Transcript BOB Profile

Presentation to Analysts
Performance Highlights
( Q1, 2008-09)
by
Dr Rupa Rege Nitsure
Chief Economist
July 29, 2008
Bank of Baroda: Key Strengths

BoB is a leading 100 years old PSB in India with modern and contemporary
personality, offering banking products and services to industrial and commercial,
retail and agricultural customers across the country.
Uninterrupted Record
in Profit-making and
Dividend Payment
Overseas Business
Operations extend across
25 countries
through 72 Offices
Pioneer in many
Customer-Centric
Initiatives
Strong Domestic
Presence through
2,851 branches
Provides Financial
Services to around
33 million customers
globally
First PSB to receive
Corporate Governance
Rating (CAGR-2)
A well-accepted &
recognised Brand in
Indian banking industry
Modern & Contemporary
Personality
Steady Movement towards
International best practices –
Preparing financials under
US GAAP
Rapid & Significant
Technology Progression
in FY06,FY07 & FY08
Strong Domestic Branch Network
No. of Branches
2900
2851
2850
•About 38.44% of the
domestic branches are
located in rural areas.
2800
2735
2750
2703
2700
2650
2600
Jun'06
Jun'07
•The Bank has a network
of 2,851 domestic
branches, as it merged 2
branches in Q1, FY09.
Jun'08
•Of the total no of
2,851 branches, 350 are
Agriculture Thrust
branches.
•Around 661 branches are
located in minority
concentrated districts.
Regional Break-up of
Domestic Branches
Metro
Urban
SemiUrban
Rural
612
519
624
1,096
• There are 127
specialised branches
(including 19 service
branches) as on date.
Robust Technology Platform
•As of date, the Bank has completed CBS Rollout in 1,759 domestic
branches covering more than 90.0% of the Bank’s domestic business.
•All CBS branches are enabled for inter bank remittances
through RTGS and NEFT.
•CBS has also been implemented in 62 overseas branches of Bank/its
Subsidiaries.
•The Bank’s ATM network has increased to 1,146 from a mere 170 in
2005.
•This includes two Biometric ATMs installed on a pilot basis in
Balsar/Rae Bareli districts.
•Bank has installed 47 ATMs at Railway Stations.
•Many novel products like RapidFunds2India, Baroda Connect,
Online Tax Payment Facility, Depository Facility, Baroda Easy Pay,
Online Payment of Railway Ticket Booking, etc. have been
developed.
Concentration (%): Domestic Branch Network
Gujarat, 23.36
Rest of India, 25.36
Maharashtra, 7.33
UP & Uttaranchal,
21.4
Rajasthan, 12.03
South, 10.52
Present Pattern of Shareholding
As on 3oth June 2008
Indian
Public
6.5%
Others
1.0%
Corp.
Bodies
1.4%
• Share
FIIs
19.6%
Capital
Rs 365.53 crore
•No. of Shares
364.27 million
• Net worth
Rs 9,907.08 crore
• B. V. per share
Rs 271.97
•Return on Equity: 14.97%
Insurance
Cos
6.3%
Banks
0.4%
Govt. of
India
53.8%
Mutual
Funds
11.0%
• BOB is a Part of the following Indexes
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.
Business Growth: June’04 to June’08
Growth: Total Deposits (%)
30
20.12
25
20
15
26.49
22.73
12.49
12.91
10
5
0
Growth: Total Advances (%)
45
40
35
30
25
20
15
10
5
0
27.5
19.96
12.61
Jun'04
Jun'04 Jun'05 Jun'06 Jun'07 Jun'08
Jun'05
Jun'06
Jun'07
Jun'08
CASA (%) in Domestic
Deposits
Growth: Total Business (%)
32.58
35
30
26.19
42
41
40
39
38
37
36
35
34
24.55
25
20
15
42.11
37.48
15.28
12.53
10
5
0
Jun'04
Jun'05
Jun'06
Jun'07
Jun'08
41.19
37.75
38.37
36.86
37.46
Jun'04
Jun'05
Jun'06
Jun'07
Jun'08
Profits: June’03 to June’08
1000
Rs crore
900
860.19
800
644.46
700
600
596.48
540.24
555.86
503.52
500
400
300
330.83
244.47
370.86
292.98
163.33
200
163.31
100
0
Jun'03
Jun'04
Gross Profit
Jun'05
Jun'06
Jun'07
Net Profit
Jun'08
Asset Quality: June’03 to June’08
12
11.02
10.41
10
Gross NPAs (%)
8
6
7.21
Net NPAs (%)
4.21
4
4.06
2.78
2.9
1.86
1.47
2
0.92
0.67
0.52
0
Jun'03
Jun'04
Jun'05
Jun'06
Jun'07
Jun'08
Business Performance: Q1, 2008-09
•Global Business up 32.6%(Y-o-Y) to Rs 2,66,122 crore at endJune 2008
•Domestic Business up 29.4%(Y-o-Y) to Rs 2,09,135 crore
•Overseas Business up 24.6%(Y-o-Y) to Rs 56,987 crore
•Global Deposits up 26.5%(Y-o-Y) to Rs 1,54,908 crore
•Domestic Deposits up 25.2%(Y-o-Y) to Rs 1,23,816 crore
•Overseas Deposits up 31.7%(Y-o-Y) to Rs 31,093 crore
•Domestic CASA share improved from 35.93% at end-Mar’08 to
36.86% at end-June’08
•Global Advances up 42.1% (Y-o-Y) to Rs 1,11,214 crore
•Domestic Advances up 35.8% to Rs 85,319 crore
•Overseas Advances up 67.7% to Rs 25,895 crore
Business Performance: Q1, 2008-09
•Retail Credit up 18.8%(Y-o-Y) to Rs 16,908 crore at end-June 2008
•Retail Credit now forms 19.6% of Gross Domestic Credit
•Home Loan Book up 15.1%(Y-o-Y) to Rs 7,267 crore
•SME Credit up 19.5% (Y-o-Y) to Rs 12,087 crore
•Farm Credit up 31.0% (Y-o-Y) to Rs 13,729 crore
•Priority Sector Credit up 28.02%(Y-o-Y) to Rs 32,836 crore.
•Bank’s credit to weaker sections was up 63.6% (Y-o-Y) to Rs 6,247
crore.
•Debt waiver & relief scheme was successfully implemented by
the Bank in given timeframe involving debt waiver amount of Rs
502 crore & debt relief of Rs 164 crore, thereby
upgrading/liquidating the NPA of Rs 242 crore.
Key Financial Ratios : Q1, 2008-09

Return on Average Assets (ROAA) at 0.81%[1.01% at Q1, FY08]

Earning per Share (annualised) at Rs 40.72 [Rs 36.32 at Q1, FY08]

Book Value per Share at Rs 271.97 [Rs 240.56 at Q1, FY08]

Return on Equity (ROE) at 14.97% [15.10% at Q1, FY08]

Capital Adequacy Ratio at 13.19% (Tier 1 : 7.89%, Tier 2 : 5.30%)
• Cost-Income Ratio declined from 53.69% to 45.20%(Y-o-Y).

Gross NPA ratio declined to 1.86% from 2.78% (Y-o-Y).

Net NPA ratio declined to 0.52% from 0.67%(Y-o-Y).

NPA Coverage at the level of 72.48%
Operating Profits: Q1, 2008-09
Rs Crore
900
860.19
•Increase in “Net Interest
Income” of 16.9% (Y-o-Y),
“Non-Interest income” of
20.8% and a moderate
growth in “Total
Expenses” of 23.8%
enabled the Bank to
increase its Operating
Profits by a decent 33.5%
in Q1, FY09 (Y-o-Y).
644.46
800
700
600
500
33.5%
400
300
200
100
0
Jun'07
Jun'08
Net Profits: Q1, 2008-09
370.86
Rs crore
380
370
330.84
360
350
340
12.10%
330
320
310
Jun'07
Jun'08
•The level of
quarterly Net Profit
at Rs 370.86 crore at
end-June, 2008
reflects a growth of
12.10% (Y-o-Y)
despite severe
pressures on cost of
funds and a
downturn in
economic cycle.
Other Highlights: Q1, 2008-09

Net Interest Margin (as % of interest-bearing assets) in Global Operations
stood at 2.76% at end-June, 2008 as against 3.02% at end-June 2007 (after
making adjustment for the “amortization” factor as per the RBI guidelines).

Cost of Deposits in Global Operations increased from 5.42% to 5.55%
 Cost of Deposits in Domestic Operations increased from 5.52% to 6.05%
 Cost of Deposits in Overseas Operations decreased from 4.99% to 3.43%

Yield on Advances in Global Operations declined from 9.51% to 9.08%
 Yield on Advances in Domestic Operations marginally improved from
10.24% to 10.34%
 Yield on Advances in Overseas Operations declined sharply from 6.49%
to 4.91%.

Yield on Investments in Global Operations, however, improved from 6.31%
to 7.22%.
Other Highlights: Q1, 2008-09
 Treasury Income (Profit on Sale of Investments) declined
by 31.7% (Y-o-Y) to Rs 88.99 crore.
 Fee-based Income (Commission, Exchange & Brokerage)
sharply improved by 44.5% (Y-o-Y) to Rs 155.52 crore.
 Cash Recovery (NPA & PWO) during Q1, 2008-09 stood
at healthy Rs 177 crore as against Rs 128 crore during
2006-07 reflecting a growth of 38.0%.
 Profit from Exchange Transactions grew by a robust
49.8% (Y-o-Y) to Rs 94.23 crore.
Other Income: Q1, 2008-09
(Rs crore)
Jun-08
Jun-07
Comm., Exchange & Brokerage
155.52
107.66
Profit on Exchange
Transactions
94.23
62.90
Incidental Charges
93.65
76.38
Recovery in Bad Debt Write-off
54.48
39.48
Profit on Sale of Investments
88.99
130.23
Other Misc. Income
25.67
7.70
Total Non-Interest Income
512.55
424.36
Provisions & Contingencies: Q1, 2008-09
(Rs crore)
Jun-08
Jun-07
Provision for NPA
-41.58
104.68
Bad-debts written off
20.09
7.19
Prov. For Dep. on Investment
218.61
29.05
Prov. For Std. Adv.
16.54
-4.98
Other Provisions
66.65
5.50
Tax Provisions
209.02
172.18
Total Provisions
489.33
313.62
Treasury Highlights: Q1, 2008-09
Category
Q1:FY08
Rs crore
Q1:FY09
Rs crore
SLR
30,507
36,757
Non-SLR
4,894
6,549
Overseas Investments
3,824
3,333
Total Investments
39,225
46,639
871
3,107
SLR (HTM) % Total Investments
67.74%
68.33%
SLR (HTM) % DTL
19.38%
18.63%
AFS Duration
1.49 yrs
1.90 yrs
Excess SLR
Overseas Business: Q1, 2008-09
 At end-June, 2008, the “Overseas Business” contributed 21.4% to
Total Business and 31.8% to Net Profit.
 In Q1, FY09, the “Overseas Business” contributed 29.5% to the
Bank’s pure Fee-based Income.
 While the Cost-Income Ratio for Domestic Operations stood at
49.29% in Q1, FY09, it was just 20.35% for Overseas Operations.
 While the Gross NPA (%) in Domestic Operations stood at 2.24%
at end-June 2008, that for Overseas Operations was just 0.63%.
 As a result, the “Net Profit to Avg. Working Funds” ratio for
Overseas Operations was 1.26% in Q1, FY09 as against 0.70% for
Domestic Operations.
NPA Movement (Gross): Q1, 2008-09
Particular
A. Opening Balance
Amount in Rs crore
1,981.38
B. Additions during the year
359.50
C. Reduction during the year
249.82
Of which
Recovery
122.06
Upgradation
122.79
Writeoff
Closing Balance
4.97
2,091.06
Gross NPAs: Sectoral Break-up at end-June, 2008
Sector
Gross NPA (%)
End-June, 2008
Gross NPA (%)
End-June-2007
Agriculture
3.16
3.81
Large & Medium Ind.
1.24
3.28
SSIs
3.49
5.43
Retail
3.52
2.46
SME
3.31
N.A.
Domestic Ops.
2.24
3.28
Overseas Ops.
0.63
0.72
Sectoral Deployment of Credit at end-June, 2008
Sector
% share in Gross
Dom. Credit
Q1, FY09
% share in Gross
Dom. Credit
Q1, FY08
Agriculture
15.93%
16.40%
Large Industries
23.40%
22.30%
SSIs
8.02%
9.24%
Retail
19.62%
22.27%
SME
14.03%
15.83%
Road Ahead
•Challenging Economic Environment in FY09
• with industrial growth slipping to 5.0% in Apr-May’08 as
against 10.9% in Apr-May’09, inflation close to 12.0%,
slowing corporate profitability & lack-lustre performance of
monsoon in July’08
•A Restrictive Monetary Policy Environment to continue
•RBI raised the CRR by a cumulative 125 bps in Apr-July’08
& Repo Rate by 75 bps in June’08
•Further tightening is expected as M3 growth is still at 20.5%
(Y-o-Y)
•Weaker Rupee (depreciated by 8.0% in Calendar 2008 till July
28) as crude oil prices still ruling at $125 per barrel
•Banks’ NIM as well as other income streams under pressure due
to sustained tightening and volatile markets.
Proposed Business Strategies for FY09
•Primary thrust on protecting the NIM by
•Improving the CASA share
•Improving the effective rates of lending
•Improving the share of Retail/SME business in total
business without compromising the asset quality.
•Leveraging technology/re-branding exercise to extract
maximum benefits, recruitment of specialised marketing staff
•Special focus on improving “relations” with the existing
corporate customers as well as efforts to add new quality
customers to the Bank’s Book
•Thrust on business process reengineering to reduce the
“transaction costs”
• A dedicated effort to add 2.5 to 3.0 million quality customers
to Bank’s book in FY09 and in subsequent years.
Thank you.