BOB Profile-Sept05

1
Bank of Baroda A Bank of Credible Track
Record ( Q2 H1 , 2010-11) Dr Rupa Rege
Nitsure Chief Economist October 28, 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, 202
Branches

• Pioneer in many
• Customer-Centric
• Initiatives

Provides Financial Services to over 37.153
mln 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
3
Domestic Branch Network

• Banks network of domestic branches as on 30th
  Sept., 2010 was 3,202 no. of ATMs were 1,443 .
  
• During H1, FY11, Bank opened 104 new branches and
  merged two existing branches.
• Around 35.98 of the Banks branch network is
  located in rural areas.
• Newly opened branches are primarily situated in
  UP Uttaranchal (38), Gujarat (13), Northern
  (13) Rajasthan (10) zones.
• Bank proposes to open 300 more branches by the
  end of FY11, for which it has already received
  authorisations.

Regional Break-up of Domestic Branches as on 30th Sept, 2010 Regional Break-up of Domestic Branches as on 30th Sept, 2010 Regional Break-up of Domestic Branches as on 30th Sept, 2010 Regional Break-up of Domestic Branches as on 30th Sept, 2010
Metro Urban Semi-Urban Rural
692 591 767 1,152
4
Robust Technology Platform

• As on 30 Sept 2010, all domestic branches, that
  is 3,202 branches and 38 extension counters were
  on CBS.
• Additionally, 47 branches of 15 overseas
  territories and 28 branches of eight overseas
  subsidiaries are on the CBS covering 96.15 of
  the Banks overseas network.
• A pilot roll out has started for the Banks RRBs
  and the Bank plans to achieve 100.0 roll out in
  its RRBs in the current financial year.
• 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 through e-banking, sms alerts,
  cash mgmt services, online institutional trading,
  etc.
• As on 30 Sept., 2010, Bank had 1,443 ATMs 910
  Onsite ATMs 533 Offsite ATMs.
•  An Integrated Global Treasury Solution is
  implemented in UK, UAE, Bahamas, Baharain, Hong
  Kong, Singapore in India.
• AML System has been implemented in India and in
  19 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 18 territories including 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.
• Bank has also implemented the NRHM (software) for
  National Rural Health Mission for Gujarat
  Rajasthan and Solar Power Generation System a
  Green Initiative in 64 branches.

5
Concentration () Domestic Branch Network
6
Pattern of Shareholding 30th Sept, 2010
As on 30th Sept., 2010

• Share Capital Rs 365.53 crore
• No. of Shares 364.27 million
• Net worth Rs 15,669.06 crore
• B. V. per share Rs 430.15
• Return on Equity (annualised) 23.98

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

7
Comparative Performance of BoB Stock Sept09
to Sept10
Index/Stock Value (30th Sept09) Value (30th Sept10) Change
Sensex 17,126.84 20,069.12 17.2
Nifty 5,083.95 6,029.95 18.6
Bankex 9,855.60 14,025.04 42.3
BankNifty 8,812.35 12,366.35 40.3
BoB-BSE 482.40 872.80 80.9
BoB-NSE 481.70 872.50 81.1
8
Awards Accolades

• The Bank has received several awards during the
  calendar 2010 for its consistent outstanding
  performance (both business financial), superior
  management, dedication to excellence and
  contribution to rural economy financial
  inclusion.
• It is the only Indian bank whose Rank has
  improved by 69 notches in just a years time from
  283 to 214 in the Bankers (London) Top 1,000
  World Banks.
• To list a few select awards that the Bank has
  received in the recent past,
• Business Indias Best Bank award for the year
  2010
• Dainik Bhaskar-DNA India Pride Award 2010 A
  Silver Trohy
• Dalal Street-KPMG DSIJ PSU Award 2010
• Runner Up in Financial Express Best Bank Awards
  under the Nationalised Bank Category
• Innovative Brand Builder Award by CMO Asia
  Awards, Singapore
• Skoch Challenger Award for Bank of the Year
  

9
Indian Macro Scene during Sep09 to Sep10
10
Economic Policy Environment in H1, FY11

• The IMFs latest World Economic Outlook (Oct. 6)
  says global economic recovery is proceeding, but
  it is an unbalanced recovery.
• Global recovery is sluggish in advanced countries
  but much stronger in emerging and developing
  economies.
• Indias GDP grew 8.8 in Q1, FY11 over above
  8.6 in Q4, FY10.
• Growth in Q1, FY11 was driven by a strong growth
  rebound in manufacturing sector and a few
  segments of services sector like hospitality
  communications.
• Indias industrial output grew 10.6 (y-o-y) in
  Apr-Aug, FY11 versus 5.9 a year ago.
• However, the growth is still quite lop-sided and
  stresses are seen in sectors like power
  generation, beverages, textiles, chemicals, wood
  products, consumer non-durables, etc.
• Thanks to good monsoon rains, Indias kharif
  foodgrain production in FY11 is estimated at
  114.63 mln tns 10.4 higher than the last
  years level.
• Indias exports grew 28.6 (y-o-y) in Apr-Aug10,
  while imports grew 33.1, taking trade deficit to
  US56.62 bln in Apr-Aug10, versus UD 40.28 bln
  a year ago.
• Higher trade deficit combined with the lower
  invisibles surplus has been putting sustained
  adverse pressure on current account deficit.

11
Economic Policy Developments in H1, FY11

• However, capital account surplus on the back of
  short term credit, ECBs, banking capital, etc.,
  has been adequately financing the current account
  deficit.
• Net investment of portfolio investors in Indias
  debt equity segments amounted to US 27.12 bln
  in H1,FY11.
• Indian rupee that depreciated against the USD by
  3.5 in Q1, FY11 to 46.46 as on 30 Jun, 2010
  bounced back in Q2 and appreciated by 3.3 during
  Q2, FY11 to 44.93 as on 30 Sept, 2010.
• Indian governments Fiscal Deficit declined 16.9
  (y-o-y) during Apr-Aug, FY11 mainly on account of
  windfall from 3G broadband spectrum auctions
  and decent revenue generation.
• Inflation has emerged as a major concern in
  macroeconomic management and is still sticky in
  the band of 8.5 to 9.0.
• To counter inflationary pressures, the RBI has
  cumulatively raised Repo rate by 125 bps and
  Reverse Repo rate by 175 bps since Mar10.
• Banking industrys aggregate deposit growth at
  14.3 (y-o-y) and credit growth at 19.0 (y-o-y)
  as on Sept 24, 2010 were way below market
  expectations. The broad money supply expansion
  was also controlled at 14.7 (y-o-y).

12
Banks Business Growth (Y-O-Y) Sept05 to
Sept10
13
Banks Profitability H1,FY06 to H1, FY11

• During the last five years, the Banks
  Half-yearly Net Profit has grown at the CAGR of
  35.2

14
Banks Asset Quality Sept04 to Sept10
Gross NPA
Net NPA
15
Banks Business Performance Sep09 to
Sep10
Particular (Rs crore) Sep09 Mar10 Sep10 Y-O-Y () Change Over March ()
Global Business 3,56,274 4,16,080 4,62,619 29.9 11.2
Domestic Business 2,70,250 3,16,926 3,47,733 28.7 9.7
Overseas Business 86,025 99,153 1,14,885 33.6 15.9
Global Deposits 207355 2,41,044 2,69,660 30.1 11.9
Domestic Deposits 1,60,609 1,85,283 2,06,001 28.3 11.2
Overseas Deposits 46,746 55,762 63,659 36.2 14.2
Global CASA Deposits 62705 71,468 79,815 27.3 11.7
Domestic CASA 58,091 66,024 73,944 27.3 12.0
Overseas CASA 4,614 5,444 5,870 27.2 7.8

• Share of Domestic CASA improved from 35.23 in
  Q1, FY11 to 35.89 in Q2, FY11.

16
Banks Business Performance Sep09 to
Sep10
Particular (Rs crore) Sep09 Mar10 Sep10 Y-O-Y () Change Over March ()
Global advances (Net) 1,48,919 1,75,035 1,92,959 29.6 10.2
Domestic Advances 1,09,641 1,31,644 1,41,732 29.3 7.7
Overseas Advances 39,278 43,392 51,227 30.4 18.1
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 21,403 24,248 27,192 27.0 12.1
Home Loans 9,353 10,313 11,324 21.1 9.8
SME Credit 16,666 21,111 23,506 41.0 11.3
Farm Credit 17,744 21,617 21,555 21.5 -0.3
Credit to Weaker Sections 8,961 10,945 11,976 33.6 9.4
17
Banks Business Performance Sep09 to
Sep10
Particular (Rs crore) Sep09 Mar10 Sep10 Y-O-Y () Change Over March ()
Global Saving Deposits 46,988 52,544 59,349 26.3 13.0
Domestic Savings Deposits 45,749 51,258 57,994 26.8 13.1
Overseas Savings Deposits 1,239 1,286 1,355 9.3 5.4
Global Current Deposits 15,717 18,924 20,466 30.2 8.1
Domestic Current Deposits 12,343 14,766 15,950 29.2 8.0
Overseas Current Deposits 3,375 4,158 4,516 33.8 8.6
18
Banks Profits NII Jul-Sep, FY10 FY11
Particular (Rs crore) Jul-Sep09 Jul-Sep10 Y-O-Y ()
Gross Profit 1,031.59 1,656.74 60.6
Net Profit 634.18 1,019.30 60.7
Net Interest Income 1,388.60 2,038.14 46.8

• The Banks NII grew sequentially from Rs 1,744.95
  crore in Jan-Mar10 to Rs 1,857.99 crore in
  Apr-Jun10 to Rs 2,038.14 crore on the back of a
  healthy growth in credit and prudent management
  of liabilities.

19
Other Highlights For Last Select Quarters
Particular (in ) Q2, FY10 Q4, FY10 Q1, FY11 Q2, FY11

Global Cost of Deposits 5.15 4.42 4.39 4.50
Domestic Cost of Deposits 5.87 5.08 5.09 5.27
Overseas Cost of Deposits 2.49 2.06 1.95 2.02

Global Yield on Advances 8.71 8.23 8.17 8.40
Domestic Yield on Advances 10.23 9.76 9.79 10.17
Overseas Yield on Advances 4.48 3.74 3.67 3.75
20
Other Highlights For Last Select Quarters
Particular (in ) Q2, FY10 Q4, FY10 Q1, FY11 Q2, FY11

Global Yield on Investment 6.69 6.51 6.66 7.06
Domestic Yield on Investment 6.87 6.72 6.83 7.24
Overseas Yield on Investment 4.33 3.68 3.71 3.71

Global NIM 2.63 2.97 2.90 3.02
Domestic NIM 2.89 3.50 3.43 3.62
Overseas NIM 1.59 1.30 1.31 1.33
21
Key Financial Ratios H1, FY10 and H1,FY11

• Return on Average Assets at 1.27 1.13 in H1,
  FY10
• Earning per Share (annualised) at Rs 103.14 Rs
  72.46 in H1, FY10
• Book Value per Share at Rs 430.15 Rs 348.70 in
  H1, FY10
• Return on Equity (ROE) at 23.98 20.78 in
  H1, FY10
• Capital Adequacy Ratio at 13.22 with Tier I
  Capital at 8.16
• Cost-Income Ratio declined from 47.54 to 38.69
  (Y-o-Y)
• Gross NPA ratio increased marginally from 1.30
  to 1.39 (Y-o-Y)
• Net NPA ratio increased from 0.27 to 0.38
  (Y-o-Y).
• NPA Coverage at the healthy level of 73.11
  (without technical write-offs) and at 85.56
  (with technical write-offs)
• Incremental Delinquency Ratio at 1.05
  (annualised) in H1, FY11.

22
Key Financial Ratios Q2, FY10 and Q2,FY11

• Return on Average Assets at 1.34 1.07 in Q2,
  FY10
• Earning per Share (annualised) at Rs 111.92 Rs
  69.64 in Q2, FY10
• Return on Equity (ROE) at 26.02 19.97 in Q2,
  FY10
• Cost-Income Ratio declined from 48.00 in Q2,
  FY10 to 39.08 in Q2, FY11
• Incremental Delinquency Ratio at 0.16
  (non-annualised) in Q2, FY11 versus 0.37
  (non-annualised) in Q1, FY11.

23
Non-Interest Income Q2, FY10 and Q2, FY11
(Rs crore) Q2, FY10 Q2, FY11 Change (Y-O-Y)
Commission, Exchange, Brokerage 192.05 248.28 29.3
Incidental Charges 78.22 90.50 15.7
Other Miscellaneous Income 53.67 63.20 17.8
Total Fee-Based Income 323.94 401.98 24.1
Trading Gains 120.54 110.13 -8.6
Profit on Exchange Transactions 84.24 100.02 18.7
Recovery from PWO 66.61 69.16 3.8
Total Non-Interest Income 595.33 681.29 14.4
24
Provisions Contingencies Q2, FY10 and
Q2, FY11
(Rs crore) Q2, FY10 Q2, FY11 Change (Y-O-Y)
Provision for NPA Bad Debts Written-off 172.16 142.26 -17.4
Provision for Depreciation on Investment -61.07 -20.11 --
Provision for Standard Advances 1.49 52.04 3392.6
Other Provisions (including Provision for staff welfare) 3.75 11.30 201.3
Tax Provisions 281.08 451.95 60.8
Total Provisions 397.41 637.44 60.4
25
Banks Treasury Highlights Q2 and H1, FY11

• Treasury Income stood at the healthy level of Rs
  210.15 crore in Q2, FY11 and at Rs 459.70 crore
  in H1, FY11.
• The Banks Trading Gains Stood at Rs 110.13 crore
  in Q2, FY11 and at Rs 238.07 crore in H1, FY11.
• As of September 30, 2010, the share of SLR
  Securities in Total Investment was 85.85.
• The Bank had 78.35 of SLR Securities in HTM and
  20.92 in AFS at end-September 2010.
• The per cent of SLR to NDTL as on 30th September,
  2010 was 26.79.
• While the modified duration of AFS investments is
  2.52 years that of HTM securities is 5.15 years.
• Total size of Banks Domestic Investment Book as
  on 30th September, 2010 stood at Rs 63,081.12
  crore.
• Total size of Banks Overseas Investment Book as
  on 30th September, 2010 stood at Rs 3,193 crore.

26
Overseas Business H1, FY11

• As on 30 Sept, 2010, the Overseas Business
  contributed 24.8 to the Banks Total Business,
  16.9 to its Gross Profit and 31.6 to its Core
  Fee income.
• While the Cost-Income Ratio for Domestic
  Operations stood at 41.51 in H1, FY11, it was
  more favourable at 19.74 for the Banks Overseas
  Operations.
• While the Gross NPA () in Domestic Operations
  stood at 1.68 at end-September, 2010, that for
  Overseas Operations was lower at 0.58.
• The ROAA for Overseas Operations stood at 1.05
  in Q2, FY11 and at 0.98 in H1, FY11.
• The Return on Avg. Net Worth for Overseas
  Operations improved from 16.41 at end-June, 2010
  to 19.23 at end-Sept, 2010.
• During H1, FY11, the Bank raised US 350 mln for
  5.5 years at 4.75 coupon (YTM 4.886) under its
  MTN programme to finance asset growth in overseas
  operations.

27
Capital Adequacy Capital Raising in H1,
FY11

• The Banks CRAR (Basel II) as on 30th Sept., 2010
  was at 13.22 of which Tier1 was at 8.16 and
  Tier 2 at 5.07.
• The size of Banks risk-weighted assets as on
  30th September, 2010 was Rs 1,85,282 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 2,211.50 crore during H1, 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
• Subordinated Upper Tier II Bonds (maturing in
  2025) Rs 500 crore in August, 2010
• Perpetual IPID (maturing in 2020) Rs 711.50
  crore in August, 2010

28
NPA Movement (Gross) H1, FY11
Particular ( Rs crore)
A. Opening Balance 2,400.69
B. Additions during H1, FY11 954.31
Out of which, Fresh Slippages 919.63
C. Reduction during H1, FY11 635.15

Recovery 242.45
Upgradation 144.67
PWO WO 248.03
Exchange Difference --
NPA as on 30th September, 2010 2,719.85
Recovery in PWO in H1, FY11 125.28
29
Sector-wise Gross NPAs H1, FY10 FY11
Sector Gross NPA () H1, FY10 Gross NPA () H1, FY11
Agriculture 2.09 3.44
Large Medium Industries 1.21 1.56
Retail 2.38 2.12
Housing 2.67 2.13
SME 1.70 2.94
30
Cumulative Position of Restructured
Assets (Domestic)

• During 30 months (1 Apr08 to 30 Sep10), the
  Bank has restructured accounts amounting Rs
  5,432.66 crore.
• Within this, the loans worth Rs 319.04 crore
  were restructured in H1, FY11.
• For the period of 30 months, out of the total
  amount restructured, Rs 2,845.44 crore (52.4)
  belonged to wholesale banking, Rs 1,345.59 crore
  (24.8) to SMEs, Rs 566.08 crore (10.4) to
  retail and Rs 675.55 crore (12.4) to agriculture
  sector.
• About 41 accounts (of Rs 1 crore above)
  restructured on/after 1st Apr, 2008 with
  aggregate outstanding of Rs 539.01 crore slipped
  to 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,
  infrastructure, real estate, etc.
• 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
  and the financial viability of such borrowers.

31
Sectoral Deployment of Credit at end-Sept, 2010
Sector share in Gross Domestic Credit
Agriculture 15.0
Retail 18.9
SME 16.3
Wholesale 36.3
Miscellaneous 13.5
Total 100.0
32
Economic Outlook

• The IMF forecasts global output to increase by
  4.8 in 2010 and by 4.2 in 2011 reflecting a
  temporary slowdown spanning the second half of
  this year.
• It has revised upwards Indias economic growth
  forecast for 2010 from 9.4 to 9.7 citing
  strengthening local consumer demand.
• However, it has maintained its 2011 economic
  growth forecast for India at 8.4.
• Indian policymakers project Indias economy to
  expand by 8.0 to 8.5 in FY11.
• While a good harvest season augurs well for
  domestic consumption, inflation inertia and
  appreciating rupee pose significant challenges
  for policymakers.
• Credit growth is still not highly broad-based and
  is expected to stay in the band of 18 to 20 for
  the banking industry in FY11.
• Slow pace of deposit mobilisation and large IPO
  issues have created short-term tightness in
  liquidity and pressure on short term interest
  rates.
• Busy season of H2, FY11 continuation of
  tightening cycle are supportive of an upward bias
  in long-term interest rates.
• Banks will continue to focus on the CASA
  franchise and recovery from the non performing
  loans.
• Pressures on asset quality have eased on the back
  of improving rating upgrades for the corporates.
  

33
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
  Sep07 to Sep10, the Banks market share in
  Deposits has gone up from 3.62 to 3.65 and in
  Advances from 3.45 to 3.71.
• The Bank would grow its deposits in the band of
  20 to 22.0 credit in the range of 23.0 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
• working aggressively on enhancing the HR
  capabilities
• working in a dedicated fashion on its BPR project
  in consultation with Mckinsey Co.
• focusing on development of marketing and sales
  service culture
• expanding the market share in both Indian and
  overseas territories
• raising capital at every appropriate opportunity

34
Banks BPR Project - Navnirmaan

• Roadmap of the Project Navnirmaan
• Design 4 Months
• Pilot Execution 5 to 12 months
• Roll-Out 2 to 3 years
• Project Navnirmaan has already entered the
  Implementation stage
• There are in all 18 activities underway focusing
  on superior customer experience, customer
  convenience, capacity building of employees
  leveraging technology.
• As a part of rollout, all branches at metro
  urban centres shall be brought under the new
  model of Baroda Next branch
• Training system is being revamped and an Academy
  of Excellence is being created to meet the soft
  skill requirement of the employees besides
  developing a pipeline of business leaders
• Organisational restructuring is being undertaken
  to align the Bank with redesigned processes and
  prepare it for the challenges of ambitious growth

35
Banks HR Initiatives

• Recruitment during FY11
• Probationary Officers 1,200
• Specialist Officers (in various specialised
  disciplines) 345
• Clerks 2,000 (in progress)
• Campus Recruitment 616
• (Bank visited nearly 75 institutes including some
  of the premier Business schools of the country)
• Total New Hires Joining BoB in FY11 4,161
• Tentative Recruitment Plans for FY12
• Probationary Officers 1,500
• Campus Recruitment around 800
• Specialist officers (in various disciplines)
  200
• Clerks 1,700
• New Hires Planned for Recruitment in FY12 4,200
• Bank has launched two massive Leadership
  Development Programmes for 1,200 of its branch
  heads, 300 AGMs/DGMs unparalleled in industry
  first of its kind for an Indian state-owned Bank.
  

36

• Thank you.