Bank of Baroda -- Riding High on

Sustainable Performance
( Apr-Mar & Q4, 2009-10)

Dr Rupa Rege Nitsure

Chief Economist
April 28, 2010
 Bank of Baroda: Key Strengths
 Bank of Baroda is a 101 years old State-owned Bank with modern and
contemporary personality, offering banking products and services to industrial and
commercial, retail and agricultural customers across the country.

Uninterrupted Record Overseas Business Modern & Contemporary

in Profit-making and Operations extend across Personality
Dividend Payment 25 countries
through 78 Offices
Strong Domestic
Presence through
Pioneer in many
Customer-Centric 3, 100 branches
Initiatives
Provides Financial
First PSB to receive Services to over
Corporate Governance 36 million customers
Rating (CAGR-2) globally

Relatively Strong Presence All Domestic Operations

A well-accepted &
recognised Brand in In Progressive States like Covered under
Indian banking industry Maharashtra & Gujarat the CBS
Domestic Branch Network
No. of Domestic Branches
3100
3100
•Bank’s network of domestic
2926 branches as on 31st Mar, 2010 was
3000
3,100 & no. of ATMs were 1,315.
2853
2900
•During FY10, Bank opened 178
2800 2732 new branches & merged four
existing branches.
2700
•Around 36.3% of the Bank’s branch
2600
network is located in rural areas.
2500
FY07 FY08 FY09 FY10 •New branches are primarily
opened in Semi-Urban, Urban &
Metro areas from U.P., Gujarat,
Regional Break-up of Maharashtra, Rajasthan, A.P.,
Domestic Branches as on 31st Mar, 2010 Tamilnadu, Uttaranchal, etc.
•Bank proposes to open around 400
Metro Urban Semi- Rural
more branches during FY10.
Urban
673 580 721 1,126
 Robust Technology Platform
•Bank achieved 100.0% CBS implementation in its domestic operations in September, 2009.
•As on date, 94.0% of its overseas business is covered under the CBS.
•All CBS branches are enabled for inter bank remittances through RTGS and NEFT.
•Bank’s Retail & Corporate Customers enjoy several facilities like internet banking, phone banking,
rapid funds2india – an online money transfer service, e-tax payment, NEFT/RTGS thru’ e-banking,
sms alerts, cash mgmt services, online institutional trading, etc.
•As on 31st Mar, 2010, Bank had 1,315 ATMs – 841 Onsite ATMs & 474 Offsite ATMs.
• An Integrated Global Treasury Solution is implemented in UK, UAE, Bahamas, Baharain, Hong
Kong & India.
•AML System has been implemented in India & 14 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 13 overseas territories & all B category
branches in India.
•A module for School Fee Collection has been implemented.
•Debit cards are now CVX2 enabled for online payment & 3D Secure (3DS) has been implemented.
•Enterprise wide GL has been implemented in India & 19 overseas territories, providing integrated
GL on a press of a button.
•All Back-Office functions have now been effectively centralised in Bank of Baroda.
Concentration (%): Domestic Branch Network

Rest of India, 21.42 Gujarat, 22.52

Maharashtra, 11.29

UP & Uttaranchal, 21.96

Rajasthan, 11.81
South, 11
 Pattern of Shareholding: 31st Mar, 2010
As on 31st Mar, 2010
Corp.
Indian • Share Capital Rs 365.53 crore
Bodies
Public
4.9% Others
6.0%
0.1%
•No. of Shares 364.27 million
• Net worth Rs 13,785.14 crore
FIIs
17.1% • B. V. per share Rs 378.40
•Return on Equity (annualised): 22.19%

• BOB is a Part of the following Indexes

Govt. of
Insurance
BSE 100, BSE 200 and BSE 500
India
Cos 53.8% Nifty Junior and Bankex.
9.1%
Mutual • BOB’s Share is listed on BSE and NSE in
Funds ‘Future and Options’ segment also.
9.1%
Comparative Performance of BoB Stock: FY10

Value Value
Index/Stock
(31st Mar’09) (31st Mar’10) % Change

Sensex 9,708.50 17,527.77 80.5%

Nifty 3,020.95 5,249.10 73.8%

Bankex 4,490.97 10,652.35 137.2%

BankNifty 4,133.20 9,459.60 128.9%

BoB-BSE 234.55 639.25 172.5%

BoB-NSE 234.35 639.05 172.7%

 Indian Macro Scene Quite Mixed in FY10

IIP Growth (%) WPI (%)

20 17.6
16.7
18 12 9.9
9.89
16
14 12 10
10.6 10.2 15.1 7.31
12 8
10 8.3 5.55 8.56
8 6
9.3
6 7.2
4
4 1.1 1.31 1.46
2 2.1 2 0.46
1.38
0
0
9 9 09 9 09 9 9 09 09 0 10
'0 '0 l'0 '0 t '0 '1

Apr'09

Jun'09
-1.01

Aug'09

Feb'10
Oct'09
n' g' v' b'

Dec'09
pr ay u u u ep c o ec' an e -2 -0.67 -0.17
A M J J A S O N D J F

Bank Credit Growth (%) Rs/USD- Exchange Rate

20 18 16.7 51 50.08
18 15.9 15.1
15.8 50
14.8 15.1 48.82 48.1
16 14.1 12.6 49
14 12.2 47.9 47.94
48 47.07
46.95
12 9.5 10 47 46.51 46.53 46.17 46.08
10
8 46 44.9
6 45
4 44
2 43
0 42
 Indian Macro Scene Quite Mixed in FY10
•Indian economy passed through many “pluses” and “minuses” in FY10
•A worst drought in last three decades gave rise to a decline of 8.0% in foodgrains &
5.0% in oilseeds production (y-o-y).
•A strong recovery in Mfg, Mining & Services sectors, however, is likely to give a real
GDP growth of 7.2% in FY10 (Official Estimate).
•Both Govt. and Pvt. Final Consumption Expd. slowed down but investment demand
(gross fixed capital formation) showed a gradual recovery.
•WPI-based inflation, after remaining subdued during H1, FY10, increased at a faster
pace in the second half and reached 9.90% (y-o-y) in Mar’10.
•Both exports & imports returned to positive zones by Nov-Dec, 2009 after contracting
for 12-13 months. But a fall in invisibles’ surplus has led to a higher current account
deficit in FY10.
•Equity markets surged on higher FII inflows at US$ 29 bln. Even FDI during Apr-Feb,
FY10 amounted to US$ 33.1 bln.
•In nominal terms, Rupee appreciated by 11.5% in FY10.
•Record market borrowing programme and rising inflation gave rise to hardening of
bond yields. Yield on 10-year GoI benchmark paper increased from 6.94% at the
beginning of FY10 to 7.17% by mid-FY10 to 7.85% by end of FY10. It hovered above
8.0% for several days during the month of March, 2010.
Bank’s Business Growth (Y-O-Y): FY06 to FY10

Growth: Total Deposits (%) Growth: Total Advances (%)

39.6
38.0 34.3
33.4 40.0
35.0 25.3
26.6 35.0
27.6
30.0 21.7 30.0
22.2
25.0 25.0
15.2
20.0 20.0
15.0 15.0
10.0 10.0
5.0 5.0

0.0 0.0
FY06 FY07 FY08 FY09 FY10 FY06 FY07 FY08 FY09 FY10

Growth: Total Business (%) Domestic CASA Growth (%)

40.0 35.8
35.0 29.7 30.0 25.1
30.0 24.1 24.0 25.0 20.6 20.0
23.1
25.0 16.1
20.0 14.1
20.0
15.0
15.0
10.0
10.0
5.0 5.0

0.0 0.0
FY06 FY07 FY08 FY09 FY10 FY06 FY07 FY08 FY09 FY10
 Bank’s Profitability: FY06 to FY10
•Bank’s Net Profit has grown at a strong
6000.00
CAGR of 38.7% between FY06 & FY10
Rs crore 4935.26
5000.00
4209.99
4000.00
3058.33
2928.55
3000.00
2415.01 2227.20
1917.51
2000.00
1435.52
1026.47
826.97
1000.00

0.00
FY06 FY07 FY08 FY09 FY10
Gross Profit Net Profit
%
Bank’s Asset Quality: FY04 to FY10
9 4

%
8 3.5
7.3

7
3
Gross NPA
6
2.99
2.5

5
3.9
2
4

2.47 1.5
3
1.45
1.84
1
2 0.87 1.36
1.27
Net NPA
1 0.6 0.5
0.47 0.34
0.31
0 0
FY04 FY05 FY06 FY07 FY08 FY09 FY10
Bank’s Business Performance: FY10 over FY09

Particular
FY09 FY10 % Change
(Rs crore)
Global Business 3,35,648 4,16,080 24.0%
Domestic Business 2,59,958 3,16,926 21.9%
Overseas Business 75,691 99,153 31.0%
Global Deposits 1,92,397 2,41,044 25.2%
Domestic Deposits 1,51,409 1,85,283 22.4%
Overseas Deposits 40,988 55,762 36.0%
Global CASA Deposits 56,939 71,468 25.5%

Domestic CASA 52,789 66,024 25.1%

Overseas CASA 4,149 5,444 31.2%

•Share of Domestic CASA improved from 34.87% at end-Mar’09 to 35.63% at end-Mar’10.

Bank’s Business Performance: FY10 over FY09
Particular
FY09 FY10 % Change
(Rs crore)
Global Advances (Net) 1,43,251 1,75,035 22.2%
Domestic Advances (Net) 1,08,549 1,31,644 21.3%
Overseas Advances (Net) 34,703 43,392 25.0%
Out of Gross Domestic Credit,

Retail Credit
19,628 24,248 23.5%
Of which:
Home Loans 8,263 10,313 24.8%

SME Credit 14,662 21,111 43.98%

Farm Credit 16,964 21,617 27.4%
Credit to Weaker Sections 8,156 10,945 34.2%

•Excluding loans to Retail Trade (that is included under the SME sector as per the new RBI
guidelines) the growth in SME advances works out to 28.2% (y-o-y) in FY10.
 Bank’s Business Performance: FY10 over FY09

Particular
(Rs crore) FY09 FY10 % Change

Global Saving Deposits

42,487 52,544 23.7%

Domestic Savings Deposits

41,327 51,258 24.0%

Overseas Savings Deposits

1,160 1,286 10.9%

Global Current Deposits

14,451 18,924 31.0%

Domestic Current Deposits

11,462 14,766 28.8%

Overseas Current Deposits

2,989 4,158 39.1%
 Bank’s Profits & NII: Yearly & Quarterly for FY09 & FY10

Particular
(Rs crore) FY09 FY10 % Change

Gross Profit 4,209.99 4,853.81 15.3%

Net Profit 2,227.20 3,058.33 37.3%
Net Interest Income
5,123.41 5,939.48 15.9%

Particular Jan-Mar, Jan-Mar,

% Change
(Rs crore) FY09 FY10
Gross Profit 1,304.48 1,547.33 18.6%

Net Profit 752.69 906.28 20.4%

Net Interest Income 1,470.79 1,744.95 18.6%

• Net Profit for FY09 includes an exceptional item of Rs 95.01 crore due to winding up/dilution
of Bank’s holdings in its subsidiaries & Net Profit of FY10 includes an exceptional item of Rs
81.45 crore due to sale of stake in UTI AMC & UTI Trustee companies.
 Key Financial Ratios : FY10
 Return on Average Assets at 1.21% [1.09% in FY09]

 Earning per Share (annualised) at Rs 83.96 [Rs 61.14 in FY09]

 Book Value per Share at Rs 378.40 [Rs 312.61 in FY09]

 Return on Equity (ROE) at 22.19% [19.56% in FY09]

 Capital Adequacy Ratio at 14.36% with Tier I Capital at 9.20%

• Cost-Income Ratio declined from 45.38% to 43.57%(Y-o-Y).

 Gross NPA ratio increased marginally from 1.27% to 1.36% (Y-o-Y).

 Net NPA ratio increased marginally from 0.31% to 0.34%(Y-o-Y).

 NPA Coverage at the healthy level of 74.90% & Incremental Delinquency Ratio at
1.13% in FY10.
Other Highlights: FY09 & FY10

Particular (in %) FY09 FY10

Global Cost of Deposits 5.71 4.90

Domestic Cost of Deposits 6.30 5.60
Overseas Cost of Deposits 3.29 2.37

Global Yield on Advances 9.50 8.55

Domestic Yield on Advances 10.86 10.05
Overseas Yield on Advances 5.19 4.21
Other Highlights: FY09 & FY10

Particular (in %) FY09 FY10

Global Yield on Investment 7.05 6.75

Domestic Yield on Investment 7.18 6.97
Overseas Yield on Investment 5.68 3.89

Global NIM 2.91 2.74

Domestic NIM 3.21 3.12
Overseas NIM 1.73 1.42

•NIM indicates Net Interest Income as % of Interest Earning Assets.

Other Highlights: Jan-Mar, FY09 & FY10

Particular (in %) Jan-Mar’09 Jan-Mar’10

Global Cost of Deposits 5.68 4.42

Domestic Cost of Deposits 6.47 5.08
Overseas Cost of Deposits 2.75 2.06

Global Yield on Advances 9.34 8.23

Domestic Yield on Advances 10.75 9.76
Overseas Yield on Advances 5.13 3.74
Other Highlights: Jan-Mar, FY09 & FY10

Particular (in %) Jan-Mar’09 Jan-Mar’10

Global Yield on Investment 7.12 6.51

Domestic Yield on Investment 7.30 6.72
Overseas Yield on Investment 5.09 3.68

Global NIM 3.17 2.97

Domestic NIM 3.38 3.50
Overseas NIM 2.07 1.30

•Sequentially, the NIM has improved from 2.37% in Q1, FY10 to

2.63% in Q2, FY10 to 2.95% in Q3, FY10 & 2.97% in Q4, FY10 in global
operations & from 2.57% to 2.89% to 3.40% to 3.50%in domestic
operations.
 Non-Interest Income: FY09 & FY10
%
(Rs crore) FY09 FY10
Change

Comm., Exchange, Brokerage 745.50 897.29 20.4%

Incidental Charges 362.92 308.57 -15.0%

Profit on Exchange
372.39 385.97 3.6%
Transactions
Recovery from PWO 263.15 300.17 14.1%

Trading Gains 805.13 641.78 -20.3%

Other Misc. Income 113.56 191.13 68.3%

Total Non-Interest Income 2,662.64 2,724.91 2.34%

Non-Interest Income: Jan-Mar, FY09 & FY10

(Rs crore) Jan-Mar, Jan-Mar, %

2009 2010 Change

Comm., Exchange, Brokerage 253.88 273.34 7.7%

Incidental Charges 86.38 84.16 -2.6%

Profit on Exchange
106.73 106.70 0.0%
Transactions
Recovery from PWO 82.62 118.13 43.0%

Trading Gains 300.85 125.36 -58.3%

Other Misc. Income 23.17 59.19 155.5%

Total Non-Interest Income 853.63 766.89 -10.2%

Provisions & Contingencies: FY09 & FY10

(Rs crore) FY09 FY10

Provision for NPA / Bad

337.58 955.46
Debts Written-off
Prov. For Dep. on
536.75 -380.74
Investment
Prov. For Std. Adv. 75.47 106.63
Other Provisions
(including Prov. For staff 12.26 15.85
welfare)
Tax Provisions 1,115.74 1,179.73
Total Provisions 2,077.80 1,876.93
Provisions & Contingencies: Jan-Mar, FY09 & FY10

(Rs crore) Jan- Jan-

Mar’09 Mar’10
Provision for NPA/ Bad
236.27 231.83
debts written-off
Prov. For Dep. on
-33.67 61.69
Investment
Prov. For Std. Adv. 15.81 79.21
Other Provisions
(including Prov. For staff -8.67 4.60
welfare)
Tax Provisions 342.05 345.17
Total Provisions 551.79 722.50
 Bank’s Treasury Highlights: FY10

• Treasury Income stood at the healthy level of Rs 1,109.20 crore in FY10

despite volatile bond and currency markets.
• As of Mar 31st 2010, the share of SLR Securities in Total Investment was
86.78%.
• The Bank had 80.13% of SLR Securities in HTM and 19.56% in AFS at
end-Mar 2010.
• The per cent of SLR to NDTL as on 31st Mar., 2010 was 26.91%.
• While the modified duration of AFS investments is 2.18 years; that of
HTM securities is 4.70 years.
• Total size of Bank’s Domestic Investment Book as on 31st Mar 2010
stood at Rs 57,912 crore.
• Total size of Bank’s Overseas Investment Book as on 31st Mar 2010
stood at Rs 3,487 crore.
 Overseas Business: FY10
• In FY10, the “Overseas Business” contributed 23.8% to the Bank’s Total
Business, 19.6% to its Gross Profit and 36.0% to its Fee-based income.

• While the Cost-Income Ratio for Domestic Operations stood at 47.11% in

FY10, it was just 22.15% for Overseas Operations.

• While the Gross NPA (%) in Domestic Operations stood at 1.64% at end-
Mar, 2010, that for Overseas Operations was just 0.47%.

• “Gross Profit to Avg. Working Funds” ratio for Overseas Operations was
1.57% in FY10 comparable to 2.11% for Domestic Operations.

• The ROAA of overseas operations was at 1.42% and the ROE at 24.0% in
FY10.
• During FY10, the Bank raised FE resources in the form of syndicated loan
of USD 175 mln for 3 yrs; bilateral loan of USD 100 mln for 3 yrs and MTN
funds of USD 350 mln for 5.5 yrs for deployment in its overseas business.
 Capital Adequacy & Capital Raising: FY10

• Bank’s CRAR as on 31st Mar, 2009 stood at 14.36%; of which

Tier1 was at 9.20% and Tier 2 at 5.16%.
• The size of Bank’s risk-weighted assets as on 31st Mar, 2010 was
Rs 1,56,091 crore.
• Bank proposes to maintain its CRAR in the band of 13.0% to
13.5% in the coming years (with the Tier 1 at 8.5% to 9.0%).
• Bank has raised Rs 1,900 crore during FY10 by way of the
following issues.

• Subordinated Upper Tier II Bonds: Rs 500 crore in June, 2009

• Subordinated Upper Tier II (Fixed Rate) Bonds: Rs 500 crore
in July 2009.
• Fixed Rate Perpetual Bonds (Innovative): Rs 300 crore in
Oct, 2009
• Fixed Rate Perpetual Bonds (Innovative): Rs 600 crore in
Nov, 2009
NPA Movement (Gross): FY10

Particular Amount in Rs crore

A. Opening Balance 1,842.92
B. Additions during FY10 1,671.22
Out of which, Fresh Slippages 1,615.64
C. Reduction during FY10 1,113.45

Recovery 383.27
Upgradation 194.63
PWO & WO 514.81
Exchange Difference 20.74
NPA as on 31st Mar, 2010 2,400.69
Recovery in PWO in FY10 300.17
 Gross NPAs: Sectoral Break-up at end-Mar, 2010

Sector Gross NPA (%) Gross NPA (%)

FY09 FY10
Agriculture 1.68% 3.33%
Large & Medium Ind. 0.74% 1.43%
Retail 2.48% 2.11%
Housing 3.01% 2.31%
SME 2.58% 2.60%
Restructured Loans : FY10

• During 24 months (1 Apr’08 to 31 Mar’10), Bank has restructured

61,174 accounts amounting Rs 5,113.62 crore.
• Within this, the loans worth Rs 463.26 were restructured in Q4,
FY10.
• For the period of 24 months, out of the total amount restructured
Rs 2,682.11 cr belonged to wholesale banking, Rs 1,272.69 cr to
SMEs, Rs 557.58 cr to retail and Rs 601.24 cr to agriculture sector.
• About 79 accounts above Rs 25 lakh restructured during the last
24 months slipped during FY10 and they were Rs 417.88 crore.
• Industry-wise break-up shows that-- Bank’s restructured accounts
are well spread over different sectors, the major ones being cotton
textiles, engineering goods, iron & steel, food processing,
infrastructure, etc.
• Bank has primarily helped genuine borrowers who suffered from
temporary cash flow problems due to global crisis. These accounts
are restructured looking into their internal strength & after
ensuring their financial viability.
 Sectoral Deployment of Credit in FY10

Sector % share in Gross

Domestic Credit

Agriculture 16.18%

Retail 18.15%

SME 15.80%

Trading plus Others 15.14%

Wholesale 34.73%
Total 100.0%
 Emerging Economic Scenario
• Global economic recovery, currently underway, faces risks because of large
public debt in advanced countries.
• Advanced countries still suffer from loss of capacity output, high
unemployment rates, impaired financial systems, etc.
• However, Asia is much better placed as domestic demand in Asian
countries is replacing exports as the main growth driver, led by China &
India.
• While India is likely to post the growth around 7.2% in FY10, the growth is
expected to rebound to 8.0% in FY11 backed by stronger than expected
growth momentum in industry & services.
• Food inflation- a major macro concern for India until the next normal
monsoon season.
• With both growth & inflation heading towards 8.0%, the pace of monetary
tightening is going to increase putting upward pressure on interest rates.
• Indian currency is headed for appreciation despite faster widening of
current account deficit.
• Key risks: high food & oil prices, a double-dip, etc.
• Positives: strong net capital inflows (both FIIs & FDI) & good signs of
investment rebound.
 Bank’s Guidance & Vision
•The Bank would continue with its thrust on sustainable & qualitative growth --
•Will try to grow at above industry average to steadily expand its market share.
•The Bank would protect the current soundness of its key financials like ROAA,
ROE, EPS, BVPS, NPL Position etc., through its dedicated focus on CASA
Mobilisation, Efficient Pricing of Retail Deposits & Loans, Steady Reduction in
Bulk Business and Credit Origination & Monitoring.
•The Bank would try to grow its Fee-based Income in tandem with its Loan-Book
growth.
•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 recently launched Baroda Next Reinforcement Campaign – II.
Thank you.