maturing in 2025): Rs 500 crorein May, 2010

Subordinated Upper Tier II Bonds (maturing in 2025): Rs 500 crorein June, 2010


25/31

NPA Movement (Gross): Q1, FY11NPA 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


26/31

SectorSector--wise Gross NPAs: Q1, FY10 & FY11wise Gross NPAs: Q1, FY10 & FY11

Sector Gross NPA(%)

Q1, FY10

Gross NPA(%)

Q1, FY11

Agriculture 2.15% 3.43%

Large & MediumIndustries 1.05% 1.69%

Retail 2.65% 2.41%

Housing 2.99% 2.41%

SME2.47% 2.91%


27/31

Cumulative Position of Restructured AssetsCumulative Position of Restructured Assets

During 27 months (1 Apr08 to 30 June10), the Bank has restructured 63,454accounts 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 2,796.09crore belonged to wholesale banking, Rs 1,296.52 crore to SMEs, Rs 560.10crore to retail and Rs 630.70 crore to agriculture sector.

About 39 accounts (of Rs 1 crore & above) restructured on/after 1st Apr, 2008with aggregate outstanding of Rs 475.77 crore became NPA afterrestructuring and most of them belonged to the SME segment.

Industry-wise break-up shows that the Banks restructured accounts are wellspread 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 fromtemporary cash flow problems due to the global crisis. These accounts arerestructured looking into the internal strength & the financial viability ofsuch borrowers.


28/31

Sectoral Deployment ofCredit in Q1, FY11Sectoral Deployment ofCredit in Q1, FY11

Sector % share in GrossDomestic Credit

Agriculture 15.3%

Retail 18.1%

SME 15.7%

Trading plus Other PS 15.2%

Wholesale 35.7%

Total 100.0%


29/31

Economic OutlookEconomic Outlook

The IMF has revised upwards its projection of global growth from 4.2% to4.6% 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 ofsatisfactory performance of monsoon and a strong rebound in non-agricultural activities. Official projections place Indian growth at 8.5% forFY11.

Headline inflation has moved to double digits in Feb10 and has remainedsticky. Demand-side pressures are evident in the inflation series.

Since Feb10, the RBI has raised CRR by 100 bps, Repo by 100 bps andReverse Repo by 125 bps & also reduced the LAF corridor by 25 bps toreduce interest rate volatility and control excess demand pressures.

The RBIs Policy Review (27 July) clearly hints significant doses oftightening 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 fiscalsituation would help lower the pressure on bond yields.

Rupee has developed a depreciation bias due to a faster widening ofcurrent account deficit and intermittent risk aversion amongst globalinvestors.


30/31

Banks Guidance & VisionBanks Guidance & Vision

The Bank would continue with its thrust on sustainable & qualitative growth --

Would maintain its growth above the industry average to steadily expandthe market share. From Jun09 to Jun10, the Banks market share in Depositshas 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 therange of 22.0% to 24.0%, fee-based income in line with the loan-book and overallprofitability 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 PremierInstitutions

Working on BPR project in consultation with Mckinsey & Co. so as toachieve 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 itsBrand value, such as the well-publicised Baroda Next ReinforcementCampaign II.


31/31

Thank you.

BOB Analysts Q1 FY11

Documents