Transcript BOB Profile-Sept05

Bank of Baroda
From Stability to Sustainability
( Q1, 2010-11)
Dr Rupa Rege Nitsure
Chief Economist
July 29, 2010
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.
Uninterrupted Record
in Profit-making and
Dividend Payment
Overseas Business
Operations extend across
26 countries
through 81 Offices
Pioneer in many
Customer-Centric
Initiatives
Strong Domestic
Presence through
3, 106 Branches
Provides Financial
Services to over
36 million Customers
Globally
First PSB to receive
Corporate Governance
Rating (CAGR-2)
A well-accepted &
recognised Brand in
Indian banking industry
Modern & Contemporary
Personality
Relatively Strong Presence
in Progressive States like
Gujarat & Maharashtra
Robust Technology
Platform with 100%
CBS in Indian Branches
Domestic Branch Network
No. of Domestic Branches
3200
3106
3100
2927
3000
•During Q1, FY10, Bank opened
seven new branches and merged
one existing branch.
2851
2900
2800
2703
•Bank’s network of domestic
branches as on 30th June, 2010 was
3,106 & no. of ATMs were 1,372 .
2735
•Around 36.35% of the Bank’s
branch network is located in rural
areas.
2700
2600
2500
Q1FY07
Q1FY08
Q1FY09
Q1FY10
Q1FY11
Regional Break-up of
Domestic Branches as on 30th June, 2010
Metro
Urban
SemiUrban
Rural
673
581
723
1,129
•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.
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 Bank’s
New Zealand territory.
•Bank’s 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 decisionmaking, 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.
Concentration (%): Domestic Branch Network
Rest of India, 21.45
Gujarat, 22.47
Maharashtra, 11.30
UP & Uttaranchal,
21.99
South, 10.97
Rajasthan, 11.82
Pattern of Shareholding: 30th June, 2010
As on 30th June, 2010
Indian
Public
5.9%
Corp.
Bodies
4.9%
Others
0.2%
FIIs
17.8%
•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
Insurance
Cos
8.5%
Govt. of
India
53.8%
Mutual
Funds
8.9%
BSE 100, BSE 200 and BSE 500
Nifty Junior and Bankex.
• BOB’s Share is listed on BSE and NSE in
‘Future and Options’ segment also.
Comparative Performance of BoB Stock: Jun’09 to Jun’10
Value
(30th Jun’09)
Value
(30th Jun’10)
% 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%
Index/Stock
Indian Macro Scene during Jun’09 to Jun’10
WPI (%)
IIP Growth (%)
17.7
20
18
16
14
12
10
8
6
4
2
0
16.5
15.1
10.6
11.5
9.3
7.2
11.23 10.16
8.56
7.31
8
13.9
12
9.89
10
16.3
10.2
8.3
12
9.90
5.55
10.55
6
4
2
1.46
0.46
-1.01
Jun'10
Apr'10
Feb'10
-0.67
Dec'09
-0.17
Oct'09
Aug'09
-2
Jun'09
Ju
n'
09
Ju
l'0
9
A
ug
'0
9
Se
pt
'0
9
O
ct
'0
9
N
ov
'0
9
D
ec
'0
9
Ja
n'
10
Fe
b'
10
M
ar
'1
0
A
pr
'1
0
M
ay
'1
0
0
Rs/$
Bank Credit Growth (%)
48.82
25.0
21.7
20.0
16.7
15.8
15.1
17.6
18.1
14.1
12.2
9.5
46.95
46.51 46.53 46.17
46.08
47
14.8
12.6
48.1
47.9 47.94
48
15.1
15.0
49
46
46.46
44.9
10.0
44.36
45
10.0
46.37
44
5.0
43
42
0.0
Jun'09
Aug'09
Oct'09
Dec'09
Feb'10
Apr'10
Jun'10
Jun'09
Aug'09
Oct'09
Dec'09
Feb'10
Apr'10
Jun'10
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 May’10; lead indicators for
services activity suggest continuation of strong growth momentum; India’s 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
•India’s 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-May’10 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 Feb’10 & 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.
Bank’s Business Growth (Y-O-Y): Jun’06 to Jun’10
Growth: Total Advances (%)
Growth: Total Deposits (%)
25.2
30.0
25.0
20.0
24.7
27.0
42.1
37.5
40.0
30.7
35.0
19.3
27.7
27.5
30.0
25.0
13.7
15.0
20.0
15.0
10.0
10.0
5.0
5.0
0.0
0.0
Jun'06
Jun'07
Jun'08
Jun'09
29.4
30.0
22.0
Jun'06
Jun'10
Jun'07
Jun'08
Jun'09
Jun'10
Domestic CASA Growth (%)
Growth: Total Business (%)
25.0
45.0
29.3
24.5
30.0
21.1
27.5
25.0
25.0
20.0
20.3
18.8
Jun'08
Jun'09
20.0
15.0
11.1
15.0
10.0
10.0
5.0
5.0
0.0
0.0
Jun'06
Jun'07
Jun'08
Jun'09
Jun'10
Jun'06
Jun'07
Jun'10
Bank’s Profitability: Jun’06 to Jun’10
1800.00
Rs crore
1600.00
Bank’s Net Profit has grown by a healthy
1527.87
CAGR of 51.4% between Jun’06 & Jun’10
1400.00
1200.00
1009.93
1000.00
859.16
800.19
800.00
685.38
644.45
600.00
503.53
330.83
400.00
200.00
370.86
163.33
0.00
Jun'06
Jun'07
Gross Profit
Jun'08
Jun'09
Net Profit
Jun'10
%
%
Bank’s Asset Quality: Jun’04 to Jun’10
9
4
8
3.5
7.21
7
6
3
Gross NPA
2.94
2.5
4.06
5
2
4
2.78
3
2
1.5
1.47
1.86
Net NPA
0.92
1.44
0.67
1
1.03
1.41
0.39
1
0.5
0.27
0
0
Jun'04
Jun'05
Jun'06
Jun'07
Jun'08
Jun'09
Jun'10
Bank’s Business Performance: Jun’09 to Jun’10
Jun’09
Mar’10
Jun’10
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%
Particular
(Rs crore)
•Share of Domestic CASA improved from 35.09% in Q1, FY10 to 35.23% in Q1, FY11.
Bank’s Business Performance: Jun’09 to Jun’10
Jun’09
Mar’10
Jun’10
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%
20,221
24,248
24,994
23.6%
3.1%
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%
Particular
(Rs crore)
Out of Gross Domestic Credit,
Retail Credit
Of which:
Home Loans
Bank’s Business Performance: Jun’09 to Jun’10
Jun’10
Y-O-Y
(%)
Change
Over
March (%)
52,544
56,061
26.7%
6.7%
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%
Particular
(Rs crore)
Jun’09
Mar’10
Global Saving
Deposits
44,237
Domestic Savings
Deposits
Bank’s Profits & NII: Apr-June, FY10 & FY11
Particular
(Rs crore)
Gross
Profit
Net Profit
Net
Interest
Income
AprJun’09
AprJun’10
Y-O-Y
(%)
1,009.93
1,527.87
51.3%
685.38
859.16
25.4%
1,204.70
1,857.99
54.2%
•The Bank’s NII grew even sequentially from Rs 1744.95 crore in JanMar’10 to Rs 1857.99 crore in Apr-Jun’10 on the back of healthy growth in
business.
Other Highlights: Apr-June, FY10 & FY11
Particular (in %)
Apr-Jun’09
Jan-Mar’10
Apr-Jun’10
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
Other Highlights: Apr-June, FY10 & FY11
Particular (in %)
Apr-Jun’09
Jan-Mar’10
Apr-Jun’10
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
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.
Non-Interest Income: Apr-June, FY10 & FY11
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%
(Rs crore)
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%
Bank’s 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 Bank’s 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 Bank’s Domestic Investment Book as on 30th June, 2010 stood
at Rs 62,963 crore.
•
Total size of Bank’s Overseas Investment Book as on 30th June, 2010
stood at Rs 3,676 crore.
Overseas Business: Apr-June, FY11
•
In Q1, FY11, the “Overseas Business” contributed 24.6% to the Bank’s
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 Bank’s Overseas Operations.
•
While the Gross NPA (%) in Domestic Operations stood at 1.73% at endJune, 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.
Capital Adequacy & Capital Raising in Q1, FY11
•
The Bank’s 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 Bank’s 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
NPA Movement (Gross): Q1, FY11
Particular
A. Opening Balance
( Rs crore)
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
Recovery in PWO in Q1, FY11
--
2,657.42
56.12
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%
Cumulative Position of Restructured Assets
•
During 27 months (1 Apr’08 to 30 June’10), 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 Bank’s 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.
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%
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 nonagricultural activities. Official projections place Indian growth at 8.5% for
FY11.
Headline inflation has moved to double digits in Feb’10 and has remained
sticky. Demand-side pressures are evident in the inflation series.
Since Feb’10, 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 RBI’s 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.
Bank’s 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 Jun’09 to Jun’10, the Bank’s 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.
Thank you.